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(ii) where that interest includes a right to
enforce payment of an amount by the
trust, the amount in respect of that right
that has been included in computing the
taxpayer's income for a taxation year
because of subsection 104(13);
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(3) Subsections (1) and (2) apply to the
2000 and subsequent taxation years.
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80. (1) The portion of paragraph
107(1)(a) of the Act before subparagraph (i)
is replaced by the following:
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(a) where the trust is a personal trust or a
prescribed trust, for the purpose of
computing the taxpayer's capital gain, if
any, from the disposition, the adjusted cost
base to the taxpayer of the interest or the
part of the interest, as the case may be,
immediately before the disposition is,
unless any part of the interest has ever been
acquired for consideration and, at the time
of the disposition, the trust is non-resident,
deemed to be the greater of
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(2) Paragraph 107(1)(b) of the Act is
repealed.
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(3) The portion of subsection 107(1) of the
Act after paragraph (d) is repealed.
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(4) Subsection 107(1.1) of the Act is
replaced by the following:
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| Cost of capital
interest in a
trust
|
(1.1) The cost to a taxpayer of a capital
interest of the taxpayer in a personal trust or a
prescribed trust is deemed to be,
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(a) where the taxpayer elected under
subsection 110.6(19) in respect of the
interest and the trust does not elect under
that subsection in respect of any property of
the trust, the taxpayer's cost of the interest
determined under paragraph 110.6(19)(a);
and
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(b) in any other case, nil, unless
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(i) any part of the interest was acquired by
the taxpayer from a person who was the
beneficiary in respect of the interest
immediately before that acquisition, or
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(ii) the cost of any part of the interest
would otherwise be determined not to be
nil under section 48 as it read in its
application before 1993 or under
paragraph 111(4)(e) or 128.1(1)(c) or
(4)(c).
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(5) The portion of subsection 107(2) of the
Act before paragraph (a) is replaced by the
following:
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| Distribution
by personal
trust
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(2) Subject to subsection (2.001), where at
any time a property of a personal trust or a
prescribed trust is distributed by the trust to a
taxpayer who was a beneficiary under the trust
in satisfaction of all or any part of the
taxpayer's capital interest in the trust,
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(6) The portion of subsection 107(2) of the
Act before paragraph (a), as enacted by
subsection (5), is replaced by the following:
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| Distribution
by personal
trust
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(2) Subject to subsections (2.001), (2.002)
and (4) to (5), where at any time a property of
a personal trust or a prescribed trust is
distributed by the trust to a taxpayer who was
a beneficiary under the trust and there is a
resulting disposition of all or any part of the
taxpayer's capital interest in the trust,
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(7) Paragraphs 107(2)(b) and (c) of the
Act are replaced by the following:
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(b) subject to subsection (2.2), the taxpayer
is deemed to have acquired the property at
a cost equal to the total of its cost amount to
the trust immediately before that time and
the specified percentage of the amount, if
any, by which
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(i) the adjusted cost base to the taxpayer
of the capital interest or part of it, as the
case may be, immediately before that
time (determined without reference to
paragraph (1)(a))
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(ii) the cost amount to the taxpayer of the
capital interest or part of it, as the case
may be, immediately before that time;
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(b.1) for the purpose of paragraph (b), the
specified percentage is,
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(i) where the property is capital property
(other than depreciable property), 100%,
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(ii) where the property is eligible capital
property in respect of a business of the
trust, 100%, and
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(iii) in any other case, 75%;
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(c) the taxpayer is deemed to have disposed
of all or part, as the case may be, of the
capital interest for proceeds equal to the
amount, if any, by which
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(i) the cost at which the taxpayer would
be deemed by paragraph (b) to have
acquired the property if the specified
percentage referred to in that paragraph
were 100%
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(ii) the total of all amounts each of which
is an eligible offset at that time of the
taxpayer in respect of the capital interest
or the part of it;
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(8) Subsection 107(2) of the Act is
amended by striking out the word ``and'' at
the end of paragraph (d) and by adding the
following after paragraph (d):
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(d.1) the property is deemed to be taxable
Canadian property of the taxpayer where
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(i) the taxpayer is non-resident at that
time,
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(ii) that time is before October 2, 1996,
and
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(iii) the property was deemed by
paragraph 51(1)(f), 85(1)(i) or
85.1(1)(a), subsection 87(4) or (5) or
paragraph 97(2)(c) to be taxable
Canadian property of the trust; and
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(9) The portion of subparagraph
107(2)(f)(ii) of the Act before the formula is
replaced by the following:
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(ii) for the purpose of determining after
that time the amount required by
paragraph 14(1)(b) to be included in
computing the taxpayer's income in
respect of any subsequent disposition of
property of the business, there shall be
added to the value otherwise determined
for Q in the definition ``cumulative
eligible capital'' in subsection 14(5) the
amount determined by the formula
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(10) Section 107 of the Act is amended by
adding the following after subsection (2):
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| No rollover
on election by
a trust
|
(2.001) Where a trust makes a distribution
of a property to a beneficiary of the trust in full
or partial satisfaction of the beneficiary's
capital interest in the trust and so elects in
prescribed form filed with the Minister with
the trust's return of income for its taxation
year in which the distribution occurred,
subsection (2) does not apply to the
distribution if
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(a) the trust is resident in Canada at the time
of the distribution;
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(b) the property is taxable Canadian
property; or
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(c) the property is capital property used in,
eligible capital property in respect of, or
property described in the inventory of, a
business carried on by the trust through a
permanent establishment (as defined by
regulation) in Canada immediately before
the time of the distribution.
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| No rollover
on election by
a beneficiary
|
(2.002) Where a non-resident trust makes a
distribution of a property (other than a
property described in paragraph (2.001)(b) or
(c)) to a beneficiary of the trust in full or partial
satisfaction of the beneficiary's capital
interest in the trust and the beneficiary makes
an election under this subsection in prescribed
form filed with the Minister with the
beneficiary's return of income for the
beneficiary's taxation year in which the
distribution occurred,
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(a) subsection (2) does not apply to the
distribution; and
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(b) for the purpose of subparagraph
(1)(a)(ii), the cost amount of the interest to
the beneficiary is deemed to be nil.
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(11) The portion of subsection 107(2.01)
of the Act before paragraph (a) is replaced
by the following:
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| Distribution
of principal
residence
|
(2.01) Where property that would, if a
personal trust had designated the property
under paragraph (c.1) of the definition
``principal residence'' in section 54, be a
principal residence (within the meaning of
that definition) of the trust for a taxation year,
is at any time (in this subsection referred to as
``that time'') distributed by the trust to a
taxpayer in circumstances in which subsection
(2) applies and the trust so elects in its return
of income for the taxation year that includes
that time,
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(12) Subsection 107(2.1) of the Act is
replaced by the following:
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| Other
distributions
|
(2.1) Where at any time a property of a trust
is distributed by the trust to a beneficiary
under the trust, there would, if this Act were
read without reference to paragraphs (h) and
(i) of the definition ``disposition'' in
subsection 248(1), be a resulting disposition
of all or any part of the beneficiary's capital
interest in the trust (which interest or part, as
the case may be, is in this subsection referred
to as the ``former interest'') and the rules in
subsection (2) and section 132.2 do not apply
in respect of the distribution,
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(a) the trust is deemed to have disposed of
the property for proceeds equal to its fair
market value at that time;
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(b) the beneficiary is deemed to have
acquired the property at a cost equal to the
proceeds determined under paragraph (a);
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(c) subject to paragraph (e), the
beneficiary's proceeds of disposition of the
portion of the former interest disposed of by
the beneficiary on the distribution are
deemed to be equal to the amount, if any, by
which
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(i) the proceeds determined under
paragraph (a) (other than the portion, if
any, of the proceeds that is a payment to
which paragraph (h) or (i) of the
definition ``disposition'' in subsection
248(1) applies)
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(ii) where the property is not a Canadian
resource property or foreign resource
property, the amount, if any, by which
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(A) the fair market value of the
property at that time
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(B) the cost amount to the trust of the
property immediately before that time,
and
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(C) the portion, if any, of the excess
that would be determined under this
subparagraph if this subparagraph
were read without reference to this
clause that represents a payment to
which paragraph (h) or (i) of the
definition ``disposition'' in subsection
248(1) applies, and
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(iii) all amounts each of which is an
eligible offset at that time of the taxpayer
in respect of the former interest;
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(d) notwithstanding paragraphs (a) to (c),
where the trust is non-resident at that time,
the property is not described in paragraph
(2.001)(b) or (c) and, if this Act were read
without reference to this paragraph, there
would be no income, loss, taxable capital
gain or allowable capital loss of a taxpayer
in respect of the property because of the
application of subsection 75(2) to the
disposition at that time of the property,
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(i) the trust is deemed to have disposed of
the property for proceeds equal to the
cost amount of the property,
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(ii) the beneficiary is deemed to have
acquired the property at a cost equal to
the fair market value of the property, and
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(iii) the beneficiary's proceeds of
disposition of the portion of the former
interest disposed of by the beneficiary on
the distribution are deemed to be equal to
the amount, if any, by which
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(A) the fair market value of the
property
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(B) the portion, if any, of the amount of
the distribution that is a payment to
which paragraph (h) or (i) of the
definition ``disposition'' in subsection
248(1) applies, and
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(C) all amounts each of which is an
eligible offset at that time of the
taxpayer in respect of the former
interest; and
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(e) where the trust is a mutual fund trust, the
distribution occurs in a taxation year of the
trust before its 2003 taxation year, the trust
has elected under subsection (2.11) in
respect of the year and the trust so elects in
respect of the distribution in prescribed
form filed with the trust's return of income
for the year,
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(i) this subsection shall be read without
reference to paragraph (c), and
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(ii) the beneficiary's proceeds of
disposition of the portion of the former
interest disposed of by the beneficiary on
the distribution are deemed to be equal to
the amount determined under paragraph
(a).
|
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| Gains not
distributed to
beneficiaries
|
(2.11) Where a trust makes one or more
distributions of property in a taxation year in
circumstances in which subsection (2.1)
applies (or, in the case of property distributed
after October 1, 1996 and before 2000, in
circumstances in which subsection (5)
applied)
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(a) where the trust is resident in Canada at
the time of each of those distributions and
has so elected in prescribed form filed with
the trust's return for the year or a preceding
taxation year, the income of the trust for the
year (determined without reference to
subsection 104(6)) shall, for the purposes of
subsections 104(6) and (13), be computed
without regard to all of those distributions
to non-resident persons (including a
partnership other than a Canadian
partnership); and
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(b) where the trust is resident in Canada at
the time of each of those distributions and
has so elected in prescribed form filed with
the trust's return for the year or a preceding
taxation year, the income of the trust for the
year (determined without reference to
subsection 104(6)) shall, for the purposes of
subsections 104(6) and (13), be computed
without regard to all of those distributions.
|
|
| Election -
subsection
(2.11)
|
(2.12) An election made under subsection
(2.11) by a mutual fund trust is deemed, for the
trust's 2003 and subsequent taxation years, not
to have been made if
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(a) the election is made after December 20,
2000 and applies to any taxation year that
ends before 2003; and
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(b) the proceeds of disposition of a
beneficiary's interest in the trust have been
determined under paragraph (2.1)(e).
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(13) Subparagraph 107(2.2)(a)(ii) of the
Act is amended by replacing the reference
to the expression ``4/3 of'' with a reference
to the word ``twice''.
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(14) Subsection 107(3) of the Act is
repealed.
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(15) Subsection 107(4) of the Act is
replaced by the following:
|
|
| Trusts in
favour of
spouse,
common-law
partner or self
|
(4) Subsection (2.1) applies (and subsection
(2) does not apply) at any time to property
distributed to a beneficiary by a trust
described in paragraph 104(4)(a) where
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(a) the beneficiary is not
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(i) in the case of a post-1971 spousal or
common-law partner trust, the spouse or
common-law partner referred to in
paragraph 104(4)(a),
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(ii) in the case of an alter ego trust, the
taxpayer referred to in paragraph
104(4)(a), and
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(iii) in the case of a joint spousal or
common-law partner trust, the taxpayer,
spouse or common-law partner referred
to in paragraph 104(4)(a); and
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(b) a taxpayer, spouse or common-law
partner referred to in subparagraph (a)(i),
(ii) or (iii), as the case may be, is alive on the
day of the distribution.
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(16) The portion of subsection 107(4.1) of
the Act after paragraph (c) is replaced by
the following:
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|
subsection (2.1) applies (and subsection (2)
does not apply) in respect of the distribution.
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|
(17) Subsection 107(4.1) of the Act, as
enacted by subsection (16), is replaced by
the following:
|
|
| Where
subsection
75(2)
applicable to
trust
|
(4.1) Subsection (2.1) applies (and
subsection (2) does not apply) in respect of a
distribution of any property of a particular
personal trust or prescribed trust by the
particular trust to a taxpayer who was a
beneficiary under the particular trust where
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|
(a) the distribution was in satisfaction of all
or any part of the taxpayer's capital interest
in the particular trust;
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(b) subsection 75(2) was applicable at a
particular time in respect of any property of
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(i) the particular trust, or
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