Where the trustee of an investment trust has discretion as to the timing of distributions of income or capital without any discretion as to the share of income or capital distributable to each beneficiary, would such discretion result in the trust not being eligible under para. (h) of the exempt foreign trust definition? CRA responded:
If the discretionary power of the trustee relates only to the choice of the payment date of an amount of income or capital ... this power would not normally have an impact on the status as an eligible trust for the purposes of paragraph (h) of the definition... . On the other hand ... the amount of income or capital of a beneficiary would depend on the exercise or the failure to exercise a discretionary power in a situation where the income or capital is allocated among the beneficiaries on the basis of the share held in the trust at a particular time and where the discretionary power as to the timing of the distributions, is also a discretionary power in respect of the particular time chosen for the allocation of the income or capital among the beneficiaries. In this last case, the share of income or capital allocated to each of the beneficiaries could vary in a taxation year depending on the exercise of this discretion.