Subsection 107(1)
See Also
Re Nelson (1916), 1928 Ch 920n
All the beneficiaries of a discretionary trust collectively assigned their interest. Held that, as in effect the were between them collectively...
Administrative Policy
2016 Ruling 2015-0606771R3 - Disclaimer of trust interest
An estate (that was a testamentary trust) holding appreciated assets has five grandchildren who would receive as residuary beneficiaries under the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - 101-110 - Section 107 - Subsection 107(2) | disclaimer resulting in a rollout of estate assets under an intestacy | 396 |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition | disclaimer of interest in estate | 85 |
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.
Example of gain computation on sale of capital interest (p. 267)
[C]onsider a beneficiary who holds a capital interest in a Canadian resident...
Elie Roth, Tim Youdan, Chris Anderson, Kim Brown, "Taxation of Trusts Resident in Canada", Chapter 3 of Canadian Taxation of Trusts, (Canadian Tax Foundation), 2016.
Potential for s. 107(1)(c) to result in double taxation (pp. 144-145)
When the beneficiary is itself a trust, paragraph 107(1)(c) reduces its loss...
Paragraph 107(1)(a)
Administrative Policy
26 November 2020 STEP Roundtable Q. 6, 2020-0839991C6 - Eligible offset
A personal trust (the “Trust”) owns all the common shares (the “Shares”) of a corporation with an ACB of $100,000, and has a $20,000...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - 101-110 - Section 107 - Subsection 107(2) - Paragraph 107(2)(c) | generation of a loss to a capital beneficiary attributable to an eligible offset amount | 225 |
25 September 2006 External T.I. 2006-0169371E5 F - Résidence principale -Détermination du PBR
Father made an inter vivos gift of the family residence his son and daughter, with bare ownership vesting in each of them as to 50%, while being...
27 February 2004 External T.I. 2004-0061841E5 - Adjustment to the ACB under 107[1][a]
A Canadian resident individual (one of four siblings) held an interest in a U.S.-resident trust. All interests in the trust had vested...
Subsection 107(1.1) - Cost of capital interest in a trust
Articles
Alycia Calvert, "Incorporation of an Energy Trust", Resource Sector Taxation, Vol. IV, No. 3, 2006, p. 286.
Goodman, "The Tax Treatment of Commercial Trusts", 1989 Canadian Tax Journal, July-August issue, p. 1053
Subsection 107(1.2)
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.
Purpose (p. 265)
[S]ubsection 107(1.2))…is intended to prevent the beneficiary from realizing a loss on the valuation of the trust interest as a...
Subsection 107(2) - Distribution by personal trust
Cases
Chan v. The Queen, 2001 DTC 5570, 2001 FCA 302
A taxpayer, who was the beneficiary of a trust established by his father and mother who were the trustees, received approximately $1.8 million in...
See Also
Mariano v. The Queen, 2015 DTC 1209 [at at 1331], 2015 TCC 244
The taxpayers were participants in leveraged donation transactions, which were intended to result in a step-up of the adjusted cost base of...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - General Concepts - Fair Market Value - Other | courseware licences valued at modest initial cost, given relevant wholesale market and depressive effect of huge volumes purchased | 303 |
| Tax Topics - General Concepts - Ownership | no acquisition of unascertained property | 76 |
| Tax Topics - General Concepts - Sham | taxpayer involvement in deceit unnecessary | 375 |
| Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(1) | void for lack of certainty of objects | 224 |
| Tax Topics - Income Tax Act - Section 118.1 - Subsection 118.1(1) - Total Charitable Gifts | no gift where no intent for impoverishment and where gifted property not yet identified | 566 |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(35) | attempted use of initial gift to step-up ACB under s. 69(1)(c) | 262 |
Chan v. The Queen, 99 DTC 1215 (TCC), aff'd supra
When the taxpayer discovered that his mother and father had established a trust in his favour and that they were about to complete the sale of the...
Administrative Policy
10 October 2024 APFF Financial Strategies and Instruments Roundtable Q. 10, 2024-1027331C6 F - Distribution of life insurance - 107(2) and 148(7)
In 2023-0990531C6, CRA indicated that, where a life insurance policy is distributed by a personal trust in satisfaction of an income interest in...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 148 - Subsection 148(7) | where both ss. 107(2) and 148(7) apply to a personal trust’s distribution of a life insurance policy in satisfaction of capital interest, s. 107(2) prevails over s. 148(7) | 171 |
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 106 - Subsection 106(3) | s. 106(3) could apply to a distribution of a dividend in kind | 274 |
2020 Ruling 2020-0844081R3 F - Rollout of property to beneficiaries
Background
Trust 2, which is a discretionary inter vivos trust with Mr. A, his spouse Ms. A and their children (Child 1 and 2, or the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(4) | a trust should distribute shares of an Amalco whose predecessor had received shares as beneficiary of another discretionary family trust before the latter’s 21-year anniversary | 162 |
15 June 2021 STEP Roundtable Q. 7, 2021-0879021C6 - Subsection 107(2)
The beneficiaries (the “Beneficiaries”) of a resident discretionary family trust (the “Trust”) are the children of Mr. X, who was the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(25) - Paragraph 248(25)(a) | 2nd trust whose beneficiaries were named beneficiaries of 1st trust was not itself a beneficiary | 192 |
26 November 2020 STEP Roundtable Q. 13, 2020-0847201C6 - GRE & section 216 election
On the death of a non-resident individual, who had been filing T1 returns pursuant to the s. 216 rules regarding a Canadian rental property, that...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 216 - Subsection 216(1) | a non-resident estate (using GRE graduated rates), then its residuary beneficiaries, could file under s. 216 respecting a Canadian rental property | 292 |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Graduated Rate Estate | non-resident estate can be GRE and file s. 216 returns | 222 |
3 December 2019 CTF Roundtable Q. 6, 2019-0823581C6 - 21 year planning, 107(5), and TCP
In the view of CRA, 2016-0669301C6 and 2017-0693321C6 dealt with an abusive circumvention of s. 104(5.8) through a s. 107(2) distribution by a...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) | abuse of ss. 107(2) to rollout private Realtyco shares to NR-owned Cdn corporate beneficiary | 213 |
2016 Ruling 2016-0635051R3 - rollout property to beneficiary non-resident trust
Background
The Trust is a non-resident personal trust whose Settlor has since been liquidated, and there is no other person who was at any time...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - 101-110 - Section 107 - Subsection 107(4.1) | rollout under s. 107(2) available following dissolution of settlor of s. 94(8.2) trust | 72 |
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) - Subparagraph 20(1)(c)(ii) | secured and intergroup debt assumed on s. 107(2) rollout of property qualified under s. 20(1)(c)(ii) | 89 |
19 January 2017 External T.I. 2015-0576751E5 F - Trust, Disposition of depreciable property, Assumption
Does s. 107(2) apply where a trust distributes property to a beneficiary on condition that the beneficiary assume a debt of the trust to a...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 13 - Subsection 13(7) - Paragraph 13(7)(e) | s. 13(7)(e) applicable to s. 107(2.1) distribution but not s. 104(5) deemed disposition | 300 |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Personal Trust | non-commital as to whether assumption of debt could constitute tainting consideration | 183 |
| Tax Topics - Income Tax Act - 101-110 - Section 107 - Subsection 107(2.1) | s. 13(7)(e) applicable to depreciable property distribution | 123 |
| Tax Topics - Income Tax Act - Section 251 - Subsection 251(1) - Paragraph 251(1)(c) | trust cannot have a NAL relationship with itself | 41 |
2016 Ruling 2015-0606771R3 - Disclaimer of trust interest
Background
Ms. A and Mr. B. are income and capital beneficiaries, as well as the trustees, of the estate (a testamentary trust) of their late...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - 101-110 - Section 107 - Subsection 107(1) | no disposition from disclaimer | 93 |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition | disclaimer of interest in estate | 85 |
12 May 2016 External T.I. 2014-0552341E5 - Subsection 107(4.1)
CRA confirmed that a personal trust was tainted under s. 107(4.1) when it was settled with a gold coin by one of the capital beneficiaries – so...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - 101-110 - Section 107 - Subsection 107(4.1) | application of s. 75(2) to only one property in a trust can taint all the other trust property | 166 |
9 October 2015 APFF Financial Strategies and Instruments Roundtable Q. 8, 2015-0593091C6 F - Assumption of a debt by a beneficiary of a trust
CRA considers (e.g., 2013-0488061E5) that the s. 107(2) rollover does not apply to the property of a personal trust which is distributed to a...
12 December 2014 External T.I. 2013-0511391E5 F - Deemed disposition of capital interest in personal trust
The sole beneficiary of an inter vivos trust (the "Trust"), whose interest under the Trust had vested indefeasibly, died, as a result of which his...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 70 - Subsection 70(5) | push-down onto property distributed by inter vivos personal trust of s. 70(5)(b) cost of indefeasibly vested capital interest in the trust | 180 |
10 October 2014 APFF Roundtable, 2014-0538261C6 F - Disposition of capital interest/personal trust
Where a discretionary personal trust issues a note to a beneficiary in satisfaction of her capital interest, CRA considers that "the issuance of a...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - 101-110 - Section 108 - Subsection 108(1) - Cost Amount | note issuance is not trust property distribution to a beneficiary | 217 |
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) | non-deductible interest on note issued to beneficiary | 198 |
16 June 2014 STEP Roundtable Q. 8, 2014-0526551C6 - STEP CRA Roundtable Q8 - June 2014
When a personal trust with appreciated property is wound-up and a portion of the property is transferred to the capital beneficiary is settlement...
27 January 2014 Internal T.I. 2012-0472161I7 - Gifts by Will
The Deceased had three wills in respect of defined components of her estate (the "Trust"), including a second will in respect of the "Secondary...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 118.1 - Subsection 118.1(1) - Total Charitable Gifts | gifts. v. distributions made to charities | 211 |
| Tax Topics - Income Tax Act - Section 118.1 - Subsection 118.1(5) | gifts. v. distributions made to charities | 64 |
19 December 2013 External T.I. 2013-0503481E5 - Distribution of property by a trust
After referring to 2013-0488061E5 (below) and 2013-0488381E5, CRA stated:
[A] transfer of property by a trustee in settlement of a debt cannot...
19 November 2013 Internal T.I. 2013-0499021I7 - Distribution of property by a trust
In commenting further on its position in 2013-0488061E5 (immediately below) and 2013-0488381E5 that the distributions of trust property in...
2 July 2013 External T.I. 2013-0488061E5 - 107(2) distribution
A child of the settlor of a discretionary trust who now is the sole trustee and one of the beneficiaries distributes all the trust real property...
23 January 2013 Internal T.I. 2012-0465081I7 - Subsection 107(2) a disposition by a NR Trust
Respecting a distribution of Canadian real property by a personal trust resulting in a disposition of the beneficiary's capital interest, CRA...
2 June 2011 External T.I. 2011-0399501E5 - TCP distributed by N/R trust to N/R beneficiary
A non-resident inter vivos trust distributes its shares of a private Canadian real estate corporation (Canco) in satisfaction of the capital...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(4) - Paragraph 104(4)(b) | 110 | |
| Tax Topics - Income Tax Act - Section 116 - Subsection 116(5) | liability of NR trust to withhold on distribution to NR beneficiary in satisfaction of capital interest | 144 |
9 December 2003 External T.I. 2003-0032585 - Immeuble détenu par une succession
CCRA indicated that since the taxpayer was a usufructuary of the estate and, thus, an income rather than capital beneficiary of the estate, the s....
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 54 - Principal Residence - Paragraph (c.1) | income beneficiary of estate could be a specified beneficiary using as principal residence | 173 |
30 April 2003 External T.I. 2002-0156045 - Debt assumed as part/distribution from trust
A trust distributes shares of a Canadian corporation to its beneficiary on the condition that the beneficiary assumes indebtedness on a loan owing...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) | 39 | |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Personal Trust | 50 |
9 January 1997 External T.I. 9637535 - CAPITAL INTEREST DISTRIBUTION
S.105(1) does not apply to a distribution of property to which s. 107(2) is applicable.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - 101-110 - Section 105 - Subsection 105(1) | 16 |
29 July 1996 External T.I. 9613815 - DISTRIBUTION OF PROPERTY BY A NON-RESIDENT ESTATE
In finding that s. 107(2)(b) rather than 69(1)(c) applied to the acquisition by a resident of Canada of property in satisfaction of an interest in...
23 July 1996 External T.I. 9602225 - DISTRIBUTION OF PROPERTY BY A NON-RESIDENT TRUST
S.107(2)(b) will apply to determine the cost of property distributed to a Canadian beneficiary of a non-resident personal trust. However, because...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Taxpayer | 55 |
24 July 1992 T.I. 921652 (March 1993 Access Letter, p. 75, ¶C104-041)
It is a question of law whether, upon the variation of a trust, the distribution of property can be said to be made under the terms of a...
22 July 1992 T.I. 920965 (March 1993 Access Letter, p. 75, ¶C104-040)
A variation of trust affecting only administrative or investment powers, or containing provisions for naming replacement trustees, or extending or...
4 March 1992 T.I. (Tax Window, No. 17, p. 20, ¶1783)
Where a personal trust is wound up and the assets distributed to the sole beneficiary, such property will be considered to have been received by...
90 C.R. - Q25
Where the deceased directed in his will that capital properties be held by the executors in trust for a particular beneficiary for a period of...
ATR-38 (10 July 89)
Under the terms of a will, although the widow is entitled to the income and the children to the residue on her death, the trustee (who is the...
85 C.R. - Q.24
The lawful transfer, by the trustee of a discretionary trust for the children of the trustee, of 5% of all the shares held in a corporation by the...
85 C.R. - Q.25
Where the trustees of a spouse trust have the power to encroach for her benefit, she is a capital beneficiary and the distribution is subsection...
IT-209R "Inter-Vivos Gifts of Capital Property to Individuals Directly or Through Trusts"
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.
CRA denial of s. 107(2) where beneficiary issued a promissory note (pp. 283-4)
[T]he CRA takes the position that if the beneficiary is instead...
Wolfe D. Goodman, "Distributing Property That is Subject to a Life Interest, Before the 21st Anniversary", Goodman on Estate Planning, Vol. VII, No. 4, 1999, p. 562.
Hayhurst, "Transactions in Income and Capital Interests in Trusts", 1988 Conference Report, c. 38
Discussion of the dividing line between a distribution in satisfaction of any part of a capital interest and an encroachment on capital in respect...
Paragraph 107(2)(a)
Administrative Policy
6 March 2006 External T.I. 2005-0155271E5 F - Disposition d'une participation au capital
A lump sum received by the taxpayer from another beneficiary of an estate to surrender all of the entitlements of the taxpayer under the estate...
Paragraph 107(2)(c)
Administrative Policy
26 November 2020 STEP Roundtable Q. 6, 2020-0839991C6 - Eligible offset
CRA ran through two simple numerical examples showing the somewhat contrived operation of the rules in ss. 107(2)(a) and (c), and 107(1)(a) in...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - 101-110 - Section 107 - Subsection 107(1) - Paragraph 107(1)(a) | illustration of s. 107(1)(a) application to avoid capital gain but not necessarily a capital loss | 410 |
Subsection 107(2.001) - No rollover on election by a trust
Administrative Policy
16 June 2014 STEP Roundtable, 2014-0526581C6 - STEP CRA Roundtable - June 2014 - Q18
Can a trust make the s. 107(2.001) election on a property by property basis? As there is no prescribed form, how is the election made? CRA...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - 101-110 - Section 107 - Subsection 107(2.002) | election procedure, gain if election | 226 |
| Tax Topics - Income Tax Act - 101-110 - Section 107 - Subsection 107(2.11) | election procedure | 61 |
11 July 2013 External T.I. 2012-0471061E5 - Subsection 107(2.001) election
///?p=18479">18 April 2013 T.I. 2012-0470391E5): The s. 107(2.001) election can be applied on a property-by-property basis - for example, on a...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - 101-110 - Section 107 - Subsection 107(2.11) | 31 |
28 January 2003 Internal T.I. 2002-0175927 F - Choix de 107(2.001)
In finding that the election under s. 107(2.001) was invalid if made late, the Directorate listed various distinctions between that election and...
Subsection 107(2.002) - No rollover on election by a beneficiary
Administrative Policy
16 June 2014 STEP Roundtable, 2014-0526581C6 - STEP CRA Roundtable - June 2014 - Q18
As there is no prescribed form, how is the election made? CRA indicated that the beneficiary should include in a letter attached to beneficiary's...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - 101-110 - Section 107 - Subsection 107(2.001) | property-by-property, election procedure | 143 |
| Tax Topics - Income Tax Act - 101-110 - Section 107 - Subsection 107(2.11) | election procedure | 61 |
11 October 2013 External T.I. 2013-0496431E5 - Subsection 107(2.002) election
Subsection 107(2.002) lacks a prescribed form. For the taxation year in which the non-resident trust distributes property, the beneficiary should...
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.
Limitations of s. 107(2.002) election (pp. 303-4)
The effect of making an election under subsection 107(2.002) in respect of a distribution of a...
Subsection 107(2.01) - Distribution of principal residence
Administrative Policy
9 September 2013 External T.I. 2012-0464321E5 - Application of subsections 107(2) and 107(2.01)
A personal trust holds a principal residence of a specified beneficiary (as defined in subpara. (c.1)(ii) of the "principal residence" definition...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 54 - Principal Residence - Paragraph (c.1) | specified and non-specified beneficiaries | 158 |
17 August 2010 External T.I. 2010-0367371E5 F - Fin d'un usufruit - résidence principale
An individual purchased a housing unit for which he established a usufruct in favour of his parents. At all relevant times, the individual owned...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(3) | dissolution of s. 248(3) trust when the usufructuaries renounced their right of usufruct | 163 |
| Tax Topics - Income Tax Act - Section 54 - Principal Residence - Paragraph (a.1) | usufructuary parents were specified beneficiaries based on their inhabiting the housing unit | 287 |
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.
Use of s. 107(2.01) or (2.001) to address “inhabited” requirement in principal residence definition (pp. 305-6)
[S]ubsection 40(7) does not...
Subsection 107(2.1) - Other distributions
Administrative Policy
19 January 2017 External T.I. 2015-0576751E5 F - Trust, Disposition of depreciable property, Assumption
The correspondent also suggested that s. 13(7)(e) does not apply on a s. 107(2.1) distribution of property: although s. 107(2.1)(a) and (b)...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 13 - Subsection 13(7) - Paragraph 13(7)(e) | s. 13(7)(e) applicable to s. 107(2.1) distribution but not s. 104(5) deemed disposition | 300 |
| Tax Topics - Income Tax Act - 101-110 - Section 107 - Subsection 107(2) | s. 107(2) generally available where beneficiary assumes trust debt | 168 |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Personal Trust | non-commital as to whether assumption of debt could constitute tainting consideration | 183 |
| Tax Topics - Income Tax Act - Section 251 - Subsection 251(1) - Paragraph 251(1)(c) | trust cannot have a NAL relationship with itself | 41 |
13 April 2015 External T.I. 2012-0449141E5 F - Usufruct
A corporation sold the usufruct respecting a property to an arm’s length third party for use as a secondary residence, while retaining the bare...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 75 - Subsection 75(2) | 75(2) applies to termination of usufruct | 174 |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(3) | application of trust provisions to creation of usufruct | 95 |
2010 Ruling 2009-0330901R3 - Reorganization of XXXXXXXXXX
A unit trust (Trust 1), after selling units of a subsidiary LP to its parent (Subco) in consideration for a note, purchases for cancellation most...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 53 - Subsection 53(2) - Paragraph 53(2)(h) - Subparagraph 53(2)(h)(i.1) | no ACB reduction for capital gain distributed to Trust parent on repurchase of most Trust units notwithstanding parent amalgamation before Trust year end | 432 |
| Tax Topics - Income Tax Act - Section 80 - Subsection 80(1) - Forgiven Amount - Element B - Paragraph B(a) | no forgiven amount on transfer by unit trust to its parent of debt owing by parent | 35 |
26 June 2003 External T.I. 2003-0021595 F - Distribution of Corporate Property
An inter vivos trust that was a personal trust (the “Trust”), holding 600 shares of Xco (a CCPC with a bond portfolio) with a nominal ACB and...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 84 - Subsection 84(2) | s. 84(2) inapplicable to s. 107(2.1) wind-up of trust holding a Portfolioco followed by an inter vivos pipeline transaction re Portfolioco | 323 |
| Tax Topics - Income Tax Act - Section 55 - Subsection 55(1) - Safe-Income Determination Time | s. 107(2.1) wind-up of trust holding a Portfolioco would trigger a safe-income determination time if with a view to an inter vivos pipeline transaction with a s. 88(2) wind-up of Portfolioco | 475 |
21 February 2002 External T.I. 2001-0105725 F - Modification à 107(2.1)
Can a distribution of property to which ss. 107(2.1)(a) and (b) apply give rise to a capital loss to the trust or beneficiary? CCRA...
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 106 - Subsection 106(3) | no income on redemption of income interest in spousal trust for cash | 116 |
1 April 1993 T.I. (Tax Window, No. 29, p. 20, ¶2461)
Where a member of an agency co-operative receives her proportionate share of machinery of the co-op on withdrawal therefrom, the rules in s....
4 February 1992 External T.I. 7-901929 - Tax Window, No. 16, p. 5, ¶1728
S.107(2.1) acts in concert with s. 52(6) to ensure that distributions of income and taxable capital gains retain their identity as income for tax...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 52 - Subsection 52(6) | 71 |
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.
Exclusions for capital and income distributions and application of FX gains thereto (p. 306, 308)
[A]lthough these amounts are excluded from the...
Goodman, "The Tax Treatment of Commercial Trusts", 1989 Canadian Tax Journal, July-August issue, p. 1053
Hayhurst, "Transactions in Income and Capital Interests in Trusts", 1988 Conference Report, c. 38
An example is given showing that a commercial trust and a beneficiary are subject to double taxation in a similar way to a corporation and its...
Subsection 107(2.11) - Gains not distributed to beneficiaries
Administrative Policy
16 June 2014 STEP Roundtable, 2014-0526581C6 - STEP CRA Roundtable - June 2014 - Q18
As there is no prescribed form, how is the election made? CRA indicated that the trust should include in a letter attached to the T3 Return: a...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - 101-110 - Section 107 - Subsection 107(2.001) | property-by-property, election procedure | 143 |
| Tax Topics - Income Tax Act - 101-110 - Section 107 - Subsection 107(2.002) | election procedure, gain if election | 226 |
11 July 2013 External T.I. 2012-0471061E5 - Subsection 107(2.001) election
CRA sets out, inter alia, the information that CRA requires for a s. 107(2.11) election. A letter containing this information should be included...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - 101-110 - Section 107 - Subsection 107(2.001) | 125 |
24 June 2003 External T.I. 2003-0000695 - Capital distribution to n/r beneficiary
In the absence of the election, a distribution by a resident testamentary trust holding shares of a publicly traded corporation (that are not...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(6) | distribution of capital property with accrued gain entails distribution of that gain | 205 |
| Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(24) | distribution of property with accrued gain treated as distribution of the taxable capital gain thereby realized | 178 |
21 February 2002 External T.I. 2001-0105715 F - Choix prévu à 107(2.11)
Regarding the scope of the election under s. 107(2.11), CCRA stated:
[W]here the election provided for in that provision is made in respect of a...
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.
Effect of s. 107(2.11) election (p. 314)
[A]ccordingly, in the absence of an election under subsection 107(2.11), the portion of the trust's...
Subsection 107(3) - Application of subsection (3.1)
Articles
Mitchell, Sherman, "SIFT Update - Conversions and Normal Growth", Corporate Finance, 2009, p. 1678.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 85.1 - Subsection 85.1(7) | 0 | |
| Tax Topics - Income Tax Act - Section 88.1 - Subsection 88.1(2) | 0 |
Subsection 107(4)
Administrative Policy
7 October 2020 APFF Roundtable Q. 5, 2020-0852171C6 F - Usufruct of a principal residence
A housing unit is subject to a usufruct created by the Quebec will of Mr. X, with Mr. X’s surviving spouse (Ms. X) being the usufructuary, and...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 54 - Principal Residence - Paragraph (c.1) | a deemed s. 248(3) testamentary usufruct trust might access the principal residence exemption on the spousal usufructuary’s death or on her surrendering her interest | 409 |
| Tax Topics - Income Tax Act - Section 70 - Subsection 70(6) - Paragraph 70(6)(b) - Subparagraph 70(6)(b)(ii) | s. 70(6)(b)(ii) not satisfied where residence of deceased passes to a usufruct for his surviving spouse for a fixed term of years | 218 |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(3) | application of s. 248(3) to usufruct created by will and terminated by death of usufructuary or surrender by her, or assignment or death by bare owner | 286 |
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 106 - Subsection 106(2) | s. 106(2) engaged where income interest renounced in favour of capital beneficiary, but not where extinguishment on death | 174 |
Subsection 107(4.1) - Where subsection 75(2) applicable to trust
Administrative Policy
2016 Ruling 2016-0635051R3 - rollout property to beneficiary non-resident trust
CRA ruled that the s. 107(2) rollover applied (and s. 245(2) did not apply) to the distribution by a non-resident trust, to which s. 94(8.2) (or...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - 101-110 - Section 107 - Subsection 107(2) | s. 107(2) rollout of taxable Canadian property by a non-resident former s. 75(2) trust to its corporate beneficiary | 412 |
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) - Subparagraph 20(1)(c)(ii) | secured and intergroup debt assumed on s. 107(2) rollout of property qualified under s. 20(1)(c)(ii) | 89 |
12 May 2016 External T.I. 2014-0552341E5 - Subsection 107(4.1)
S. 75(2) applied to a personal trust respecting a gold coin that had been settled on it by one of the capital beneficiaries. The Trust also used...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - 101-110 - Section 107 - Subsection 107(2) | tainting effect of one 75(2) property | 84 |
3 June 2011 STEPs Roundtable Q. 2, 2011-0401831C6 - 2011 STEP Conference-Q2-Trusts & Principal Res.
where a cottage is contributed to an inter vivos trust by a Canadian-resident individual (B) who is one of the beneficiaries, then the s. 107(2)...
22 April 2002 External T.I. 2002-0117135 F - Appl. de 107.4(1)a) à une fiducie du CcQ
A transferor transfers ownership of property to a Quebec personal trust of which he is a beneficiary. CCRA then noted that a distribution of that...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - 101-110 - Section 107.4 - Subsection 107.4(1) - Paragraph 107.4(1)(a) | s. 107.4(1)(a) applicable on transfer by individual to Quebec trust of which he is a the sole beneficiary | 140 |
7 August 1992 T.I. 921506 (May 1993 Access Letter, p. 197, ¶C56-227; Tax Window, No. 23, p. 18, ¶2126)
S.107(4.1) does not apply where a trust distributes property back to the settlor.
Where there are identical properties some of which were...
22 July 1992, T.I. 920736 (March 1993 Access Letter, p. 71, ¶C56-219)
S.75(2) can be considered to be applicable even if there has been no income attribution by the trust to the settlor under that provision.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 75 - Subsection 75(2) | 62 |
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.
Broad scope accorded by CRA to s. 107(4.1) (pp. 324-6)
The CRA has consistently taken the position that the application of subsection 107(4.1) is...
Paragraph 107(4.1)(b)
Administrative Policy
17 November 2005 External T.I. 2005-0118181E5 F - Signification "was applicable" vs "s'est appliqué"
An individual settled a trust with a gold bar, which it will hold until its winding-up. Such settlor is a contingent beneficiary (i.e., will...
18 July 2003 External T.I. 2002-0162985 F - Renonciation et bénéficiaire
A holding company owned by the parents transfer shares of an operating company to a family trust (Trust A) with the parents and children as...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 75 - Subsection 75(2) | renunciation by transferor of capital interest (but not of income interest) may avoid s. 75(2)(a)(i) if not done in advance of transfer | 133 |
Paragraph 107(4.1)(c)
Administrative Policy
21 March 2012 External T.I. 2011-0423141E5 F - Application du paragraphe 107(4.1)
A trust which was settled with $100 uses $1 million borrowed from an arm’s length lender to acquire a commercial rental property. Would s....
Subsection 107(5) - Distribution to non-resident
Administrative Policy
26 November 2020 STEP Roundtable Q. 12, 2020-0839981C6 - 21 year planning, 107(5) and TCP
A Canadian resident discretionary family trust (the “Trust”) holds taxable Canadian property (e.g., shares of a Canadian realty company) not...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) | s. 107(2) rollout by Canadian discretionary trust to a NR-owned Canadian corporate beneficiary appears abusive | 206 |
8 June 2018 Internal T.I. 2017-0683021I7 - Assignment of capital interest in a trust
As a discretionary irrevocable personal family trust, which had non-resident beneficiaries (Y and Y’s spouse (Z)), was approaching the 21-year...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(13) | purported drop-down of trust interests to an excluded beneficiary resulted in s. 104(13) inclusions to transferors | 343 |
| Tax Topics - Income Tax Act - Section 56 - Subsection 56(2) | potential application of s. 56(2) to income distribution to non-qualifying transferee of trust interest | 203 |
| Tax Topics - Income Tax Act - 101-110 - Section 105 - Subsection 105(1) | potential application of s. 105(1) to income distribution to non-qualifying transferee of trust interest | 273 |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(25) - Paragraph 248(25)(a) | para. (a) refers to beneficiary in ordinary sense - and does not include assignee | 62 |
21 November 2017 CTF Roundtable Q. 1, 2017-0724301C6 - 21 year planning & NR beneficiary
The beneficiaries of a Canadian resident discretionary family trust (the “Trust”) are individuals who are intended to receive the Trust’s...
4 January 2013 External T.I. 2012-0442741E5 - Distribution from a NR trust to a NR beneficiary
After being referred to proposed amendments to s. 107(5) to be effective for distributions made after February 27, 2004, CRA stated:
we agree with...
ATR-70, 21 March 1996 "Distribution of Taxable Canadian Property by a Trust to a Non-Resident"
The distribution by a non-resident personal trust of shares of a public corporation was not subject to s. 107(5) because the shares were deemed,...
Commentary
The following example illustrates the operation of s. 107(2.1).
Example
Bidco, which is a taxable Canadian corporation that recently acquired all...