CRA confirms that a capital distribution by an estate to a non-resident beneficiary is deemed to be of “income,” and must be reported on an NR4

CRA confirmed that a capital distribution that was not derived from a capital dividend, paid by a resident estate to non-resident beneficiaries, would not be subject to Part XIII tax - notwithstanding that s. 212(11) deemed such capital distribution to be a payment of income for purposes of s. 212(1)(c) - given that it was not specifically described in s. 212(1)(c)(i) or (ii).

However, because s. 212(11) deemed the distribution to be a distribution of income, the estate was required to report it on an NR4 form (but should note its exempt status by using the exemption code, “S”).

Neal Armstrong. Summaries of 12 June 2023 External T.I. 2022-0956461E5 under s. 212(1)(c) and Reg. 202(1)(b).