Finance proposes to extend the principal residence exemption to an inter vivos disability trust
Beginning after 2016, eligibility for the principal residence exemption was limited to three categories of trusts, including a qualified disability trust that was a testamentary trust - so that an inter vivos trust established for the benefit of an individual eligible for the disability tax credit (DTC) was excluded. Finance has now provided a comfort letter recommending, effective for taxation years beginning after 2016, that the principal residence exemption be amended to also accommodate an inter vivos trust for a resident child, or present or previous spouse, of the settlor, where that beneficiary is eligible for the DTC and, during his or her lifetime, no other person can obtain the use of the trust income or capital.
Neal Armstrong. Summary of 4 September 2019 Finance comfort letter under s. 54 – principal residence – (c.1)(iii.1)(B).