“accumulating income”

« revenu accumulé »

“accumulating income” of a trust for a taxation year means the amount that would be the income of the trust for the year if that amount were computed

• (a) without reference to paragraphs 104(4)(a) and (a.1) and subsections 104(5.1), (5.2) and (12) and 107(4),

• (b) as if the greatest amount that the trust was entitled to claim under subsection 104(6) in computing its income for the year were so claimed, and

• (c) without reference to subsection 12(10.2), except to the extent that that subsection applies to amounts paid to a trust to which paragraph 70(6.1)(b) applies and before the death of the spouse or common-law partner referred to in that paragraph;

“capital interest”

« participation au capital »

“capital interest” of a taxpayer in a trust means all rights of the taxpayer as a beneficiary under the trust, and after 1999 includes a right (other than a right acquired before 2000 and disposed of before March 2000) to enforce payment of an amount by the trust that arises as a consequence of any such right, but does not include an income interest in the trust;

“income interest”

« participation au revenu »

“income interest” of a taxpayer in a trust means a right (whether immediate or future and whether absolute or contingent) of the taxpayer as a beneficiary under a personal trust to, or to receive, all or any part of the income of the trust and, after 1999, includes a right (other than a right acquired before 2000 and disposed of before March 2000) to enforce payment of an amount by the trust that arises as a consequence of any such right;

“cost amount”

« coût indiqué »

“cost amount” to a taxpayer at any time of a capital interest or part of the interest, as the case may be, in a trust (other than a trust that is a foreign affiliate of the taxpayer) means, except for the purposes of section 107.4 and notwithstanding subsection 248(1),

• (a.1) where that time is immediately before the time of the death of the taxpayer and subsection 104(4) or (5) deems the trust to dispose of property at the end of the day that includes that time, the amount that would be determined under paragraph (b) if the taxpayer had died on a day that ended immediately before that time, and

• (a.1) a trust, other than a trust described in paragraph (a) or (d), all or substantially all of the property of which is held for the purpose of providing benefits to individuals each of whom is provided with benefits in respect of, or because of, an office or employment or former office or employment of any individual,

and, in applying subsections 104(4), (5), (5.2), (12), (14) and (15) and section 106 at any time, does not include

• (f) a trust that, at that time, is a unit trust, or

• (g) a trust all interests in which, at that time, have vested indefeasibly, other than

  • (i) an alter ego trust, a joint spousal or common-law partner trust, a post-1971 spousal or common-law partner trust or a trust to which paragraph 104(4)(a.4) applies,

  • (ii) a trust that has elected under subsection 104(5.3),

  • (iii) a trust that has, in its return of income under this Part for its first taxation year that ends after 1992, elected that this paragraph not apply,

  • (iv) a trust that is at that time resident in Canada where the total fair market value at that time of all interests in the trust held at that time by beneficiaries under the trust who at that time are non-resident is more than 20% of the total fair market value at that time of all interests in the trust held at that time by beneficiaries under the trust,

  • (v) a trust under the terms of which, at that time, all or part of a person’s interest in the trust is to be terminated with reference to a period of time (including a period of time determined with reference to the person’s death), otherwise than as a consequence of terms of the trust under which an interest in the trust is to be terminated as a consequence of a distribution to the person (or the person’s estate) of property of the trust if the fair market value of the property to be distributed is required to be commensurate with the fair market value of that interest immediately before the distribution, or

  • (vi) a trust that, before that time and after December 17, 1999, has made a distribution to a beneficiary in respect of the beneficiary’s capital interest in the trust, if the distribution can reasonably be considered to have been financed by a liability of the trust and one of the purposes of incurring the liability was to avoid taxes otherwise payable under this Part as a consequence of the death of any individual.

“eligible offset”

« montant de réduction admissible »

“eligible offset” at any time of a taxpayer in respect of all or part of the taxpayer’s capital interest in a trust is the portion of any debt or obligation that is assumed by the taxpayer and that can reasonably be considered to be applicable to property distributed at that time in satisfaction of the interest or part of the interest, as the case may be, if the distribution is conditional upon the assumption by the taxpayer of the portion of the debt or obligation;

“exempt property”

« bien exonéré »

“exempt property” of a taxpayer at any time means property any income or gain from the disposition of which by the taxpayer at that time would, because the taxpayer is non-resident or because of a provision contained in a tax treaty, not cause an increase in the taxpayer’s tax payable under this Part;

• (b) each of the following conditions was satisfied:

  • (i) throughout the taxation year that includes the particular time (in this paragraph referred to as the “current year”), the trust was resident in Canada,

  • (ii) throughout the period or periods (in this paragraph referred to as the “relevant periods”) that are in the current year and throughout which the conditions in paragraph (a) are not satisfied in respect of the trust, its only undertaking was

    • (A) the investing of its funds in property (other than real property or an interest in real property),

    • (B) the acquiring, holding, maintaining, improving, leasing or managing of any real property or an interest in real property, that is capital property of the trust, or

    • (C) any combination of the activities described in clauses (A) and (B),

  • (iii) throughout the relevant periods at least 80% of its property consisted of any combination of

    • (A) shares,

    • (B) any property that, under the terms or conditions of which or under an agreement, is convertible into, is exchangeable for or confers a right to acquire, shares,

    • (C) cash,

    • (D) bonds, debentures, mortgages, hypothecary claims, notes and other similar obligations,

    • (E) marketable securities,

    • (F) real property situated in Canada and interests in real property situated in Canada, and

    • (G) rights to and interests in any rental or royalty computed by reference to the amount or value of production from a natural accumulation of petroleum or natural gas in Canada, from an oil or gas well in Canada or from a mineral resource in Canada,

  • (iv) either

    • (A) not less than 95% of its income for the current year (computed without regard to subsections 49(2.1) and 104(6)) was derived from, or from the disposition of, investments described in subparagraph (iii), or

    • (B) not less than 95% of its income for each of the relevant periods (computed without regard to subsections 49(2.1) and 104(6) and as though each of those periods were a taxation year) was derived from, or from the disposition of, investments described in subparagraph (iii),

  • (v) throughout the relevant periods, not more than 10% of its property consisted of bonds, securities or shares in the capital stock of any one corporation or debtor other than Her Majesty in right of Canada or a province or a Canadian municipality, and

  • (vi) where the trust would not be a unit trust at the particular time if this paragraph were read without reference to this subparagraph and subparagraph (iii) were read without reference to clause (F), the units of the trust are listed at any time in the current year or in the following taxation year on a prescribed stock exchange in Canada, or

• Marginal note:Income of a trust in certain provisions

  (3) For the purposes of the definition “income interest” in subsection (1), the income of a trust is its income computed without reference to the provisions of this Act and, for the purposes of the definition “pre-1972 spousal trust” in subsection (1) and paragraphs 70(6)(b) and (6.1)(b), 73(1.01)(c) and 104(4)(a), the income of a trust is its income computed without reference to the provisions of this Act, minus any dividends included in that income

• Marginal note:Trust not disqualified

  (4) For the purposes of the definition “pre-1972 spousal trust” in subsection (1), subparagraphs 70(6)(b)(ii) and (6.1)(b)(ii) and paragraphs 73(1.01)(c) and 104(4)(a), where a trust was created by a taxpayer whether by the taxpayer’s will or otherwise, no person is deemed to have received or otherwise obtained or to be entitled to receive or otherwise obtain the use of any income or capital of the trust solely because of the payment, or provision for payment, as the case may be, by the trust of

  • (a) any estate, legacy, succession or inheritance duty payable, in consequence of the death of the taxpayer, or a spouse or common-law partner of the taxpayer who is a beneficiary under the trust, in respect of any property of, or interest in, the trust; or

  • (b) any income or profits tax payable by the trust in respect of any income of the trust.

• Marginal note:Variation of trusts

  (6) Where at any time the terms of a trust are varied

  • (a) for the purposes of subsections 104(4), (5) and (5.2) and subject to paragraph (b), the trust is, at and after that time, deemed to be the same trust as, and a continuation of, the trust immediately before that time;

  • (b) for greater certainty, paragraph (a) does not affect the application of paragraph 104(4)(a.1); and

  • (c) for the purposes of paragraph 53(2)(h), subsection 107(1), paragraph (j) of the definition “excluded right or interest” in subsection 128.1(10) and the definition “personal trust” in subsection 248(1), no interest of a beneficiary under the trust before it was varied is considered to be consideration for the interest of the beneficiary in the trust as varied.

• Marginal note:Interests acquired for consideration

  (7) For the purposes of paragraph 53(2)(h), subsection 107(1), paragraph (j) of the definition “excluded right or interest” in subsection 128.1(10) and the definition “personal trust” in subsection 248(1),

  • (a) an interest in a trust is deemed not to be acquired for consideration solely because it was acquired in satisfaction of any right as a beneficiary under the trust to enforce payment of an amount by the trust; and

  • (b) where all the beneficial interests in a particular inter vivos trust acquired by way of the transfer, assignment or other disposition of property to the particular trust were acquired by

    • (i) one person, or

    • (ii) two or more persons who would be related to each other if

      • (A) a trust and another person were related to each other, where the other person is a beneficiary under the trust or is related to a beneficiary under the trust, and

      • (B) a trust and another trust were related to each other, where a beneficiary under the trust is a beneficiary under the other trust or is related to a beneficiary under the other trust,

    any beneficial interest in the particular trust acquired by such a person is deemed to have been acquired for no consideration.

• Marginal note:Employee options

  (d) an amount equal to 1/2 of the amount of the benefit deemed by subsection 7(1) to have been received by the taxpayer in the year in respect of a security that a particular qualifying person has agreed after February 15, 1984 to sell or issue under an agreement, or in respect of the transfer or other disposition of rights under the agreement, if

• (ii) where rights under the agreement were not acquired by the taxpayer as a result of a disposition of rights to which subsection 7(1.4) applied,

  • (A) the amount payable by the taxpayer to acquire the security under the agreement is not less than the amount by which

    • (I) the fair market value of the security at the time the agreement was made

    exceeds

    • (II) the amount, if any, paid by the taxpayer to acquire the right to acquire the security, and

  • (B) at the time immediately after the agreement was made, the taxpayer was dealing at arm’s length with

    • (I) the particular qualifying person,

    • (II) each other qualifying person that, at the time, was an employer of the taxpayer and was not dealing at arm’s length with the particular qualifying person, and

    • (III) the qualifying person of which the taxpayer had, under the agreement, a right to acquire a security, and

• (iii) where rights under the agreement were acquired by the taxpayer as a result of one or more dispositions to which subsection 7(1.4) applied,

  • (A) the amount payable by the taxpayer to acquire the security under the agreement is not less than the amount that was included, in respect of the security, in the amount determined under subparagraph 7(1.4)(c)(ii) with respect to the most recent of those dispositions,

  • (B) at the time immediately after the agreement the rights under which were the subject of the first of those dispositions (in this subparagraph referred to as the “original agreement”) was made, the taxpayer was dealing at arm’s length with

    • (I) the qualifying person that made the original agreement,

    • (II) each other qualifying person that, at the time, was an employer of the taxpayer and was not dealing at arm’s length with the qualifying person that made the original agreement, and

    • (III) the qualifying person of which the taxpayer had, under the original agreement, a right to acquire a security,

  • (C) the amount that was included, in respect of each particular security that the taxpayer had a right to acquire under the original agreement, in the amount determined under subparagraph 7(1.4)(c)(iv) with respect to the first of those dispositions was not less than the amount by which

    • (I) the fair market value of the particular security at the time the original agreement was made

    exceeded

    • (II) the amount, if any, paid by the taxpayer to acquire the right to acquire the security, and

  • (D) for the purpose of determining if the condition in paragraph 7(1.4)(c) was satisfied with respect to each of the particular dispositions following the first of those dispositions,

    • (I) the amount that was included, in respect of each particular security that could be acquired under the agreement the rights under which were the subject of the particular disposition, in the amount determined under subparagraph 7(1.4)(c)(iv) with respect to the particular disposition

    was not less than

    • (II) the amount that was included, in respect of the particular security, in the amount determined under subparagraph 7(1.4)(c)(ii) with respect to the last of those dispositions preceding the particular disposition;

• Marginal note:Charitable donation of employee option securities

  (d.01) subject to subsection (2.1), where the taxpayer disposes of a security acquired in the year by the taxpayer under an agreement referred to in subsection 7(1) by making a gift of the security to a qualified donee (other than a private foundation), an amount in respect of the disposition of the security equal to 1/4 of the lesser of the benefit deemed by paragraph 7(1)(a) to have been received by the taxpayer in the year in respect of the acquisition of the security and the amount that would have been that benefit had the value of the security at the time of its acquisition by the taxpayer been equal to the value of the security at the time of the disposition, if

  • (i) the security is a security described in subparagraph 38(a.1)(i),

  • (ii) the taxpayer acquired the security after February 27, 2000 and before 2002,

  • (iii) the gift is made in the year and on or before the day that is 30 days after the day on which the taxpayer acquired the security, and

  • (iv) the taxpayer is entitled to a deduction under paragraph (d) in respect of the acquisition of the security;

• Marginal note:Determination of amounts relating to employee security options

  (1.5) For the purpose of paragraph (1)(d),

  • (a) the amount payable by a taxpayer to acquire a security under an agreement referred to in subsection 7(1) shall be determined without reference to any change in the value of a currency of a country other than Canada, relative to Canadian currency, occurring after the agreement was made;

  • (b) the fair market value of a security at the time an agreement in respect of the security was made shall be determined on the assumption that all specified events associated with the security that occurred after the agreement was made and before the sale or issue of the security or the disposition of the taxpayer’s rights under the agreement in respect of the security, as the case may be, had occurred immediately before the agreement was made; and

  • (c) in determining the amount that was included, in respect of a security that a qualifying person has agreed to sell or issue to a taxpayer, in the amount determined under subparagraph 7(1.4)(c)(ii) for the purpose of determining if the condition in paragraph 7(1.4)(c) was satisfied with respect to a particular disposition, an assumption shall be made that all specified events associated with the security that occurred after the particular disposition and before the sale or issue of the security or the taxpayer’s subsequent disposition of rights under the agreement in respect of the security, as the case may be, had occurred immediately before the particular disposition.

• Meaning of “specified event”

  (1.6) For the purpose of subsection (1.5), a specified event associated with a security is

  • (a) where the security is a share of the capital stock of a corporation,

    • (i) a subdivision or consolidation of shares of the capital stock of the corporation,

    • (ii) a reorganization of share capital of the corporation, and

    • (iii) a stock dividend of the corporation; and

  • (b) where the security is a unit of a mutual fund trust,

    • (i) a subdivision or consolidation of the units of the trust, and

    • (ii) an issuance of units of the trust as payment, or in satisfaction of a person’s right to enforce payment, out of the trust’s income (determined before the application of subsection 104(6)) or out of the trust’s capital gains.

• Marginal note:Definitions in subsection 7(7)

  (1.7) The definitions in subsection 7(7) apply for the purposes of subsections (1.5) and (1.6).

• Marginal note:Charitable donation — proceeds of disposition of employee option securities

  (2.1) Where a taxpayer, in exercising a right to acquire a security that a particular qualifying person has agreed to sell or issue to the taxpayer under an agreement referred to in subsection 7(1), directs a broker or dealer appointed or approved by the particular qualifying person (or by a qualifying person that does not deal at arm’s length with the particular qualifying person) to immediately dispose of the security and pay all or a portion of the proceeds of disposition of the security to a qualified donee,

  • (a) if the payment is a gift, the taxpayer is deemed, for the purpose of paragraph (1)(d.01), to have disposed of the security by making a gift of the security to the qualified donee at the time the payment is made; and

  • (b) the amount deductible under paragraph (1)(d.01) by the taxpayer in respect of the disposition of the security is the amount determined by the formula

    A × B / C

    where

    A

    is the amount that would be deductible under paragraph (1)(d.01) in respect of the disposition of the security if this subsection were read without reference to this paragraph,

    B

    is the amount of the payment, and

    C

    is the amount of the proceeds of disposition of the security.