"The Canadian-resident beneficiary of a factually non-resident trust (the “NRT”) will sign an indemnity, prior to the distribution by the NRT, which requires the repayment of the distribution to the trustee in the event that there should be a successful challenge against the trustee by any other beneficiary in respect of that distribution which requires the trustee to repay the amount of the distribution to the NRT. In finding that the signing of the indemnity would not cause s. 94(2)(d) to apply, CRA stated:\n\n[I]n order for paragraph 94(2)(d) to be applicable, inter alia, the undertaking must be given to ensure the repayment of a loan or indebtedness incurred by the other person at the relevant time. In the situation described, the other person would be the trustee of the NRT, which means that in order for paragraph 94(2)(d) to apply, the indemnity must relate to the repayment of a loan or other indebtedness incurred by the trustee. It would appear that until there is a successful challenge against the trustee by another beneficiary in respect of the distribution by the NRT to the Canadian Beneficiary, which requires the trustee to repay the amount of the distribution to the NRT, there is no loan or other indebtedness incurred for purposes of paragraph 94(2)(d)."