Income Tax Act — I-3.3 107
al to the amount determined under paragraph (a). Gains not distributed to beneficiaries (2.11) If a trust that is resident in Canada for a taxation year makes in the taxation year one or more distributions to which subsection (2.1) applies and the trust elects in prescribed form filed with the trust’s return for the year or a preceding taxation year to have one of the following paragraphs apply, the income of the trust for the year (determined without reference to subsection 104(6)) shall, for the purposes of subsections 104(6) and (13), be computed without regard (a) if the election is to have this paragraph apply, to all of those distributions (other than distributions of cash denominated in Canadian dollars) to non-resident persons (including a partnership other than a Canadian partnership); and (b) if the election is to have this paragraph apply, to all of those distributions (other than distributions of cash denominated in Canadian dollars). Election — subsection (2.11) (2.12) An election made under subsection (2.11) by a mutual fund trust is deemed, for the trust’s 2003 and subsequent taxation years, not to have been made if (a) the election is made after December 20, 2000 and applies to any taxation year that ends before 2003; and (b) the proceeds of disposition of a beneficiary’s interest in the trust have been determined under paragraph (2.1)(e). Flow-through entity (2.2) Where at any time before 2005 a beneficiary under a trust described in paragraph (h), (i) or (j) of the definition flow-through entity in subsection 39.1(1) received a distribution of property from the trust in satisfaction of all or a portion of the beneficiary’s interests in the trust and the beneficiary files with the Minister on or before the beneficiary’s filing-due date for the taxation year that includes that time an election in respect of the property in prescribed form, there shall be included in the cost to the beneficiary of a particular property (other than money) received by the beneficiary as part of the distribution of property the least of (a) the amount, if any, by which the beneficiary’s exempt capital gains balance (as defined in subsection 39.1(1)) in respect of the trust for the beneficiary’s taxation year that includes that time exceeds the total of all amounts each of which is (i) an amount by which a capital gain is reduced under section 39.1 in the year because of the beneficiary’s exempt capital gains balance in respect of the trust, (ii) twice an amount by which a taxable capital gain is reduced under section 39.1 in the year because of the beneficiary’s exempt capital gains balance in respect of the trust, or (iii) an amount included in the cost to the beneficiary of another property received by the beneficiary at or before that time in the year because of this subsection, (b) the amount by which the fair market value of the particular property at that time exceeds the adjusted cost base to the trust of the particular property immediately before that time, and (c) the amount designated in respect of the particular property in the election. Application of subsection (3.1) (3) Subsection (3.1) applies to a trust’s distribution of property to a taxpayer if (a) the distribution is a SIFT trust wind-up event to which section 88.1 does not apply; (b) the property is a share and the only shares distributed on any SIFT trust wind-up event of the trust are of a single class of the capital stock of a taxable Canadian corporation; and (c) where the trust is a SIFT wind-up entity, the distribution occurs no more than 60 days after the earlier of (i) the first SIFT trust wind-up event of the trust, and (ii) the first distribution to the trust that is a SIFT trust wind-up event of another trust. SIFT trust wind-up event (3.1) If this subsection applies to a trust’s distribution of property, the following rules apply: (a) the trust is deemed to have disposed of the property for proceeds of disposition equal to the adjusted cost base to t