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: Whether subsection 104(21) of the Act can apply to a double tier structure of trusts?
Position: Yes.
Reasons: 104(21) applies for the purpose of computing income under section 3 of the Act. Section 3 is of generality and can be read in conjunction with 104(21) and (21.3) so that taxable capital gains of a trust which are deemed to be taxable capital gains of another trust pursuant to 104(21) be viewed as net taxable capital gains of the other trust for the purpose of subsection 104(21) of the Act.
XXXXXXXXXX 5-981368
M. Lemire
Attention: XXXXXXXXXX
January 21, 1999
Dear Sirs:
Re: Subsection 104(21) of the Income Tax Act (the “Act”)
This is in reply to your letter of May 21, 1998 on the application of subsection 104(21) of the Act to a double tier structure of trusts.
Subsection 104(21) of the Act allows a trust to designate a portion of its net taxable capital gains for a taxation year as a taxable capital gain of a beneficiary of the trust. In essence, the designated portion of the net taxable capital gains of a trust is deemed to be the taxable capital gain of a particular beneficiary. Where the particular beneficiary is another trust, it is our view that such portion of the net taxable capital gain designated to the other trust would form part of the total amount of net taxable capital gains of the other trust which can then be designated under subsection 104(21) of the Act by the other trust as a taxable capital gain of a beneficiary of the other trust.
Our comments are provided in accordance with paragraph 22 of Information Circular 70-6R3 dated December 30, 1996.
We hope this will be of assistance to you.
Yours truly,
Theresa Murphy
Section Chief
Resources, Partnerships and Trusts Division
Income Tax Rulings and Interpretations Directorate
Policy and Legislation Branch
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 1999
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 1999
Email this Content