| November 14, 1990 | |
| Current Amendments and | Rulings Directorate |
| Regulations Division | G. Arsenault |
| R. D'Aurelio | 957-2126 |
| Director | |
| 902888 |
SUBJECT: Subparagraph 214(3)(f) Trust Ceasing to be Resident in Canada
Subparagraph 214(3)(f) deems certain amounts payable by a trust to non-resident beneficiaries to have been paid on the earlier of
(i) the day on which the amount was paid or credited, and
(ii) the day that is 90 days after the end of the taxation year.
We have recently received a telephone inquiry as to the application of Part XIII the Act where a trust that was resident in Canada becomes a non-resident within 89 days after its year end. The caller 19(1) suggested that it appears that notwithstanding that the trust will be entitled to a deduction under subsection 104(6) for income "payable" to beneficiaries, the non-resident beneficiaries will not be subject to Canadian tax on such income if the trust ceases to be resident in Canada within 89 days of its year end as non-resident beneficiaries are only taxable on amounts paid to them by trusts resident in Canada.
In the particular situation discussed with 24(1) We advised that the Department would likely take the position that the transfer of the trust property by the Canadian trustees to the new non-resident trustees constituted the payment of the preceding year's income to (or to the credit of) the beneficiaries such that Part XIII tax would become exigible under subclause 214(3)(f)(i) on such transfer. 21(1)(b)
21(1)(b)
R.J.L. ReadDirector GeneralRulings DirectorateLegislative and Intergovernmental Affairs Branch