I-3 - Taxation Act

Section 663.1 Disposition versions

2006-03-01

663.1. Subject to section 671.7, where a trust, in its fiscal return for a taxation year under Part I of the Income Tax Act (Revised Statutes of Canada, 1985, chapter 1, 5th Supplement), in accordance with subsection 13.1 of section 104 of that Act, designates an amount in respect of a beneficiary under the trust, the lesser of the amount so designated and the amount determined under the second paragraph in respect of the beneficiary for the year, is deemed, for the purposes of sections 662 and 663, not to have been paid or to have become payable in the year to or for the benefit of the beneficiary or out of income of the trust.

The amount referred to in the first paragraph is, in respect of a beneficiary under a trust for a taxation year of the trust, determined by the following formula:

(A / B) × (C − D − E).

For the purposes of the formula contemplated in the second paragraph,

(a)  A is the beneficiary’s share of the income of the trust for the year, computed without reference to this Act;

(b)  B is the aggregate of all amounts each of which is a beneficiary’s share of the income of the trust for the year, computed without reference to this Act;

(c)  C is the aggregate of all amounts each of which is an amount that, but for this section and section 663.2, would be included in computing the income of a beneficiary under the trust for the year by reason of section 662 or 663;

(d)  D is the amount deducted under paragraph a of section 657 in computing the income of the trust for the year;

(e)  E is the amount determined by the trust for the year and used as the value of C for the purposes of the formula contemplated in the second paragraph of section 663.2 or, if no amount is so determined, nil.

A trust that designates an amount in respect of a beneficiary, in accordance with the first paragraph, in respect of a taxation year shall notify the Minister in writing on or before its filing-due date for the year.

1990, c. 59, s. 227; 1999, c. 83, s. 57; 2004, c. 21, s. 94.