Mr. A is one of the two trustees for an inter vivos trust for his minor children that provides for the distribution of all income to the beneficiaries, with the trust electing under s. 104(13.1). Mr. A voluntarily pays the income taxes owed by the trust.
Does such payment trigger the application of the s. 74.1(2)? CRA responded:
[W]e may be faced with a situation where we would apply the attribution rules in subsection 74.1(2) (and subsection 74.3(1) if applicable) to attribute to Mr. A the income derived from an amount equaling the amount of tax paid by Mr. A.