Corporation A, which has a sanitary landfill site and must annually fund an qualifying environmental trust to provide a fund for the post-closure management of site, is subject to tax on the interest income generated by the trust under s. 107.3(1)(a), but may claim a tax credit equal to the Part XII.4 tax payable by the trust under section 127.41.
After providing a general discussion of the operation of ss. 127.41(1) to (3), including making the observation that “the Part XII.4 tax credit is an amount received by Corporation A in respect of Part XII.4 tax paid by the qualifying environmental trust,” CRA went on to find that the s. 127.41 refundable credit was not taxable under s. 12(1)(x).