Section 132.1 — Income Tax Act: Amounts designated by mutual fund trust

Where a trust in its return of income under this Part for a taxation year throughout which it was a mutual fund trust designates an amount in respect of a particular unit of the trust owned by a taxpayer at any time in the year equal to the total of such amount as the trust may determine in respect of the particular unit for the year not exceeding the amount, if any, by which the total of all amounts that were determined by the trust under subsection 104(16) of the Income Tax Act , chapter 148 of the Revised Statutes of Canada, 1952, for taxation years of the trust commencing before 1988 exceeds the total of all amounts determined by the trust under this paragraph for the year or a preceding taxation year in respect of all units of the trust, other than amounts determined in respect of the particular unit for the year under this paragraph, and such amount as the trust may determine in respect of the particular unit for the year not exceeding the amount, if any, by which the total of all amounts described in subparagraph 53(2)(h)(i.1) that became payable by the trust after 1987 and before the year exceeds the total of all amounts determined by the trust under this paragraph for the year or a preceding taxation year in respect of all units of the trust, other than amounts determined in respect of the particular unit for the year under this paragraph, the amount so designated shall subject to subsection 132.1(3), be deductible in computing the income of the trust for the year, and be included in computing the income of the taxpayer for the taxpayer’s taxation year in which the year of the trust ends, except that where the particular unit was owned by two or more taxpayers during the year, such part of the amount so designated as the trust may determine shall be included in computing the income of each such taxpayer for the taxpayer’s taxation year in which the year of the trust ends if the total of the parts so determined is equal to the amount so designated. In computing, at any time in a taxation year of a taxpayer, the adjusted cost base to the taxpayer of a unit in a mutual fund trust, there shall be added that part of the amount included under subsection 132.1(1) in computing the taxpayer’s income that is reasonably attributable to the amount determined under paragraph 132.1(1)(b) by the trust for its taxation year ending in the year in respect of the unit owned by the taxpayer. The total of amounts deductible by reason of paragraph 132.1(1)(c) in computing the income of a trust for a taxation year shall not exceed the amount that would be the income of the trust for the year if no deductions were made under this section and subsection 104(6). The amount, if any, by which the total of all amounts each of which is an amount designated for the year under subsection 132.1(1) exceeds the amount deductible under this section in computing the income of the trust for the year, shall, for the purposes of paragraph 132.1(1)(c) and subsection 132.1(3), be deemed designated under subsection 132.1(1) by the trust for its immediately following taxation year. Where it is reasonable to conclude that an amount determined by a mutual fund trust under paragraph 132.1(1)(a) or 132.1(1)(b) for a taxation year of the trust in respect of a unit owned at any time in the year by a taxpayer who was a person exempt from tax under this Part by reason of subsection 149(1), or under paragraph 132.1(1)(d) for the year in respect of the amount designated under subsection 132.1(1) for the year in respect of the unit differs from the amount that would have been so determined for the year in respect of the taxpayer had the taxpayer not been a person exempt from tax under this Part by reason of subsection 149(1), the amount designated for the year in respect of the unit under subsection 132.1(1) shall have no effect for the purposes of paragraph 132.1(1)(c).