Caplan – Court of Quebec finds that family trust income purportedly distributed to the children beneficiaries was in fact received by the father as beneficiary
Two university-age children received income-distribution cheques from the discretionary family trust, and endorsed them to their father (who was one of the two trustees as well as a beneficiary), who professed to spend such funds on expenditures for the benefit of the children, such as covering part of the costs of the family car and condominium. In confirming the inclusion of the distributed income amounts in the income of the father under the Quebec equivalent of s. 104(13), Bourgeois JCQ stated:
… Michael and Megan each acted as an accommodation party, whether as an agent or nominee, for their father.
… Michael and Megan never had control of the sums that were paid to them by the Trust.
Laplante is similar, although it put more emphasis on there being a “simulation” (a concept akin to sham).
Neal Armstrong. Summary of Caplan v. Agence du revenu du Québec, 2019 QCCQ 3269 under s. 104(13).