A personal trust realizes a capital gain for a particular taxation year and would like to designate it as the taxable capital gain of a beneficiary for that year under s. 104(21). Is it sufficient for the amount of the taxable capital gain so designated to be paid or made payable in the year, rather than also the non-taxable portion of the gain? CRA stated:
[S]ubsection 104(21) do[es] not require that any additional amount, other than the net taxable capital gain so designated, be paid or made payable by the trust to the beneficiary such as an amount reflecting the non-taxable portion of any capital gain realized by the trust. … [A]ny amounts that the trust pays or makes payable to beneficiaries must be authorized or permitted by the trust instrument and the applicable law … [and] we have assumed that the amounts that are paid or payable to the beneficiary, and designated under subsection 104(21), are for the beneficiary’s own account and benefit … .