A trust received a capital dividend form a corporation and distributed it in the same year to a corporate beneficiary, and made a designation under s. 104(20) respecting such distribution. In indicating that the distributed amount should only be added to that corporation’s capital dividend account at the end of the trust's taxation year rather than as soon as the corporation received the distribution, CRA stated:
If the amount had been paid before the end of the trust's year, we are of the view that when the amount was received by the beneficiary corporation, we would not know whether the trust satisfied the condition that it had been resident in Canada throughout its taxation year. In addition, there would be no amount designated by the trust in respect of the dividend before the end of its taxation year since the designation is made in its income tax return filed for the taxation year in which it received the capital dividend.