Subsection 132(1) - Capital gains refund to mutual fund trust
Administrative Policy
7 March 1995 External T.I. 9504095 - MUTUAL FUND TRUSTS - CAPITAL GAINS REFUND FOR QUEBEC
The capital gains refund to mutual fund trusts under s. 132(1) does not reduce the Quebec refundable abatement provided under s. 120(2).
21 September 1992 T.I. (Tax Window), No. 24, p. 20 ¶2183)
The purchase and redemption of units of a mutual fund trust by an investment dealer for the sole purpose of increasing the capital gains refund to...
Articles
Hugh Chasmar, "Mutual Fund 'Switch Funds'", Taxation of Corporate Reorganizations, Canadian Tax Journal, Vol. 46, No. 1, 1998, p. 172.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 131 - Subsection 131(1) | 37 | |
| Tax Topics - Income Tax Act - Section 51 - Subsection 51(1) | 37 |
Subsection 132(2)
Administrative Policy
21 February 2002 External T.I. 2001-0105735 F - Intérêts sur remboursement - gains en capital
Before confirming that a mutual fund trust which was entitled to a capital gains refund equal to its tax payable for a year nonetheless could be...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 132 - Subsection 132(2.1) | MFT incurs interest charges if it waits for its capital gains refund to be applied to its Pt. I tax | 214 |
Subsection 132(2.1)
Administrative Policy
21 February 2002 External T.I. 2001-0105735 F - Intérêts sur remboursement - gains en capital
In confirming that a mutual fund trust which was entitled to a capital gains refund equal to its tax payable for a year nonetheless would be...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 132 - Subsection 132(2) | MFT obligation to pay tax, if unpaid, will be reduced by application of capital gains refund | 132 |
Subsection 132(4) - Definitions
Capital Gains Redemption
Administrative Policy
2002 Ruling 2001-009107A - Mutual Fund Trust-Capital Gains
The trust agreement respecting a mutual fund trust is amended to provide that where units of the fund are redeemed, a portion of the redemption...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(6) | distribution of capital gains on unit redemptions | 132 |
Articles
Josh Jones, Jeffrey Love, "Recent Developments in Asset Management", draft 2023 CTF Annual Conference paper
Potential to not receive a full refund (p. 13)
- Where the amount of an MFT’s realized capital gains throughout a taxation year divided by the...
Brian C. Weatherby, "Mutual Funds", 1985 Conference Report, C. 45
Overview of mechanism, p. 43-14
As a result of the capital gains redemptions provision, a mutual fund trust becomes entitled to receive a refund...
Refundable Capital Gains Tax On Hand
Administrative Policy
7 August 2013 Internal T.I. 2013-0497961I7 - Refundable Capital Gains Tax On Hand
Respecting what happens to the balance of the "Refundable Capital Gains Tax On Hand" ("RCGTOH") of a mutual fund trust ("MFT") when the MFT failed...
Articles
Hugh G. Chasmar, Suzanie M.L. Chua, "Reorganizations of Investment Funds", 2001 Canadian Tax Journal, Issue No. 2
In practice, generally no excess to include in RCGTOH
The distributions of a mutual fund trust or mutual fund corporation are generally calculated...
Subsection 132(5.3)
Paragraph 132(5.3)(a)
Articles
Josh Jones, Jeffrey Love, "Recent Developments in Asset Management", draft 2023 CTF Annual Conference paper
Abuse addressed by s. 132(5.3)(a), and response in practice (pp. 6-8)
- S. 132(5.3)(a) addressed in part the potential for abuse arising from a...
Paragraph 132(5.3)(b)
Articles
Josh Jones, Jeffrey Love, "Recent Developments in Asset Management", draft 2023 CTF Annual Conference paper
Allocation-to-redeemer rulings (p. 12)
- The allocation-to-redeemer methodology for allocating capital gains to a redeemed unitholder is supported...
Subsection 132(5.31)
Articles
Josh Jones, Jeffrey Love, "Recent Developments in Asset Management", draft 2023 CTF Annual Conference paper
Background to s. 132(5.31) (p. 16)
- S. 132(5.3)(b) produced an inappropriate result for exchange-traded funds (ETFs) where a market maker, in...
Subsection 132(6)
Commentary
In order for a unit trust to qualify as a mutual fund trust, its only undertaking must be the investing of its funds in property or a real estate...
See Also
Ontario Hydro v. Ontario (Labour Relations Board), [1993] 3 S.C.R. 327
The regulation of labour relations was found by the majority to be an integral part of Ontario Hydro's nuclear power generating enterprise, which...
Lount Corp. v. A.-G. of Canada (1985), 19 DLR (4th) 304 (FCA)
The owners and operators of a Holiday Inn in Winnipeg used television receiving equipment located on the premises to transmit programming to...
Northern Telecom v. Communications Workers, [1980] 1 S.C.R. 115
The jurisdiction of the Canada Labour Relations Board to determine whether the Communications Workers of Canada could be certified as bargaining...
Baytrust Holdings Ltd. v. IRC, [1971] 1 WLR 1333 (Ch D)
On of the taxpayers ("Nitralloy"), which was a subsidiary of holding company ("Thos. Firth") which carried on a steel manufacturing business...
Town of Beauport v. Quebec Railway, Light & Power Co. / Quebec Railway, Light & Power Co. v. Town of Beauport, [1945] S.C.R. 16
A declaration in the 1895 federal incorporating Act of the appellant that its undertaking was a work for the general advantage of Canada (thereby...
Administrative Policy
24 March 2015 External T.I. 2012-0470991E5 F - Mutual fund trust
Would a mutual fund trust that was a "day trader" using margin have an investment undertaking? CRA stated (TaxInterpretations translation):
[W]e...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(21) | flow-through to unitholder of capital gain designated by MFT | 183 |
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(a) - Income-Producing Purpose | s. 39(4) presumption establishing expense non-deductibility | 64 |
| Tax Topics - Income Tax Act - Section 39 - Subsection 39(5) - Paragraph 39(5)(a) | election can be made by leveraged day-trading MFT | 183 |
| Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Shares | capital v. income character determined at trust level | 94 |
2013 Ruling 2013-0492731R3 - qualifying disposition -mutual fund trust
The elimination of the sub trust of an open-end listed mutual fund trust (the "Fund") was to be accomplished by the subtrust transferring its...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - 101-110 - Section 107.4 - Subsection 107.4(1) | elimination of REIT sub trust through s. 107.4 transfer to new "in house" MFT and s. 132.2 merger of MFT into REIT | 644 |
| Tax Topics - Income Tax Act - Section 132.2 - Subsection 132.2(1) - Qualifying Exchange | elimination of REIT subtrust through s. 107.4 transfer to new "in house" MFT and s. 132.2 merger of MFT into REIT | 97 |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition | no disposition on MFT units consolidation back to the previous number, occurring outside a Plan of Arrangement | 107 |
2011 Ruling 2010-0386081R3 - Guarantee provided by MFT to sub-partnership
The taxpayer is a listed mutual fund trust which holds all of the non-exchangeable LP units in a subsidiary LP which, in turn, holds interests in...
2008 Ruling 2008-0273501R3 - Guarantee by a MFT
A mutual fund trust holds all the units of a subsidary trust which in turn holds the share of the general partner and the Class A units of a...
2008 Ruling 2008-0271251R3 - Arrangements related to dealer's commission
A non-resident third party which does not have any office in Canada (the "Arranger") agrees to fund the payment of dealer commissions for sales of...
2007 Ruling 2007-0226891R3 - MFT issues guarantee notes issuedby whollyownedLP
A guarantee, for no fee, by a mutual fund trust of notes of a limited partnership held by a subsidiary trust of the mutual fund trust would not...
Income Tax Technical News, No. 34, 27 April 2006 under "Delaware Revised Uniform Partnership Act"
CRA has accepted that a trust was not engaged in a separate non-qualifying undertaking in situations where trustees did not form the majority of...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 96 | Delaware LPs with separate personality are not corps | 21 |
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) | 160 | |
| Tax Topics - General Concepts - Transitional Provisions and Policies | 0 | |
| Tax Topics - Income Tax Act - Section 55 - Subsection 55(2) | 7 | |
| Tax Topics - Treaties - Income Tax Conventions - Article 5 | 17 | |
| Tax Topics - Income Tax Act - Section 132 - Subsection 132(6) - Paragraph 132(6)(b) - Subparagraph 132(6)(b)(i) | guarantee must be highly integrated with trust’s core investment undertaking/limited overlap with subsidiaries' boards | 434 |
2006 Ruling 2004-0097111R3 - REIT providing a guarantee on co-owned property
A REIT through an subsidiary trust is the limited partner of a partnership that directly and indirectly owns and leases real property, and whose...
2006 Ruling 2006-0191881R3 - Witholding Tax Exemption
Ruling that a guarantee given by an income fund of a loan made to an indirect "Finco" subsidiary of the Fund and of a loan made on similar terms...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 212 - Subsection 212(1) - Subparagraph 212(1)(b)(vii) | 141 | |
| Tax Topics - Income Tax Act - Section 15 - Subsection 15(2.3) | 47 |
30 August 2004 External T.I. 2004-006085
In indicating that a trust which guaranteed (a) the obligations of a subtrust under the subtrust's guarantee of a borrowing of a partnership of...
2004 Ruling 2003-005422
Ruling that the giving of a guarantee by an open-ended unit trust that is a REIT on mortgages held on properties beneficially owned by an...
15 April 2003 External T.I. 2002-0167675 - Debt guaranteed by a Mutual Fund Trust
A mutual fund trust that is not engaged in the business of lending money or guaranteeing loans will not violate the requirements of s. 108(2)(b)...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - 101-110 - Section 108 - Subsection 108(2) - Paragraph 108(2)(b) | guarantee | 61 |
2000 Ruling 2000-0007513 - Index Tracking Mutual Fund
Ruling that the lending of securities by a unit trust under a securities lending arrangement would not by itself cause its undertaking to cease to...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - 101-110 - Section 108 - Subsection 108(2) - Paragraph 108(2)(a) | potential suspension of redemption right did not disqualify | 69 |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition | no disposition on consolidation of units | 72 |
1999 Ruling 991832 [investment undertaking in 2-tier structure]
The only assets of an inter vivos trust (the "MFT") are (as to a cost of 85%) interest-bearing promissory notes ("First Notes") with a term of 25...
2 July 1998 External T.I. 9728675 - MUTUAL FUND TRUSTS
The requirement that its undertaking be the investing of its funds would not be violated as a result of short selling, writing naked call option,...
16 June 1997 External T.I. 9700175 - INVESTING OF FUNDS - 100%
The requirement that its undertaking be the investing of funds will be satisfied where a trust's only activity is purchasing and holding all the...
31 March 1994 Administrative Letter 9337012 - MUTUAL FUND TRUST INVESTING IN FUTURES - INCOME ACCOUNT
Although the acquisition of commodity futures contract by a mutual fund trust will be considered to be investing for purposes of s. 132(6)(b), it...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 132 - Subsection 132(6) | investing undertaking can be on income account | 40 |
| Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Futures/Forwards/Hedges | 61 |
1996 Ruling 960994 [futures and forwards]
An activity of entering into exchange-traded futures contracts and forward purchase contracts would constitute "the investing of its funds in...
5 January 1995 Income Tax Technical News, No. 6
Respecting the requirements in ss.131(8)(b) and 132(6)(b) that the only undertaking of the corporation or trust be the investing of its funds and...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 62 | 19 | |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Fiscal Period | 52 | |
| Tax Topics - Income Tax Act - Section 6 - Subsection 6(1) - Paragraph 6(1)(a) | 67 |
27 October 1994 Internal T.I. 9421586 - REGISTERED INVESTMENT AND STOCK INDEX FUTURES CONTRACT
The acquisition of a stock index futures contract would constitute the investing of funds.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Regulations - Regulation 4900 - Subsection 4900(1) - Paragraph 4900(1)(e) | 25 | |
| Tax Topics - Income Tax Act - Section 204.6 - Subsection 204.6(1) | no tax under s. 204.6 if qualify as an MFT/tax for quasi-MFT re futures contract based on transaction costs | 139 |
22 June 1994 External T.I. 9413475 - COMMODITY FUTURES CONTRACTS
Entering into a commodity futures contract constitutes the investing of funds.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 206 - Paragraph 206(1)(c) | 59 |
31 March 1994 Administrative Letter 9337012 - MUTUAL FUND TRUST INVESTING IN FUTURES - INCOME ACCOUNT
Transactions with respect to commodity futures contracts by a mutual fund trust are considered to be investing notwithstanding that the resulting...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 132 - Subsection 132(6) | commodity futures are investing but may be on income account | 59 |
| Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Futures/Forwards/Hedges | 61 |
8 March 1991 T.I. (Tax Window, No. 2, p. 25, ¶1189)
The disposition by a mutual fund corporation of all its investments, the distribution of all its assets and its winding-up will not disqualify the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 131 - Subsection 131(8) | 35 |
25 January 1991 T.I. (Tax Window, Prelim. No. 3, p. 29, ¶1107)
A mutual fund trust is not precluded from investing in mortgages, or from acquiring real property on the security of a mortgage, provided that its...
Articles
D. Cannon, "Income Trusts: The Interest (Deduction) Continues - A Review of Westshore Terminals Income Fund and Superior Propane Income Fund", 1997 Corporate Management Tax Conference Report, c. 4.
D. Williamson, "Real Estate Investment Trust", 1997 Corporate Management Tax Conference Report, c. 5.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 149 - Subsection 149(1) - Paragraph 149(1)(o.2) - Subparagraph 149(1)(o.2)(ii) | 0 |
David M. Williamson, "Recent Transactions - Income Fund Trust", Current Issues in Resource Taxation, Canadian Tax Foundation, 1997, p. 1D:10.
J. Brussa, "Royalty Trusts, Income Trusts and the Search for Yield", 1996 Conference Report 19:9-10.
Weatherby, "Mutual Funds", 1985 Conference Report, C. 43.
Paragraph 132(6)(b)
Administrative Policy
15 September 2020 External T.I. 2020-0854471E5 - Pension Corporation - Renting Furnished Apartment
S. 149(1)(o.2)(ii)(A)(II) permits a s. 149(1)(o.2) (pension-group) corporation to invest its funds in “a partnership that limits its activities...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 149 - Subsection 149(1) - Paragraph 149(1)(o.2) - Subparagraph 149(1)(o.2)(ii) - Clause 149(1)(o.2)(ii)(A) | the purchase and rental of furniture in a furnished apartment is assimilated to the apartment rental activity | 203 |
Subparagraph 132(6)(b)(i)
Administrative Policy
Income Tax Technical News, No. 34, 27 April 2006 under "Delaware Revised Uniform Partnership Act"
Would an income trust (that is not engaged in the business of lending money or guaranteeing loans) still satisfy s. 132(6)(b)(i) after having...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 96 | Delaware LPs with separate personality are not corps | 21 |
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) | 160 | |
| Tax Topics - Income Tax Act - Section 132 - Subsection 132(6) | majority of subsidiary board not to be MFT trustees/guarantees re non-wholly owned subs scrutinized | 105 |
| Tax Topics - General Concepts - Transitional Provisions and Policies | 0 | |
| Tax Topics - Income Tax Act - Section 55 - Subsection 55(2) | 7 | |
| Tax Topics - Treaties - Income Tax Conventions - Article 5 | 17 |
6 April 2004 External T.I. 2004-0068221E5 - Debt Guaranteed by a Mutual Fund Trust
A mutual fund trust (the "Fund") wholly-owns a second unit trust (the "Trust"), which owns 70% of the limited partner interest in a limited...
2004 Ruling 2003-0054221R3 - "investing of funds" and guarantees
The REIT wholly owns a unit trust (the “Trust”) which wholly-owns directly and indirectly a real estate limited partnership through holding...
Subparagraph 132(6)(b)(ii)
Administrative Policy
29 July 2019 External T.I. 2018-0784701E5 - Rent from real/immovable properties - furnishings
All of the rent generated from a rental unit that was fully-furnished with “furnishings typically … found in a residence” would qualify as...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 122.1 - Subsection 122.1(1) - Rent from Real or Immovable Properties | rent for fully-furnished apartments is all rent | 129 |
Paragraph 132(6)(c)
Administrative Policy
8 June 2020 External T.I. 2019-0822901E5 - Mutual Fund Trusts
Where an individual, her TFSA, her RRSP and her spouse’s RRSP (to which she had contributed) each held a block of units, they would be...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Regulations - Regulation 4801 - Paragraph 4801(b) | an individual and their registered plans can constitute multiple beneficiaries under the 150 MFT beneficiary test | 159 |
Subsection 132(6.1) - Election to be mutual fund
Administrative Policy
29 March 2001 External T.I. 2001-0071825 F - Application de 132(6) et 132(6.1)
A trust which was formed in September 2000, had its first year end on December 15, 2000 and did not satisfy the unit distribution requirements in...
Subsection 132(7) - Idem [Retention of status as mutual fund trust]
See Also
Covert et al. v. Minister of Finance of Nova Scotia, [1980] CTC 437, [1980] 2 S.C.R. 774
The testator left the residue of his estate to an Alberta corporation which was a wholly-owned subsidiary of another Alberta corporation. The...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Statutory Interpretation - Drafting Style | 82 |
Administrative Policy
2006 Ruling 2006-0174351R3 - re-organization of income trust to royalty trust
Ruling that a net profits interest granted by a partnership to a mutual fund trust would not be taxable Canadian property, so that s. 132(7) would...
23 November 2004 External T.I. 2004-0056271E5 - income trusts as qualified investments
Given that taxable Canadian property can include shares, units and partnership interests in some circumstances, oil and gas income trusts may...
17 September 2004 External T.I. 2003-004888
In response to a submission that a trust should have a reasonable period of time to take steps to correct a situation giving rise to more than 50%...
28 November 2003 External T.I. 2003-003097
General discussion of consequences of an income or royalty trust not satisfying the 50% test in s. 132(7).
20 November 2002 External T.I. 2002-0153635 - Exchange rights iss
Non-residents who had sold a business to a Canadian corporation owned by a unit trust in consideration for notes and shares of the corporation had...
Commentary
The capital gains refund rules in s. 132(1) and following permit a mutual fund trust such as a REIT to retain rather than distribute part (or in...