Income Tax Act — I-3.3 135.2
have become payable to any other beneficiary, (iv) the distribution is deemed to be a disposition by the estate of the eligible unit for proceeds equal to the cost amount to the estate of the unit, (v) the part of the spouse or common-law partner’s interest as a beneficiary under the estate that is disposed of as a result of the distribution is deemed to be disposed of for proceeds of disposition equal to the cost amount to the spouse or common-law partner of that part immediately before the disposition, (vi) the cost amount to the spouse or common-law partner of the eligible unit is deemed to be nil, and (vii) the spouse or common-law partner is, except for the purposes of paragraph (c), deemed to have acquired the eligible unit as a participating farmer from an eligible trust. Participating farmer — disposition of eligible unit (9) If, at any time, an eligible unit of an eligible trust that was acquired by a participating farmer from the eligible trust is disposed of by the participating farmer (other than a disposition described in paragraph (8)(a), (10)(d) or (11)(b)), (a) the participating farmer’s proceeds from the disposition are deemed to be equal to the fair market value of the unit immediately before its disposition; (b) if the disposition results from a distribution of money denominated in Canadian dollars by the trust to the participating farmer in a taxation year of the trust, the money is proceeds from the disposition in that taxation year by the trust of other property and, at the time of the disposition, the participating farmer is not a person described in any of clauses (4)(b)(ii)(A) to (C), the trust’s gain, if any, from the disposition of the other property is reduced to the extent that the proceeds so distributed would, in the absence of this paragraph, be included under subsection 104(13) in the participating farmer’s income for the taxation year of the participating farmer in which the taxation year of the trust ends; and (c) if the participating farmer is a Canadian-controlled private corporation, for the purposes of section 125, the gain from the disposition is deemed to be income from an active business carried on by the corporation. Eligible wind-up distribution (10) If, at any time, an eligible trust distributes property as an eligible wind-up distribution of the trust to a person (a) subsection 107(2.1) does not apply in respect of the distribution; (b) the trust is deemed to have disposed of the property for proceeds equal to its fair market value at that time; (c) the trust’s gain from the disposition of the property is, notwithstanding subsection 104(24), deemed (i) to have become payable at that time by the trust to the person, and (ii) not to have become payable to any other beneficiary; (d) the person is deemed to acquire the property at a cost equal to the trust’s proceeds from the disposition; (e) the person’s proceeds from the disposition of the eligible unit, or part of it, that results from the distribution are deemed to be equal to the cost amount of the unit to the person immediately before that time; and (f) for greater certainty, no part of the trust’s gain from the disposition is to be included in the cost to the person of the property, other than as determined by paragraph (d). Ceasing to be an eligible trust (11) If a trust ceases to be an eligible trust at a particular time (a) subsection 149(10) applies to the trust as if (i) it ceased at that particular time to be exempt from tax under this Part on its taxable income, and (ii) the list of provisions in paragraph 149(10)(c) included a reference to this section; and (b) each person who holds at the particular time an eligible unit in the trust is deemed to have (i) disposed of, at the time that is immediately before the time that is immediately before the particular time, each of the eligible units for proceeds equal to the cost amount of the unit to the person, and (ii) reacquired the eligible unit at the time that is immediatel