Tax wiki
s. 107.3
PART I — Income Tax · DIVISION B — Computation of Income · SUBDIVISION K — Trusts and their Beneficiaries
Treatment of beneficiaries under qualifying environmental trusts
Not yet annotated · Text current to 2026-06-21 · section last amended 2013-12-12
Current text
Where a taxpayer is a beneficiary under a qualifying environmental trust in a taxation year of the trust (in this subsection referred to as the “trust’s year”) that ends in a particular taxation year of the taxpayer,
subject to paragraph 107.3(1)(b), the taxpayer’s income, non-capital loss and net capital loss for the particular year shall be computed as if the amount of the income or loss of the trust for the trust’s year from any source or from sources in a particular place were the income or loss of the taxpayer from that source or from sources in that particular place for the particular year, to the extent of the portion thereof that can reasonably be considered to be the taxpayer’s share of such income or loss; and
if the taxpayer is non-resident at any time in the particular year and an income or loss described in paragraph 107.3(1)(a) or an amount to which paragraph 12(1)(z.1) or (z.2) applies would not otherwise be included in computing the taxpayer’s taxable income or taxable income earned in Canada, as the case may be, notwithstanding any other provision of this Act, the income, the loss or the amount shall be attributed to the carrying on of business in Canada by the taxpayer through a fixed place of business located in the province in which the site to which the trust relates is situated.
Transfers to beneficiaries
(2)Where property of a qualifying environmental trust is transferred at any time to a beneficiary under the trust in satisfaction of all or any part of the beneficiary’s interest as a beneficiary under the trust,
the trust shall be deemed to have disposed of the property at that time for proceeds of disposition equal to its fair market value at that time; and
the beneficiary shall be deemed to have acquired the property at that time at a cost equal to its fair market value at that time.
Ceasing to be qualifying environmental trust
(3)If at any time a trust ceases to be a qualifying environmental trust,
for the purposes of subsections 111(5.5) and 149(10), the trust is deemed to cease at that time to be exempt from tax under this Part on its taxable income;
each beneficiary under the trust immediately before that time is deemed to receive at that time from the trust an amount equal to the percentage of the fair market value of the properties of the trust immediately after that time that can reasonably be considered to be the beneficiary’s interest in the trust; and
each beneficiary under the trust is deemed to acquire immediately after that time an interest in the trust at a cost equal to the amount deemed by paragraph (b) to be received by the beneficiary from the trust.
Application
(4)Subsection 104(13) and sections 105 to 107 do not apply to a trust with respect to a taxation year during which it is a qualifying environmental trust.
Source: Justice Laws Website. Not an official version.
Historic text
Immediately preceding version, in force from 2004-08-31 to 2013-12-11:
Show the text in force 2004-08-31 to 2013-12-11
Treatment of beneficiaries under qualifying environmental trusts
107.3 (1) Where a taxpayer is a beneficiary under a qualifying environmental trust in a taxation year of the trust (in this subsection referred to as the “trust’s year”) that ends in a particular taxation year of the taxpayer,
(a) subject to paragraph 107.3(1)(b), the taxpayer’s income, non-capital loss and net capital loss for the particular year shall be computed as if the amount of the income or loss of the trust for the trust’s year from any source or from sources in a particular place were the income or loss of the taxpayer from that source or from sources in that particular place for the particular year, to the extent of the portion thereof that can reasonably be considered to be the taxpayer’s share of such income or loss; and
(b) if the taxpayer is non-resident at any time in the particular year and an income or loss described in paragraph 107.3(1)(a) or an amount to which paragraph 12(1)(z.1) or (z.2) applies would not otherwise be included in computing the taxpayer’s taxable income or taxable income earned in Canada, as the case may be, notwithstanding any other provision of this Act, the income, the loss or the amount shall be attributed to the carrying on of business in Canada by the taxpayer through a fixed place of business located in the province in which the site to which the trust relates is situated.
Transfers to beneficiaries
(2) Where property of a qualifying environmental trust is transferred at any time to a beneficiary under the trust in satisfaction of all or any part of the beneficiary’s interest as a beneficiary under the trust,
(a) the trust shall be deemed to have disposed of the property at that time for proceeds of disposition equal to its fair market value at that time; and
(b) the beneficiary shall be deemed to have acquired the property at that time at a cost equal to its fair market value at that time.
Ceasing to be a qualifying environmental trust
(3) Where a trust ceases at any time to be a qualifying environmental trust,
(a) the taxation year of the trust that would otherwise have included that time is deemed to have ended immediately before that time and a new taxation year of the trust is deemed to have begun at that time;
(b) the trust shall be deemed to have disposed immediately before that time of each property held by the trust immediately after that time for proceeds of disposition equal to its fair market value at that time and to have reacquired immediately after that time each such property for an amount equal to that fair market value;
(c) each beneficiary under the trust immediately before that time shall be deemed to have received at that time from the trust an amount equal to the percentage of the fair market value of the properties of the trust immediately after that time that can reasonably be considered to be the beneficiary’s interest in the trust; and
(d) each beneficiary under the trust shall be deemed to have acquired immediately after that time an interest in the trust at a cost equal to the amount deemed by paragraph 107.3(3)(c) to have been received by the beneficiary from the trust.
Application
(4) Subsection 104(13) and sections 105 to 107 do not apply to a trust with respect to a taxation year during which it is a qualifying environmental trust.
- [NOTE: Application provisions are not included in the consolidated text
- see relevant amending Acts and regulations.]
- 1995, c. 3, s. 30
- 1998, c. 19, s. 18
Earlier versions: Justice Laws point-in-time versions of the Act (from 31 August 2004), and CanLII (under “Versions”). On Justice Laws, each version of section 107.3 links to the one before it.
Enacting and amending legislation
- 1995, c. 3, s. 30; 1998, c. 19, s. 18; 2013, c. 40, s. 45
Text before 2004 is found in the annual Statutes of Canada cited above. Application and coming-into-force provisions are not part of the consolidation; see the amending Acts.
Cross-references
Citation
Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.), s. 107.3.