Subsection 106(1) - Income interest in trust
Administrative Policy
S6-F2-C1 - Disposition of an Income Interest in a Trust
Cost to the beneficiary
1.20 For the purpose of determining the deduction available under subsection 106(1), the cost to a beneficiary of the...
Example 2
…Mr. X establishes a personal trust (the Trust) in favour of his son, Mr. A, and grandson, Mr. B. He settles the Trust by transferring to the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 256 - Subsection 256(7) - Paragraph 256(7)(b) | 93 | |
| Tax Topics - Income Tax Act - Section 67.6 | 239 |
Scenario 2
In a particular tax year, the Trust had income of $25,000 that it allocated to Mr. A. The Trust did not have enough funds to pay that amount in...
Scenario 3
Adopt the same additional facts as outlined in Scenario 2. Assume further that the Trust distributes $100,000 of income to Mr. B in the first tax...
Description
Year 1
Year 2
$100,000
$150,000
$50,000 ($150,000 - $100,000)
Therefore, at the end of Year 2, Mr. B would have fully offset the cost of acquisition of his income interest in the Trust.
IT-385R2 "Disposition of an Income Interest in a Trust"
Subsection 106(2) - Disposition by taxpayer of income interest
Administrative Policy
2022 Ruling 2021-0919101R3 - Ruling Letter
Background
Daughter1 and Daughter2 (sisters) had been the equal income beneficiaries of a testamentary trust (the Fund). However, on the death of...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition | aunt’s renunciation of her trust income interest, and her approval of the resulting scheme of distribution to the residual beneficiaries, did not entail a disposition | 186 |
S6-F2-C1 - Disposition of an Income Interest in a Trust
Offset
1.6 Pursuant to paragraph 106(2)(a), where a taxpayer disposes of an income interest in a trust that includes a right to enforce payment of...
26 February 2007 External T.I. 2005-0159431E5 F - Renonciation aux revenus d'une fiducie
CRA found that the renunciation of the income of a spouse trust by the spouse under Art. 1285 of the Civil Code (or pursuant to a clause in the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - 101-110 - Section 108 - Subsection 108(1) - Testamentary Trust - Paragraph (c) | renunciation of income not yet realized is not a contribution to the trust | 85 |
18 March 2005 External T.I. 2004-0089661E5 F - Fiducie personnelle-Résidence principale
Father acquired a rental property (the "Immovable") in 1956 and, on his death in 1994, devised the usufruct of the Immovable to his wife...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 54 - Principal Residence - Paragraph (c.1) - Subparagraph (c.1)(ii) | the residence being leased to the specified beneficiary does not change that it may be a principal residence to the trust | 339 |
| Tax Topics - Income Tax Act - 101-110 - Section 107 - Subsection 107(4) | application of s. 107(4) to spouse trust respecting residence turned on whether such trust was terminated by such income interest being distributed to the capital beneficiary during the spouse’s lifetime or on her death | 282 |
30 November 1996 Ruling 9706043 - SURRENDER OF INCOME INTEREST
Where the income beneficiary of a family trust releases and surrenders all her interests in the trust, she will be considered to have disposed of...
ATR-3 (29 Nov. 85)
In winding-up an estate, all the estate assets would be transferred to the capital beneficiaries who would agree to give to their mother (the life...
IT-385R2 "Disposition of an Income Interest in a Trust"
Articles
Elie Roth, Tim Youdan, Chris Anderson, Kim Brown, "Taxation of Beneficiaries Resident in Canada", Chapter 4 of Canadian Taxation of Trusts (Canadian Tax Foundation), 2016.
Requirements for valid disclaimer of income interest (pp. 340
A taxpayer who executes a valid disclaimer of an income interest in a trust is...
Subsection 106(3) - Proceeds of disposition of income interest
See Also
McKenzie v. The Queen, 2011 DTC 1216 [at at 1274], 2011 TCC 289
The testator of a testamentary trust holding shares of a company provided that an executive employee of the company had an entitlement to the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - General Concepts - Payment & Receipt | payment through back-to-back promissory notes | 228 |
Administrative Policy
3 November 2023 APFF Financial Strategies and Instruments Roundtable Q. 4, 2023-0990531C6 F - Life insurance policy transfer
A private company (Aco) was the beneficiary and holder of a policy, on the life of Mr. X, with an adjusted cost basis (ACB), cash surrender value...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 148 - Subsection 148(7) | a trust distribution of a life insurance policy to a beneficiary was made for FMV consideration equal to the part of the beneficiary’s capital or income interest that is satisfied | 450 |
| Tax Topics - Income Tax Act - 101-110 - Section 107 - Subsection 107(2) | s. 107(2) inapplicable to distribution in satisfaction of a trust debt owing to the beneficiary | 296 |
31 August 2001 External T.I. 2001-0087865 F - Accélération de remise de capital
Regarding a resident qualifying spousal trust that provided that on the death of the surviving spouse, the residue of the trust property was to be...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - 101-110 - Section 107 - Subsection 107(2.1) | generally favourable consequences of early termination of spousal trust pursuant to s. 107(2.1) | 236 |