I-3 - Taxation Act

Section 796.4 Disposition versions

2021-06-02

796.4. Where a trust is an eligible trust at a particular time in a taxation year, the following rules apply:

(a)  in computing the trust’s income for the year, no deduction may be made under paragraph a of section 657 or section 657.1, except to the extent of the income of the trust for the year (determined without reference to that paragraph or section) that is paid in the year, provided that the trust is an eligible trust at the beginning of the following taxation year;

(b)  each property held by the trust that is an eligible debt or an eligible share is deemed to have a cost amount to the trust of nil;

(c)  if the trust disposes of a property, the following rules apply:

i.  subject to section 796.14, it is deemed to have disposed of the property for proceeds equal to the fair market value of the property immediately before the disposition,

ii.  the gain, if any, of the trust from the disposition is deemed not to be a capital gain and must be included in computing the trust’s income for the trust’s taxation year that includes the time of disposition, and

iii.  the loss, if any, of the trust from the disposition is deemed not to be a capital loss and must be deducted in computing the trust’s income for the trust’s taxation year that includes the time of disposition;

(d)  the trust is deemed not to be a

i.  personal trust,

ii.  unit trust,

iii.  trust prescribed for the purposes of section 688, or

iv.  trust any interest in which is an excluded right or interest for the purposes of Chapter I of Title I.1; and

(e)  subparagraph d of the second paragraph of section 248 does not apply in respect of eligible units in the trust.

2021, c. 14, s. 101.