7-901331 Basic Files Section 142-14
Re: 24(1) (the "Trust")
This is in reply to a memorandum of June 20, 1990 from Janice Dulk, formerly of your office, concerning the tax implications arising out of a disclaimer made by the income beneficiary of the Trust, 24(1) We regret the delay in replying which was due to giving the matter an in-depth review, including consulting our legal counsel both verbally and in writing.
We have reviewed the copy of the disclaimer submitted by you and it is our view that it is of a type discussed in paragraph 5 of IT-385R. Generally, the result of such a disclaimer is that the interest disclaimed will revert into the trust and the beneficiaries will derive their interests solely from the trust.
(23)
(21(1)(a)
(23)
we subsequently informed him that on
24(1) (23)
With respect to your concern that the subsection 85(1) elections refer only to capital interests, such a reference is correct in that on the date of the sale (i.e., October 22, 1982, the only interests that the children had in the Trust were capital interest. The result of the subsequent disclaimer dated October 27, 1982 is that the rule of early vesting and doctrine of acceleration applies to the beneficiaries of the Trust, other than 19(1) at the time of the disclaimer, i.e., 24(1) 24(1)
Given that the earliest reference to the disclaimer appears to be in the letter of May 8, 1990 from 24(1) and that the disclaimer is not witnessed, you may wish to attempt to determine its validity, particularly with regard to its date.
Given the above comments, it would appear unnecessary to comment on the other issues raised by Ms. Dulk in her memorandum.
for DirectorFinancial Industries DivisionRulings Directorate