1 March 1994 External T.I. 9404195 - HAA7234-1 INCOME POOLED FUND TRUST

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

RULINGS DIRECTORATE
CORRESPONDENCE SUMMARY

DOCUMENT TYPE:

Opinion File #E9404195

Principal Issues:

definition of Income as used in Reg. 5000(7)

Position TAKEN:

Expanded on standard reply. Income is income from a source as calculated at 3(a) of the Act.

Reasons FOR POSITION TAKEN:

Routine interpretation of provision

LEGAL:

FINANCE OPINION:

JURISPRUDENCE:

RCT PUBLICATIONS:

HAA NUMBER: 7234-1

XXXXXXXXXX 5-940419

Attention: XXXXXXXXXX

March 1, 1994

Dear Sirs:

Re: Subsection 5000(7) of the Income Tax Regulations ("Regulations")

This is in reply to your letter of February 17, 1994, concerning the meaning of the term "income" as used in paragraph (b) of the definition of a pooled fund trust contained in subsection 5000(7) of the Regulations

The purpose of this provision is to ensure that 95 per cent of the income of the trust from all sources is from sources that are investments described in subparagraph a(i) of the definition. Therefore, it is our opinion that income as used in paragraph (b) of the definition means the total income of the trust for the year from all sources as determined under paragraph 3(a) of the Income Tax Act (the "Act"). Accordingly, it is our opinion that income includes the gross income derived from each source minus expenses that are directly attributable thereto following generally accepted accounting principals and the provisions of part I of the Act. Specific to your questions, this means:

the gross-up amount in respect of taxable dividends is included to the extent the trust does not designate the dividend to be income of a beneficiary pursuant to subsection 104(19) of the Act; and

a deduction of an amount by the trust pursuant to subsection 104(6) of the Act will not reduce the amount of income as it is not a deduction that is directly attributable to any particular source.

The above comments are based on our understanding of the law as it applies in general and may or may not apply to the circumstances of a particular case. However, they do not form an advance income tax ruling and they are not binding on the Department.

Yours truly,

for Director
Financial Industries Division
Rulings Directorate