Bouchard - Court of Quebec finds that family-trust beneficiaries themselves decided to expend distributions for the benefit of the family patriarch, so that such distributions were not a sham

The Pierre-André Bouchard Family Trust realized a capital gain of $950,000 in 2014, which it distributed in December 2014 to its two beneficiaries: $800,000 to Mr. Bouchard’s wife; and $150,000 to his daughter. Both beneficiaries claimed the enhanced capital gains exemption.

The ARQ denied the deduction claimed by the trust under the Quebec equivalent of s. 104(6) and added $950,000 to Mr. Bouchard's income pursuant to the Quebec equivalent of s.105(2), taking the position that the distributions were a sham.

In allowing the appeals of Mr. Bouchard and the trust, Riverin JCQ found that the two beneficiaries had each received and exercised control over the funds distributed to them, and had expended the funds as determined by them, without direction from Mr. Bouchard.

Mr. Bouchard’s wife spent most of the funds on renovating the residence jointly owned by her and Mr. Bouchard and, as to the balance of $150,000, purchased a Tesla as an anniversary gift to him. His daughter used a portion of the funds to repay some debts and make a gift to him in recognition of the amounts he had spent on her education and, as for the remaining $80,000, she lent it to him for safekeeping on her behalf.

Neal Armstrong. Summary of Bouchard v. Agence du revenu du Québec, 2026 QCCQ 4373 under s. 104(24).