Words and Phrases - "capital distribution"

In finding that, for taxation years before 2000, a resident beneficiary who received a portion of the capital gain realized on the sale of an asset of a non-resident personal trust would be subject to tax under s. 104(13)(c) even though the distribution was treated as a capital distribution for US trust law purposes, CCRA stated:

[T]he expression “distribution of capital” used in subparagraph 104(3)(c)(ii) must be interpreted as being a distribution that is not a distribution of income, that is, a distribution of amounts that would not constitute income of the trust computed for Canadian tax purposes. Consequently, we are of the view that the portion of the proceeds of disposition of the asset that would represent the taxable capital gain realized by the trust on the disposition of the asset and that was distributed to the Canadian beneficiary in the same year as it was realized, would be considered to be an amount that became payable on a distribution of the trust's income and not on a distribution of capital.