Evoy Estate – Tax Court of Canada finds that a s. 104(2) trust-consolidation designation requires that the respective trusts’ future income cannot accrue to different beneficiaries

S. 104(2) provides that CRA may designate that multiple trusts be treated as one trust where inter alia they each are “conditioned so that the income thereof accrues or will ultimately accrue to the same beneficiary or group or class of beneficiaries.” Paris J found that this condition was not satisfied where three testamentary trusts had the same income beneficiary (the surviving wife) during her lifetime, but thereafter the income of each trust was to go to one of the three children of the testator (or their respective children).

Paris J stated that the quoted test “contemplate[s] a consideration of the right to receive the income of the trust over the entire lifetime of the trust rather than for each taxation year,” whereas here, after the death of the wife, the income of each trust went to a separate family rather than “ultimately accruing to the same group or class of beneficiaries.”

Neal Armstrong. Summary of Evoy Estate v. The Queen, 2016 TCC 263 under s. 104(2).