5-910455
P. Spice
(613) 957-8953
24(1)19(1)March 22, 1991
Dear Sirs:
Re: Subsection 107(4.1) of the Income Tax Act (the "Act")
We are writing in reply to your letter of February 12, 1991, in which you ask for a technical interpretation of the above-noted subsection.
You ask whether it is possible for a distribution to contingent beneficiaries to fall under the provisions of subsection 107(2) rather than subsection 107(4.1) where one of four settlors has died.
Where the provisions of subsection 75(2) of the Act were applicable at any time in respect of any property of a trust, it is our view that the provisions of subsection 107(4.1) of the Act would apply to a distribution of trust property if any settlor were alive at the time of the distribution. It is irrelevant that the particular property to be distributed to a beneficiary can be traced back to a particular settlor who is not alive at the time of the distribution.
We are unable, therefore, to confirm the interpretation you desire but trust that the foregoing comments, although not binding on the Department, will assist you.
Yours truly,
for Director Financial Industries Division Rulings Directorate
000137