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.
XXXXXXXXXX 5-971053
August 25, 1997
Dear XXXXXXXXXX
Re: Application of subsection 110.6(19) and subparagraph 104(15)(b)(ii) of the Income Tax Act (the "Act")
This is in reply to your letter dated March 17, 1997, addressed to Mr. Tom Taylor of our Taxation Services Office in Vancouver. Mr. Taylor has requested that we reply to your letter.
Generally, for the purposes of subsection 110.6(19) of the Act, a taxpayer will normally make an election for an amount which is between the adjusted cost base and the fair market value of the property. Therefore, we are of the opinion that you can elect in the amount of 4/5 of the fair market value of the property.
For the purposes of subparagraph 104(15)(b)(ii) of the Act, the portion of the trust's accumulating income for the year that may reasonably be regarded as having been earned for the benefit of a particular preferred beneficiary will be determined according to the trust indenture. Therefore, the percentage of the amount elected under paragraph 110.6(19) that belongs to the non-resident beneficiary will be taxed at the trust level and will not form part of the amounts that are flowed out to any preferred beneficiary.
The above comments are an expression of opinion only and are not binding on the Department.
Yours truly,
for Director
Resources, Partnerships and Trusts Division
Income Tax Rulings and Interpretations Directorate
Policy and Legislation Branch
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