CRA intimates that use by the children of the cottage held in an alter ego or joint spousal trust is not permitted

The general CRA position is that where, pursuant to the terms of the trust indenture or will, a trust owns personal-use property (e.g., a cottage) for the benefit or personal use of a beneficiary, no taxable benefit will be assessed to that beneficiary for the rent-free use of such property.

When asked whether this position also applies to a trust that is an alter ego trust or a joint spousal trust or a common-law partner trust, CRA noted that in order to meet the conditions of s. 73(1.01)(c), the alter ego trust must be a trust under which no person except the settlor may receive or otherwise obtain the use of any of the income or capital of the trust before the settlor’s death – and similarly, for a joint spousal trust or a common-law spousal trust.

CRA’s anemic language may suggest that this is not a point it will pursue with gusto.

Neal Armstrong. Summary of 27 October 2020 CTF Roundtable, Q.7 under s. 73(1.01)(c) and s. 105(1).