Although the trust indenture for a family trust specified that no “designated person” beneficiary could receive or otherwise obtain the use of any of the income or capital of the trust, amounts nonetheless were paid to the minor beneficiaries, and purportedly included in their income under s. 104(13). Could the trust deduct such amounts under s. 104(6)? After referencing the trust indenture prohibition and in finding that there was no s. 104(6) deduction, CRA stated:
[I]t is prima facie not possible, pursuant to subsection 104(6), for an amount to become payable in the year to a beneficiary that is a designated person under the terms of the trust indenture. …
[S]ubsection 104(24) provides a rule of application that alters the ordinary result…only if…an amount has first been determined to have become payable to a beneficiary. As no amount has become payable to a beneficiary pursuant to subsection 104(6), subsection 104(24) has no application. …
By analogous rationale, in our view no amount may be included in computing the income for the year of a minor beneficiary under the trust pursuant to subsection 104(13) in this case.