Income Tax Act — I-3.3 132
ring 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 ETF units in the taxation year, and (ii) the greater of (A) the amount determined for C, and (B) the net asset value of the trust at the end of the previous taxation year, C is the net asset value of the trust at the end of the taxation year, and D is the amount that would be, without reference to subsection 104(6), the trust’s net taxable capital gains (as determined under subsection 104(21.3)) for the taxation year; or (b) units offered by a mutual fund trust include units that are not ETF units (in this paragraph referred to as “non-ETF units”) and units that are ETF units, then (i) in respect of redemptions of ETF units, paragraph (5.3)(b) does not apply and paragraph (a) applies, except that (A) the description of C is to be read as “is the portion of the net asset value of the trust at the end of the taxation year that is referable to the ETF units,”, (B) clause (ii)(B) of the description of B shall be read as “the portion of the net asset value of the trust at the end of the previous taxation year that is referable to the ETF units,”, and (C) the amount determined for D shall be the amount determined by the formula E ÷ F × G where E is the portion of the net asset value of the trust at the end of the taxation year that is referable to the ETF units, F is the net asset value of the trust at the end of the taxation year, and G is the amount that would be, without reference to subsection 104(6), the trust’s net taxable capital gains (as determined under subsection 104(21.3)) for the taxation year; and (ii) in respect of redemptions of non-ETF units, in addition to the limitation applicable under paragraph (5.3)(b), the total amount of the deductions that may be claimed by the trust for the taxation year for the portion of the allocated amounts described in the description of A in paragraph (5.3)(b) in respect of non-ETF units shall not exceed the amount determined by the formula H ÷ I × J where H is the portion of the net asset value of the trust at the end of the taxation year that is referable to the non-ETF units, I is the net asset value of the trust at the end of the taxation year, and J is the amount that would be, without reference to subsection 104(6), the trust’s net taxable capital gains (as determined under subsection 104(21.3)) for the taxation year. Meaning of mutual fund trust (6) Subject to subsection 132(7), for the purposes of this section, a trust is a mutual fund trust at any time if at that time (a) it was a unit trust resident in Canada, (b) its only undertaking was (i) the investing of its funds in property (other than real property or an interest in real property or an immovable or a real right in an immovable), (ii) the acquiring, holding, maintaining, improving, leasing or managing of any real property (or interest in real property) or of any immovable (or real right in immovables) that is capital property of the trust, or (iii) any combination of the activities described in subparagraphs 132(6)(b)(i) and 132(6)(b)(ii), and (c) it complied with prescribed conditions. Election to be mutual fund (6.1) Where a trust becomes a mutual fund trust at any particular time before the 91st day after the end of its first taxation year, and the trust so elects in its return of income for that year, the trust is deemed to have been a mutual fund trust from the beginning of that year until the particular time. Retention of status as mutual fund trust (6.2) A trust is deemed to be a mutual fund trust throughout a calendar year where (a) at any time in the year, the trust would, if this section were read without reference to this subsection, have ceased to be a mutual fund trust (i) because the condition described in paragraph 108(2)(a) ceased to be satisfied, (ii) because of the application of paragraph (6)(c), or (iii)