CRA indicates that the central management and control of a TFSA trust is generally exercised in the office of the investment firm to which most of the trustee’s functions have been delegated
When asked where a self-directed TFSA was resident, CRA indicated that the trust would always be resident where its central management and control was factually exercised by the trustee – irrespective of the level of involvement of the TFSA holder in the decisions. However, CRA went on to indicate that where the administrative and investment functions of the plan had been largely delegated by its trustee, who was a trust company, to an investment firm, it would consider the central management and control of the trust to be exercised at the office where that firm carried out its delegated functions. Furthermore, if the TFSA carried on a taxable securities trading business, for purposes of determining the income of the trust that was allocable to a provincial permanent establishment of the trust, the:
TFSA trust will have a permanent establishment in a province if the TFSA trust carries on business in that province through an agent of the trustee who has a fixed place of business.
It went on to indicate that this would be the case in the situation described of substantial delegation of the trustee’s management and administrative functions to an investment firm.
This position (which CRA stated also generally applied to RRSP, RRIF, RESP and RDSP trusts) is of interest to investment trusts whose trustee has delegated most of its functions to an investment or fund manager, although it may be significant only for trusts whose trustee is a trust company that does not in fact exercise a major oversight role (cf. Discovery Trust, where a trust company trustee “worked”).