An individual disposed of capital property to a discretionary trust (whose beneficiaries were the individual and spouse and their children) in consideration for property (other than a debt obligation) having the same fair market value. One year after the sale, the trust disposed of the capital property to a third party and distributed and allocated the resulting taxable capital gain to the spouse under s. 104(21). How would ss. 74.2(1) and 74.5(1) apply? CRA responded:
In general, the attribution rules in subsection 74.2(1) (taking subsection 74.3(1) into account, if applicable) do not apply to a particular situation where the conditions in subsection 74.5(1) are all satisfied. … [T]he condition in paragraph 74.5(1)(c) would be satisfied … where an individual's capital property is not transferred in the circumstances described in subsection 73(1.01).