The Appellants brought a Rule 58 application to determine a question of law regarding the timing of when two corporations are considered "connected" for the purposes of Part IV tax under paragraph 186(1)(a) of the Income Tax Act, in circumstances where a trust designates a taxable dividend to a corporate beneficiary under subsection 104(19).
The Tax Court held that the determination of whether the payer corporation is connected with the beneficiary is made at the time the taxable dividend was actually received by the trust, provided the beneficiary is deemed to have received the amount in the same taxation year.
If deemed received in a subsequent taxation year, the determination is made in that subsequent year.
