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Income Tax Act

Version of section 122 from 2008-06-18 to 2013-06-25:


Marginal note:Tax payable by inter vivos trust

  •  (1) Notwithstanding section 117, the tax payable under this Part for a taxation year by an inter vivos trust is the total of

    • (a) 29% of its amount taxable for the taxation year, and

    • (b) if the trust is a SIFT trust for the taxation year, the positive or negative amount determined by the formula

      A × B

      where

      A
      is the positive or negative decimal fraction determined by the formula

      C + D - E

      where

      C
      is the net corporate income tax rate in respect of the SIFT trust for the taxation year,
      D
      is the provincial SIFT tax rate of the SIFT trust for the taxation year, and
      E
      is the decimal fraction equivalent of the percentage rate of tax provided in paragraph (a) for the taxation year, and
      B
      is the SIFT trust’s taxable SIFT trust distributions for the taxation year.
  • Marginal note:Deductions not permitted

    (1.1) No deduction may be made under section 118 in computing the tax payable by a trust for a taxation year.

  • Marginal note:Where s. (1) does not apply

    (2) Subsection 122(1) is not applicable for a taxation year of an inter vivos trust other than a mutual fund trust if the trust

    • (a) was established before June 18, 1971;

    • (b) was resident in Canada on June 18, 1971 and without interruption thereafter until the end of the year;

    • (c) did not carry on any active business in the year;

    • (d) has not received any property by way of gift since June 18, 1971;

    • (e) has not, after June 18, 1971, incurred

      • (i) any debt, or

      • (ii) any other obligation to pay an amount,

      to or guaranteed by, any person with whom any beneficiary of the trust was not dealing at arm’s length; and

    • (f) has not received any property after December 17, 1999, where

      • (i) the property was received as a result of a transfer from another trust,

      • (ii) subsection (1) applied to a taxation year of the other trust that began before the property was so received, and

      • (iii) no change in the beneficial ownership of the property resulted from the transfer.

  • Marginal note:Definitions

    (3) The following definitions apply in this section.

    non-deductible distributions amount

    montant de distribution non déductible

    non-deductible distributions amount for a taxation year has the meaning assigned by subsection 104(16). (montant de distribution non déductible)

    taxable SIFT trust distributions

    montant de distribution imposable

    taxable SIFT trust distributions, of a SIFT trust for a taxation year, means the lesser of

    • (a) its amount taxable for the taxation year, and

    • (b) the amount determined by the formula

      A/(1 - (B + C))

      where

      A
      is its non-deductible distributions amount for the taxation year,
      B
      is the net corporate income tax rate in respect of the SIFT trust for the taxation year, and
      C
      is the provincial SIFT tax rate of the SIFT trust for the taxation year.
  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • R.S., 1985, c. 1 (5th Supp.), s. 122
  • 2001, c. 17, s. 105
  • 2007, c. 29, s. 12
  • 2008, c. 28, s. 18

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