CRA rules that s. 75(2) does not apply to trust fund where the income therefrom but not the capital can be distributed to the settlor, and no encroachment decision occurs during his lifetime

CRA ruled that s. 75(2) did not apply to property settled on a trust where during the settlor’s lifetime, no capital distributions could be made and income could only be distributed to the settlor or the settlor’s spouse. Only following the settlor’s death could the (numerous) trustees determine to distribute income and capital to the second-generation beneficiaries.

CRA also opined that s. 104(4) would not apply to the new trust 21 years later on the basis of a trust deed provision providing for the vesting (but not necessarily pay-out) of all trust interests before then.

Neal Armstrong. Summary of 2015 Ruling 2015-0610391R3 under s. 75(2).