I-3 - Taxation Act

Section 1033.7 Disposition versions

2006-03-01

1033.7. The rules in the second paragraph apply where

(a)  solely because of the application of section 692, subparagraphs a to c of the first paragraph of section 688 do not apply to a distribution by a trust in a particular taxation year, in this section and section 1033.8 referred to as the “distribution year”, of taxable Canadian property; and

(b)  the trust elects, in prescribed manner on or before the trust’s balance-due day for the distribution year, that this section and sections 1033.8 to 1033.10 apply in respect of the distribution year.

The rules to which the first paragraph refers are as follows:

(a)  the Minister shall, until the trust’s balance-due day for a subsequent taxation year, accept security satisfactory to the Minister and furnished by or on behalf of the trust on or before the trust’s balance-due day for the distribution year for the lesser of

i.  the amount determined by the formula

A − B − {[(A − B) / A] × C}, and

ii.  if the subsequent year is the year that follows the distribution year, the amount determined under subparagraph i, and in any other case, the amount determined under this subparagraph in respect of the trust for the taxation year that precedes the subsequent year; and

(b)  except for the purposes of the first, second and third paragraphs of section 1038, the following interest and penalties shall be computed as if the particular amount for which security satisfactory to the Minister has been accepted under this section were an amount paid by the trust on account of the particular amount:

i.  interest payable under this Part for any period that ends on the trust’s balance-due day for the subsequent year and throughout which security is accepted by the Minister, and

ii.  penalties payable under this Part computed with reference to the trust’s tax payable for the year that was, without reference to this subparagraph, unpaid.

In the formula provided for in subparagraph i of subparagraph a of the second paragraph,

(a)  A is the amount of tax that would be payable by the trust under this Part for the distribution year if the exclusion from income or deduction of an amount referred to in the first paragraph of section 1044 were not taken into account;

(b)  B is the amount of tax that would be so payable by the individual under this Part if the rules in section 688, other than the election referred to in that section, had applied to each distribution by the trust in the distribution year of property, other than property subsequently disposed of before the beginning of the subsequent year, to which subparagraph a of the first paragraph applies; and

(c)  C is the aggregate of all amounts deemed under this or any other Act to have been paid on account of the trust’s tax payable under this Part for the distribution year.

2004, c. 8, s. 180.