News of Note
Herman Grad 2000 Family Trust – Ontario Superior Court of Justice finds that trusts, whose Alberta-lawyer trustees did not make substantial decisions, were resident in Ontario
In finding that a family trust and a spousal trust, that had two Alberta lawyers as their trustees, were resident in Ontario, Wilton-Siegel J noted that, in the context of an investment trust, “the principal decisions taken by trustees pertain to the investment of the assets of the trust and distributions to beneficiaries,” and noted the principle that “management and control of a trust may rest with a trustee who has little investment experience provided that the trustee has the power to retain others for advice and remains the ultimate decision-maker.” He found here that the ultimate decision maker instead was the family patriarch along with the CFO of the family companies, in the absence of evidence that there was any real decision-making by the trustees in relation to the core investing function or with respect to all but perhaps one of the trust distributions.
Neal Armstrong. Summary of Herman Grad 2000 Family Trust v. Minister of Revenue, 2016 ONSC 2402 under s. 2(1).
The table below links to full-text translations of French technical interpretation that were released last Wednesday and in the week of February 10 and January 27, 2016. They are paywalled in the usual (4-days per week) manner.
Finance responded to the finding in Last, that the prohibition of an increased assessment on appeal is to be applied on a source-by-source basis, by proposing to amend s. 152(9) to provide that additional arguments can be advanced to support "all or any portion of the total amount determined on assessment." “However, it is worth considering whether [this] selected method to address Last would alter the outcome of the decision,” given that this language does not engage with the source-by-source finding in Last.
Neal Armstrong. Summary of Derrick Hosanna, "Alternative Arguments on Appeal: Does Finance Get the Last Word?", Tax For The Owner Manager, Vol. 16, No. 4, October 2016, p. 3 under s. 152(9).
The proposed version of the s. 212.1(4) safe harbour from the application of s. 212.1(1) “discriminates against foreign buyers” – notwithstanding that “there is no difference to the Canadian tax base whether purchasers are Canadian or foreign or whether they deal at arm's length or not (as shareholders) with the Canadian corporation that acquires the non-resident corporation.”
Neal Armstrong. Summary of Nathan Boidman, "Judicial and Legislative Developments Threaten Indirect Canadian Acquisitions", Tax Notes International, Vol. 84, No. 2, 10 October 2016, p. 163 under s. 212.1(4).