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.
Principales Questions:
How does the revocation work under paragraph 104(5.31) of the Act?
Position Adoptée:
No prescribed form the request should be filed by writing separately from the T3 and when the permission to revoke is granted, the election under paragraph 159(6.1) is not available.
Raisons POUR POSITION ADOPTÉE:
1995 T3 Guide and wording of 104(5.3) and 159(6.1)
5-962956
XXXXXXXXXX (613) 957-8953
Attention: XXXXXXXXXX
September 16, 1996
Dear Sirs:
Re: Revocation of the election filed under paragraph 104(5.3) of the Income Tax Act
We are replying to your facsimile of September 5, 1996, wherein you requested information concerning the revocation of the election filed under subsection 104(5.3) of the Income Tax Act (the "Act"). In addition, you requested information concerning the amendment to the limit on gifts by an individual in the year of death as announced in the federal budget paper of March 6, 1996.
New subsection 104(5.31) of the Act enables a trust to apply before 1997 to revoke an election that was filed under subsection 104(5.3) of the Act before July 1995. Therefore, a trust that filed Form T1015, Election By a Trust to Defer the Deemed Realization Day, before July 1995, can apply in writing before 1997 for permission to revoke the election. A revocation under subsection 104(5.31) is made by writing a letter to the Minister before 1997 for permission to revoke the election. No prescribed form exists for the revocation under subsection 104(5.31) of the Act. However, when requesting a revocation, the name and the account number of the trust should be provided and the letter should state if any of the property or beneficiaries of the trust have changed since Form T1015 was filed and if so, details should be provided. The request to revoke should be filed at the following address separately from the T3 Income Tax and Information Return:
Individual Programs Section
Client Services Directorate
Revenue Canada
400 Cumberland Street
Ottawa, Ontario
K1A 0L8
As mentioned at page 29 in the 1995 T3 Guide, "a trust that is granted permission to revoke its election will be deemed to have never made the election. The trust cannot file preferred beneficiary elections, or elect on Form T2223, Election by a Trust to Defer Payment of Tax, on the tax resulting from the revocation." Therefore, when a trust is granted the permission under 104(5.31) of the Act to revoke its election, the trust cannot elect under subsection 159(6.1) of the Act (Form T2223) to pay the income tax arising from the revocation in up to 10 annual instalments. Furthermore, when a trust is granted permission to revoke its election, new paragraph 104(5.31)(c) of the Act requires the Minister to assess each taxation year of any taxpayer to take into consideration the consequences of the revocation of an election, even if the normal reassessment period for that year has expired.
Regarding your question on the increase of the limit on gifts by an individual in the year of death as announced in the 1996 federal budget, there is presently no draft legislation on this proposal. Consequently, we are unable to provide any comments to your third question.
The above comments are an expression of opinion only and, as explained in paragraph 21 of Information Circular 70-6R2, are not binding on the Department.
We trust that these comments will be of assistance to you.
Yours truly,
for Director
Resources, Partnerships and
Trusts Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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