CRA is reviewing the scope of the concept of settlement of property on an inter vivos trust for GST purposes

On Friday, CRA provided its written responses to most of the questions posed to it at the March 8, 2018 CBA Commodity Taxes Roundtable. In our Roundtables Section, we provide the complete text of these written responses together with summaries of the questions posed. The complete text of the questions posed will be posted on the Canadian Bar website in due course for the CBA Section members.

S. 268 of the ETA provides that where a person “settles” property on an inter vivos trust, the person is deemed to have made and the trust is deemed to have received a supply by way of sale of the property for consideration equal to the amount determined under the ITA to be the proceeds of disposition of the property.

CRA indicated that where X settles a trust and then, some years later, contributes (to use a neutral word) further property to the trust, s. 268 will be considered to apply to that subsequent property contribution. However, CRA is still reviewing the issue of whether s. 268 would apply if Y subsequently contributed to the trust, i.e., if is “currently reviewing the issue of whether contributions made by another person (such as Y in the question) would fall within the meaning of the term ‘settles’.”

Neal Armstrong. Summary of 8 March 2018 CBA Commodity Taxes Roundtable, Q.2 under ETA s. 268.