CRA rules on the s. 107(2) rollout of taxable Canadian property by a non-resident former s. 75(2) trust to its corporate beneficiary
CRA ruled that the s. 107(2) rollover applied to the distribution by a non-resident trust, to which s. 94(8.2) (effectively, s. 75(2)) no longer applied because its settlor had been dissolved, of Canadian rental property to its sole beneficiary, which was a (presumably non-resident) corporation related to the Canadian-resident lessee of the property. The stated purpose of the distribution was to avoid the application of the 21-year rule in s. 104(4) to the property, which had a significant accrued capital gain and recapture. No representation was made that the settlor was not wound-up for the purpose of permitting the accessing of the rollover.
CRA also ruled that mortgage debt, and unsecured debt owing to a group “Finco,” that was assumed on the distribution, qualified as an amount payable for the property by the beneficiary for purposes of s. 20(1)(c)(ii).