Dear Sirs:
Re: Paragraph 212(1)(c) of the Canadian Income Tax Act (the "Act")
This is in reply to your letter dated June 19, 1991.
We are unable to comment specifically with regard to the situations referred to in your letter. An opinion in respect of a particular situation can only be formulated after determining and considering all of the relevant facts, including the terms of the particular trust under consideration, the amount payable to the beneficiaries thereunder and the amount in fact paid to the beneficiaries. However, we can make the following general comments concerning paragraph 212(1)(c) of the Act which hopefully will be of assistance to you:
1. Generally, all amounts paid or credited or deemed to be paid or credited by a trust to a non-resident beneficiary (otherwise than on a distribution or payment of capital) were taxable under paragraph 212(1)(c) of the Act as it was prior to the 1988 amendment thereto. Thus, for example, distributions of amounts that were income for trust purposes but not for income tax purposes under the Act were nonetheless taxable under paragraph 212(1)(c). Furthermore, by virtue of paragraph 214(3)(f) of the Act, where subsection 104(13) would, if Part I were applicable, have required any part of an amount payable by a trust in its taxation year to a beneficiary to be included in computing the income of the non-resident person who is a beneficiary of the trust, that part would have been deemed to be an amount paid or credited to the person as income of or from the trust.
obligate the corporation to repay the debt if certain actions are taken by persons other than the corporation, including the shareholders thereof.
Yours truly,
for DirectorReorganizations and Non-Resident DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch