A mutual fund trust which had elected under s. 132.11(1) to have a December 15 taxation year-end, first acquires a beneficial interest in an underlying trust (also having elected a December 15 year end) in late December and before an income distribution by the underlying trust on December 31 of that year. Would s. 132.11(4) require inclusion of this income in the top trust’s December 15, 201x taxation year? CRA responded:
Subsection 132.11(4)…would apply to deem an amount paid or payable by the underlying electing MFT to the top electing MFT, after the end of a particular taxation year of the underlying trust that ends on December 15 but before the end of that calendar year, to have been paid or payable at the end of December 15.
Paragraph 132.11(5)(c) will apply…such that where a beneficiary (top electing MFT) was not a beneficiary at the end of December 15, the top electing MFT is deemed to have been a beneficiary of the underlying trust on December 15 and, as such, is required to include in its income any amount that is deemed by subsection 132.11(4) to be paid or payable to it from the underlying trust… .