Dimane Enterprises - Tax Court of Canada finds that Junior did not receive a distribution if father still had control over the funds

After receiving brilliant tax advice, father set up an employee profit sharing plan for the "employees" of his incorporated family business located in his home (i.e., his children, who performed household chores – it was essential to the success of the business that the lawn be mowed), with payments by the corporation to the EPSP then purportedly distributed to them.

Before concluding that the EPSP was a sham, D’Arcy J found that the distributions out of the EPSP were to a bank account controlled by father, so that the children "never had control of these funds,", and so that the "real transactions" were "the payment of amounts by the [corporation] to [father]."

This may be relevant to the question whether a family trust has distributed income to children beneficiaries (see 2013-0475501I7 F, Langer Family Trust, Degrace Family Trust, 2011-0428661E5).

Neal Armstrong.  Summary of Dimane Enterprises Ltd. v. The Queen, 2014 TCC 334 under General Concepts – Sham.