Income Tax Act — I-3.3 132
ion year, to be TCP gains distributions received by beneficiaries under the mutual fund trust; ( solde des gains provenant de BCI ) TCP gains distribution means a TCP gains distribution described in subsection (5.1). ( distribution de gains provenant de BCI ) Definition of taxed capital gains (5) In subsection 132(4), taxed capital gains of a taxpayer for a taxation year has the meaning assigned by subsection 130(3). TCP gains distribution (5.1) If a mutual fund trust designates an amount under subsection 104(21) for a taxation year of the trust in respect of a beneficiary under the trust, for the purposes of this Part and Part XIII, (a) the beneficiary is deemed to have received from the mutual fund trust a TCP gains distribution equal to the lesser of (i) twice the amount designated, and (ii) the beneficiary’s pro rata portion of the mutual fund trust’s TCP gains balance for the taxation year; and (b) where the beneficiary is a non-resident person or a partnership that is not a Canadian partnership, (i) the amount designated is deemed by subsection 104(21) to be a taxable capital gain of the beneficiary only to the extent that it exceeds one half of the TCP gains distribution, and (ii) one half of the TCP gains distribution is to be added to the amount otherwise included under subsection 104(13) in computing the income of the beneficiary, and is deemed to be an amount to which paragraph 212(1)(c) applies. Application of subsection (5.1) (5.2) Subsection (5.1) applies to an amount designated under subsection 104(21) by a mutual fund trust for a taxation year only if more than 5% of the total of all amounts each of which is an amount designated under that subsection by the mutual fund trust for the taxation year was designated in respect of beneficiaries under the mutual fund trust each of whom is a non-resident person or is a partnership that is not a Canadian partnership. Allocation to redeemers (5.3) If a trust that is a mutual fund trust throughout a taxation year paid or made payable, at any time in the taxation year, to a beneficiary an amount on a redemption by that beneficiary of a unit of the trust (in this subsection and subsection (5.31) referred to as the “allocated amount”) and the beneficiary’s proceeds from the disposition of that unit do not include the allocated amount, in computing its income for the taxation year no deduction may be made by the trust in respect of (a) the portion of the allocated amount that would be, without reference to subsection 104(6), an amount paid out of the income (other than taxable capital gains) of the trust; and (b) the portion of the allocated amount determined by the formula A − ½(B + C − D) where A is the portion of the allocated amount that would be, without reference to subsection 104(6), an amount paid out of the taxable capital gains of the trust, B is the beneficiary’s proceeds from the disposition of the unit on the redemption, C is the allocated amount, and D is the amount determined by the trustee to be the beneficiary’s cost amount of that unit, using reasonable efforts to obtain the information required to determine the cost amount. Allocations by ETFs (5.31) If in a taxation year referred to in subsection (5.3) (a) all of the units offered in the taxation year by a mutual fund trust are listed on a designated stock exchange in Canada and are in continuous distribution (in this subsection referred to as “ETF units”), then paragraph 132(5.3)(b) does not apply and, in computing its income for the taxation year, no deduction may be made by the trust in respect of the amount determined by the formula A − (B ÷ (C + B) × D) where A is the portion of the total of all allocated amounts for the taxation year in respect of redemptions of ETF units by beneficiaries of the trust during that year that would be, without reference to subsection 104(6), amounts paid out of the taxable capital gains of the trust, B is the lesser of (i) the total amount paid for redemptions of the ET