As there is no prescribed form, how is the election made? CRA indicated that the beneficiary should include in a letter attached to beneficiary's T1 Return (or in an election sent separately if the return is filed electronically): a declaration that the beneficiary is electing under s 107(2.11); his or her name, address and ID number (e.g., SIN); the distributed property's description, cost amount and FMV; the ACB of his or her capital interest in the trust; a description , address and country of residence of the trust and the name and address of the trustees.
CRA stated:
Under paragraph 107(2.002)(b), the cost amount of the capital interest to the beneficiary is deemed, for purposes of subparagraph 107(l)(a)(ii), to be nil. Generally, the beneficiary's proceeds of disposition in respect of the capital interest are calculated in accordance with paragraph 107(2.l)(d). The beneficiary will be treated as having disposed of the capital interest for an amount equal to the fair market value of the property, less the portion of the distribution that is a payment to which paragraph (h) or (i) of the definition of "disposition" in subsection 248(1) applies, and any eligible offset as defined in subsection 108(1). As a result, the beneficiary may realize a capital gain on the disposition of their capital interest in the trust.