CRA rules on a trust-to-trust transfer to permit indefeasible vesting before the 21st anniversary

CRA ruled on transactions under which a discretionary family trust, which is approaching the 21st anniversary of its settlement, transfers all its property for no consideration to a newly-settled trust with the same trustees and beneficiaries and virtually identical terms, except that the trustees now have the discretion to cause the interests in the trust to vest indefeasibly in one or more of the beneficiaries. Following such transfer, the trustees, by deed, cause all the interests to vest indefeasibly in one beneficiary (father).

CRA ruled respecting inter alia:

• the application of the no-disposition rule in para. (f) of “disposition” and of the trust continuity rule in s.104(25.1)
• the 21-year rule in s. 104(4) not applying provided that the declaration of indefeasible vesting occurs within 21 years of the settling of the first trust
• no loss restriction event regarding private corporations included in the trust corpus

Neal Armstrong. Summary of 2025 Ruling 2024-1036051R3 F under s. 108(1) – trust – (g).