Elie Roth, Tim Youdan, Chris Anderson, Kim Brown, "Classification of Trusts for Income Tax Purposes", Chapter 2 of Canadian Taxation of Trusts (Canadian Tax Foundation), 2016.
Numerical example of refundable tax (pp. 104-5)
Assume that a qualifying environmental trust has a single beneficiary in a taxation year and earns $1,000 of investment income in the year. The beneficiary is a corporation whose federal income tax, after taking into account subsection 107.3(1), is nil because of other deductions to which it is entitled. In this case, the $1,000 of investment income is treated as income of the trust for the purposes of part XII.4. The same $1,000 is treated as the corporations income. The qualifying environmental trust is subject to federal tax under part XII.4 in the amount of $150. The corporation is then considered to have paid $150 under subsection 127.41(3) on account of its tax payable under part I. Since no tax is payable by the corporation, the corporation should be entitled to an income tax refund of the full amount of part XII.4 tax paid by the trust ($150).