Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues:
For the purposes of 104(5.6)(c), where a trust is a beneficiary of another trust and the beneficary trust loans money to the other trust, will the "individual" loaning the money be the beneficiary trust or the trustees thereof?
Position TAKEN:
The "individual" will be the beneficiary trust
Reasons FOR POSITION TAKEN:
Same position taken in #922370 dated March 31, 1993
940299
XXXXXXXXXX C.R. Bowen
Attention: XXXXXXXXXX
June 16, 1994
Dear Sirs:
Re: Subsection 104(5.6)
This is in reply to your letter dated February 3, 1994, wherein you requested our opinion on the interpretation of paragraph 104(5.6)(c) of the Income Tax Act (S.C. 1970-71-72, c.63 as amended consolidated to June 10, 1993 (the "Act")). We apologize for the delay in responding to your request.
Your letter is further to paragraph 4 of our letter dated March 31, 1993 (our file number 922370), wherein we indicated that if the trust indenture of a trust permitted its trustees to use its capital to settle another trust as its beneficiary, the first trust and not any trustee thereof would be regarded as an individual who "transferred or loaned property" to the second trust for the purposes of proposed subparagraphs 104(5.6)(c)(i) and (ii) of the Act.
Similarly, it is our opinion that if a trust which is a beneficiary of another trust loans funds to the other trust, the loan would be regarded as made by the beneficiary trust for the purposes of subparagraphs 104(5.6)(c)(i) and (ii) of the Act.
These comments represent our opinion of the law as it applies generally. As indicated in paragraph 21 of Information Circular 70-6R2 dated
September 28, 1990, this opinion is not a ruling and accordingly, it is not binding on Revenue Canada, Customs, Excise and Taxation.
We trust the foregoing is of assistance.
for Director
Manufacturing Industries,
Partnerships and Trusts Division
Rulings Directorate
Legislative and Intergovernmental
Affairs Branch
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