Muzich Family Trust v. MNR, 93 DTC 314 (TCC)
A purported preferred beneficiary election that was filed nine days after the deadline in Regulation 2800(2), that was not signed by any trustee or beneficiary, that did not disclose the computation of the preferred beneficiaries' shares in the accumulating income and that did not disclose any information concerning the provisions of the trust and its administration, was not valid. Mogan J. stated (p. 316) that:
"The manner of filing and election under subsection 104(14) of the Act is substantive and not merely procedural".
90 C.R. - Q27
When the preferred beneficiaries is a minor, RC accepts a preferred beneficiary election that is signed on behalf of the minor by the legal guardian, who in most cases is the minor's parent.
84 C.R. - Q.31
Where the taxpayer is an infant, the appropriate signature will be that of the person who can legally bind the infant.
84 C.R. - Q.32
Where the preferred beneficiary is a Quebec minor for whom no tutor has been appointed, a trustee who is legally empowered to do so may file the election.
81 C.R. - Q.2
A preferred beneficiary election will not be accepted in the situation where the trust does not provide the legal authority to actually vest such income in the particular preferred beneficiary.
87 C.R. - Q.86
The election need not accompany a T3 return, and is valid even though the T3 return is late-filed.
30 June 1994 T.I. 941236 (C.T.O. "Preferred Beneficiary Election & Capital Gains")
Respecting a situation in which the beneficiaries of a trust established by a father were the grandchildren, children and the mother, and income could be distributed at the discretion of the trustees to the mother, the children or the grandchildren in amounts decided by the trustees, RC noted that where Regulation 2800(3)(e) applies, the discretionary share of the spouse (i.e., mother) is 100% of the accumulating income (which would include taxable capital gains) regardless of the fact that there are other income and capital beneficiaries, and that she is not a capital beneficiary.
16 June 1992 External T.I. 5-920008 -
The number to be used in a calculation under s. 2800(3)(f) would include any preferred beneficiary alive at the end of the taxation year including beneficiaries whose rights are contingent on the death of another preferred beneficiary, or contingent capital beneficiaries where the trust deed did not specify that taxable capital gains will be considered income for trust purposes.
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|Tax Topics - Income Tax Act - Section 75 - Subsection 75(2)||21|
28 November 1990 T.I. (Tax Window, Prelim. No. 3, p. 10, ¶1111)
In a discretionary trust in which a son of the settlor is the capital beneficiary and four grandchildren are income beneficiaries, any income not allocated to the grandchildren within three months of the end of the year is added to the capital of the trust, and the trustee did not provide that capital gains are to be considered income for purposes of determining the entitlement of the income beneficiaries, then the capital beneficiary will be entitled to share in the accumulating income of the trust if there is a capital gain, with the result that in any year in which there is no capital gain a preferred beneficiary election can be made only for 4/5 of the trust's accumulating income.