10 June 2016 STEP Roundtable Q. 12, 2016-0634921C6 - Phantom Income -- summary under Subsection 104(6)

As deemed income (e.g., a capital gain deemed to arise under a s. 48.1 election on the IPO of a Canadian-controlled private corporation) is not recognized as income or capital for trust law purposes, in order for it to be distributed under ss. 104(6) and (24) its distribution must be authorized under the trust deed and the trustees must specifically distribute it (which can be accomplished by a payment in kind, e.g., distributing the shares in question).