Budget Implementation Act, 2009 (S.C. 2009, c. 2)

Marginal note:Distribution by personal trust

(2) Subject to subsections (2.001), (2.002) and (4) to (5), if at any time a property of a personal trust or a prescribed trust is distributed (otherwise than as a SIFT trust wind-up event) 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,

Marginal note: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 subsections (2) and (3.1) and sections 88.1 and 132.2 do not apply in respect of the distribution,

Marginal note:Application of subsection (3.1)

(3) Subsection (3.1) applies to a trust’s distribution of property to a taxpayer if

• (a) the distribution is a SIFT trust wind-up event to which section 88.1 does not apply;

• (b) the property is a share and the only shares distributed on any SIFT trust wind-up event of the trust are of a single class of the capital stock of a taxable Canadian corporation; and

• (c) where the trust is a SIFT wind-up entity, the distribution occurs no more than 60 days after the earlier of

  • (i) the first SIFT trust wind-up event of the trust, and

  • (ii) the first distribution to the trust that is a SIFT trust wind-up event of another trust.

Marginal note:SIFT trust wind-up event

(3.1) If this subsection applies to a trust’s distribution of property, the following rules apply:

• (a) the trust is deemed to have disposed of the property for proceeds of disposition equal to the adjusted cost base to the trust of the property immediately before the distribution;

• (b) the taxpayer is deemed to have disposed of the taxpayer’s interest as a beneficiary under the trust for proceeds of disposition equal to the cost amount to the taxpayer of the interest immediately before the distribution;

• (c) the taxpayer is deemed to have acquired the property at a cost equal to

  • (i) if, at all times at which the trust makes a distribution that is a SIFT trust wind-up event, the taxpayer is the only beneficiary under the trust and is a SIFT wind-up entity or a taxable Canadian corporation, the adjusted cost base to the trust of the property immediately before the distribution, and

  • (ii) in any other case, the cost amount to the taxpayer of the taxpayer’s interest as a beneficiary under the trust immediately before the distribution;

• (d) if the taxpayer’s interest as a beneficiary under the trust was immediately before the disposition taxable Canadian property of the taxpayer, the property is deemed to be taxable Canadian property of the taxpayer; and

• (e) if a liability of the trust becomes as a consequence of the distribution a liability of the corporation described in paragraph (3)(b) in respect of the distribution, and the amount payable by the corporation on the maturity of the liability is the same as the amount that would have been payable by the trust on its maturity,

  • (i) the transfer of the liability by the trust to the corporation is deemed not to have occurred, and

  • (ii) the liability is deemed

    • (A) to have been incurred or issued by the corporation at the time at which, and under the agreement under which, it was incurred or issued by the trust, and

    • (B) not to have been incurred or issued by the trust.

(f) if the property was deemed to be taxable Canadian property of the transferor by this paragraph or paragraph 44.1(2)(c), 51(1)(f), 85(1)(i) or 85.1(1)(a) or (8)(b), subsection 85.1(5) or 87(4) or (5) or paragraph 97(2)(c) or 107(2)(d.1) or (3.1)(d), the property is deemed to be taxable Canadian property of the transferee trust;

(e) the donee is a registered charity that, in the opinion of the Minister for International Cooperation (or, if there is no such Minister, the Minister responsible for the Canadian International Development Agency) meets conditions prescribed by regulation.

Marginal note:Rules governing international medical charities

(9) For the purpose of paragraph (8)(e),

• (a) for greater certainty, nothing in paragraph (8)(b) modifies the application to a registered charity of the prescribed conditions referred to in paragraph (8)(e);

• (b) if, in respect of a registered charity, the Minister referred to in paragraph (8)(e) is of the opinion described in that paragraph

  • (i) that Minister may also designate a period of time during which that opinion is valid, and

  • (ii) notwithstanding subparagraph (i), the opinion may be revoked at any time by that Minister if

    • (A) that Minister is of the opinion that the registered charity no longer meets prescribed conditions referred to in paragraph (8)(e), or

    • (B) any person has made any misrepresentation that is attributable to neglect, carelessness or wilful default for the purpose of obtaining the opinion; and

• (c) a revocation referred to in subparagraph (b)(ii) is effective as of the time that notice, in writing, of the revocation is issued by that Minister to the registered charity.

Marginal note:Foreign currency debt on acquisition of control

(12) For the purposes of subsection (4), if at any time a corporation owes a foreign currency debt in respect of which the corporation would have had, if the foreign currency debt had been repaid at that time, a capital loss or gain, the corporation is deemed to own at the time (in this subsection referred to as the “measurement time”) that is immediately before that time a property

• (a) the adjusted cost base of which at the measurement time is the amount determined by the formula

  A + B – C

  where

  A  

  is the amount of principal owed by the corporation under the foreign currency debt at the measurement time, calculated, for greater certainty, using the exchange rate applicable at the measurement time,

  B 

  is the portion of any gain, previously recognized in respect of the foreign currency debt because of this section, that is reasonably attributable to the amount described in A, and

  C 

  is the portion of any capital loss previously recognized in respect of the foreign currency debt because of this section, that is reasonably attributable to the amount described in A; and

• (b) the fair market value of which is the amount that would be the amount of the principal owed by the corporation under the foreign currency debt at the measurement time if that amount were calculated using the exchange rate applicable at the time of the original borrowing.