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Where an amount of trust income is included in the return of a beneficiary, that beneficiary may claim a credit for the foreign tax paid by the trust.
The trust's income must be divided into the appropriate classes of income. The beneficiary's share of the trust income must also be divided into the appropriate classes of income.
The trustee has to show in the trust tax return the amount of foreign income and attributed foreign income.
The trustee is also required to show in the trust tax return the sum of the foreign tax paid and deemed paid in respect of the part of the net income to which beneficiaries are presently entitled (and assessable) and the foreign tax credit allowable in respect of the part of the net income on which the trustee is assessable.
On the distribution statement, the trustee has to show the portion of foreign tax that relates to the share of foreign income to which each beneficiary is presently entitled (and assessable).
The trustee also has to show the amount of foreign income included in net income on which the trustee is assessable and the foreign tax credit allowable in respect of that income.
A credit is not available for foreign tax paid in respect of income that is attributed to a transferor as a result of the transferor trust measures. For details on the transferor trust measures, see chapter 2.
The foreign income of a unit trust is treated in the same manner as foreign income of any other trust.
Last modified: 05 Dec 2006QC 18000