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.
19(1) 5-9448
A.B. Adler
(613) 957-8962
February 22, 1990
Dear Sirs:
This is in reply to your letter dated January 22, 1990 in which you requested our views with respect to the application of paragraph 248(8)(c) and subsection 248(9) of the Income Tax Act ("Act") in the following circumstances.
We are to assume a situation where an income beneficiary of an estate irrevocably releases or surrenders his right to future payments of income after having received and accepted income payments from the estate for a period of time. Further, the release or surrender is made under the laws of Ontario, is not made in favour of any person and does not direct in any manner who is entitled to benefit therefrom, and is made within the period ending 36 months after the death of the testator.
Specifically, you wish to know whether this would constitute a "release" or "surrender" by the beneficiary as defined in subsection 248(9) of the Act. In addition, you want to know if we agree that the beneficiary would not be considered to have disposed of his income interest in the trust paragraph 248(8)(c) of the Act notwithstanding that the release or surrender described above might also be considered to be a "renunciation" for purposes of paragraph 6 of IT-385R.
Our comments follow.
It is our general position that a "release" or "surrender" of an interest in an estate by a beneficiary thereof must be made within the time specified in subsection 248(9) of the Act for the purposes of paragraph 248(8)(c) thereof. Further, a "release" or "surrender" must not be made in favour of any person.
Paragraph 6 of IT-385R continues to reflect our position where a taxpayer renounces any part of his income interest in a trust at a time subsequent to the taxpayer having accepted funds from the trust in respect of that interest.
We trust that our comments will be of assistance to you.
Yours truly,
for Director
Financial Industries Division
Rulings Directorate
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