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.
Principal Issues:
Can a subsection 104(13.1) designation be made with respect to amounts deemed payable under subsection 104(18)? (I.e., if the income is not otherwise payable but deemed to be so, is "A" in subsection 104(31.1) an amount other than nil?)
Position:
Generally yes.
Reasons:
Subsection 104(18) deems amounts payable for purposes of subsection 104(13). "A" then can be read as an amount other than nil.
XXXXXXXXXX 971832
T. Murphy
Attention: XXXXXXXXXX
May 13, 1998
Dear Sirs:
Re: Subsections 104(13.1) and 104(18) of the Income Tax Act
This is in reply to your letter of July 4, 1997 concerning the above noted provisions of the Income Tax Act.
Where subsection 104(18) applies, the income of the trust is deemed to have become payable to the beneficiary in the year for purposes of subsections 104(6) and (13).
Subsection 104(13.1) permits a trust to deduct less than the full amount of its income payable to a beneficiary and thus choose to have that income taxed at the trust level rather than the beneficiary level. The formula in subsection 104(13.1) requires a determination of several items, including the beneficiary's share of the income of the trust for the year computed without reference to the Act.
Subsection 104(13.1) does not explicitly require that the beneficiary's share of income be an amount payable to the beneficiary in the year. Thus, in our opinion, a designation under subsection 104(13.1) would be available with respect to amounts deemed payable pursuant to subsection 104(18). Furthermore, if the trust were a testamentary trust, such a designation would not in and by itself cause a trust to cease to be a testamentary trust.
The above opinion represents our view of the law as it generally applies. While we hope it is of assistance to you, please note that it is not an advance income tax ruling and, accordingly, it is not binding on Revenue Canada.
Yours truly,
R.S. Biscaro
Director
Resources, Partnerships and
Trusts Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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