CRA considers that an exempt foreign charitable trust must satisfy the Canadian common law tests

The definition of an exempt foreign trust in s. 94(1) includes a charitable trust described in para. (d) thereof, which is required to have been created and operated exclusively for charitable purposes. In interpreting this, CRA considers many of the tests applied by it to Canadian registered charities to be applicable:

• One of the four Pemsel charitable purpose tests must be satisfied.
• “When the charitable activities are carried out by an intermediary…the activities and the underlying resources provided must be subject to the direction and control of the trust.”
• “A charitable trust may conduct commercial activities to the extent that they remain incidental to and only serve as a means of furthering the exclusive charitable purposes of the organization.”
• “An exempt foreign trust may accumulate and invest funds, so long as the accumulation and investments are incidental to and serve as a means of furthering the exclusive charitable purposes of the organization, rather than being an end in themselves.”

Neal Armstrong. Summary of 14 June 2016 T.I. 2016-0647951E5 under s. 94(1) – exempt foreign trust – para. (d).