Income Tax Act — I-3.3 70
); (c) the property is, immediately before the beneficiary’s death, land or a depreciable property of a prescribed class of the trust that was used in a farming or fishing business carried on in Canada; (d) the child of the settlor is, immediately before the beneficiary’s death, resident in Canada; and (e) as a consequence of the beneficiary’s death, the property is transferred to and becomes vested indefeasibly in the child of the settlor within the period ending 36 months after that beneficiary’s death or, if written application has been made to the Minister by the taxpayer’s legal representative within that period, within any longer period that the Minister considers reasonable in the circumstances. Transfer of farming and fishing property from trust to settlor’s children (9.11) If, because of subsection (9.1), this subsection applies to the trust and a child of the settlor of the trust in respect of a property of the trust that has been distributed to the child as a consequence of the death of the beneficiary under the trust who was the spouse or common-law partner of the settlor, the following rules apply: (a) where the trust does not elect, in its return of income under this Part for the taxation year in which the beneficiary died, to have paragraph (b) apply to the trust in respect of the property, (i) subsections 104(4) and (5) and section 69 do not apply to the trust and the child in respect of the property, (ii) the trust is deemed to have (A) disposed of the property immediately before the beneficiary’s death, and (B) received, at the time of the disposition, proceeds of disposition in respect of that disposition equal to (I) where the property was depreciable property of a prescribed class, the lesser of 1 the capital cost to the trust of the property, and 2 the amount, determined immediately before the time of the disposition of the property, that is that proportion of the undepreciated capital cost of property of that class to the trust that the capital cost to the trust of the property is of the capital cost to the trust of all property of that class that had not, at or before that time, been disposed of, and (II) where the property is land (other than land to which subclause (I) applies), the adjusted cost base to the trust of the property immediately before the time of the disposition of the property, and (iii) the child is, immediately after the time of the disposition of the property, deemed to have acquired the property at a cost equal to the trust’s proceeds of disposition in respect of the disposition of the property determined under subparagraph (ii); (b) where the trust elects, in the trust’s return of income under this Part for the taxation year in which the beneficiary died, to have this paragraph apply to the trust in respect of the property, (i) subsections 104(4) and (5) do not apply to the trust in respect of the property, (ii) the trust is deemed to have (A) disposed of the property immediately before the beneficiary’s death, and (B) received, at the time of the disposition of the property, proceeds of disposition in respect of the disposition of the property equal to (I) where the property was depreciable property of a prescribed class, the amount that the trust designates, which must not be greater than the greater of nor less than the lesser of 1 the fair market value of the property immediately before the time of the disposition of the property, and 2 the lesser of the capital cost to the trust of the property and the amount, determined immediately before the time of the disposition of the property, that is that proportion of the undepreciated capital cost of property of that class to the trust that the capital cost to the trust of the property is of the capital cost to the trust of all property of that class that had not, at or before that time, been disposed of, and (II) where the property is land (other than land to which subclause (I) applies), the amount that the trust designates, which