Explain how is trust income taxed.

A. It is taxed in the hands of the beneficiaries to the extent that is paid, or payable to a beneficiary.
B. Capital gains are taxed in the trust if it is paid out to a beneficiary.
C. Income earned in a trust is taxed in the trust, but the trust can use personal credits to reduce taxes owing.
D. Income earned in a trust is taxed at the lowest marginal tax bracket as long as the trust was created during the settlor's lifetime.