I-3 - Taxation Act

Section 597.0.14 Disposition versions

2015-12-04

597.0.14. Where at a specified time in respect of a trust for a taxation year of the trust (in this section referred to as the “trust’s year”), there is an electing contributor in respect of the trust, the following rules apply:

(a)  the electing contributor is required to include in computing income for the contributor’s taxation year (in this section referred to as the “contributor’s year”) in which the trust’s year ends, the amount determined by the formula

A/B × (C - D);

(b)  subject to subparagraph c, the amount, if any, required to be included in the electing contributor’s income, in accordance with subparagraph a, for the contributor’s year is deemed to be income from property from a source in Canada;

(c)  for the purposes of this subparagraph, subparagraph d and sections 772.2 to 772.13, an amount in respect of the trust’s income for the trust’s year from a source in a foreign country is deemed to be income of the electing contributor for the contributor’s year from that source if the amount is deemed to be such income of the contributor for the purposes of the Income Tax Act (R.S.C. 1985, c. 1, (5th Suppl.)) under paragraph c of subsection 16 of section 94 of that Act;

(d)  for the purposes of this subparagraph and sections 772.2 to 772.13, the electing contributor is deemed to have paid to the government of a foreign country or of a political subdivision of such a country, as business-income tax or non-business-income tax, as the case may be, for the contributor’s year in respect of a particular source in that country, an amount equal to the amount determined by the formula

E × F/G;

(e)  in applying section 146.1 and sections 772.2 to 772.13 in respect of the trust’s year there must be deducted

i.  in computing the trust’s income from a particular source for the trust’s year the aggregate of all amounts each of which is an amount that, in accordance with subparagraph c, is deemed to be income from the particular source of the electing contributor for the contributor’s year, and

ii.  in computing the business-income tax or non-business-income tax paid by the trust for the trust’s year in respect of a particular source the aggregate of all amounts in respect of that source each of which is an amount that, in accordance with subparagraph d, is deemed to be paid by the electing contributor as business-income tax or non-business-income tax in respect of the particular source;

(f)  in computing the trust’s income for the trust’s year the trust may deduct an amount that does not exceed the amount included by the electing contributor, under subparagraph a, in computing the electing contributor’s income for the contributor’s year; and

(g)  where before the specified time the electing contributor made a contribution to the trust as part of a series of transactions in which another person made the same contribution, in applying subparagraphs a to f in respect of the electing contributor and the other person, the other person is deemed not to be a joint contributor in respect of the contribution if the other person is deemed not to be a joint contributor in respect of that contribution for the purposes of the Income Tax Act under paragraph g of subsection 16 of section 94 of that Act.

In the formulas in the first paragraph,

(a)  A is the aggregate of all amounts each of which is

i.  where at or before the specified time the electing contributor has made a contribution to the trust and is not a joint contributor in respect of the trust and the contribution, the amount of the contribution, or

ii.  where at or before the specified time the electing contributor has made a contribution to the trust and is a joint contributor in respect of the trust and the contribution, the quotient obtained when the amount of the contribution is divided by the number of joint contributors in respect of the contribution;

(b)  B is the aggregate of all amounts each of which is the amount that would be determined in accordance with subparagraph a for each resident contributor, or connected contributor, to the trust at the specified time if all of those contributors were electing contributors in respect of the trust;

(c)  C is the trust’s income, computed without reference to subparagraph f of the first paragraph, for the trust’s year;

(d)  D is the amount deducted by the trust under sections 727 to 737 in computing its taxable income for the trust’s year;

(e)  E is the amount that, in the absence of subparagraph i of subparagraph e of the first paragraph, would be the business-income tax or non-business-income tax, as the case may be, paid by the trust to the government of a foreign country or of a political subdivision of such a country in respect of the particular source referred to in subparagraph d of the first paragraph for the trust’s year;

(f)  F is the aggregate of all amounts each of which is an amount deemed under subparagraph c of the first paragraph to be an income of the electing contributor for the contributor’s year from the particular source referred to in subparagraph d of the first paragraph; and

(g)  G is the trust’s income for the trust’s year from the particular source referred to in subparagraph d of the first paragraph.

In this section, “business-income tax” and “non-business-income tax” have the meaning assigned by section 772.2.

2015, c. 36, s. 29.