Goldman – Tax Court of Canada finds that s. 160(1) did not apply to a transfer to an individual qua trustee of a valid oral trust

The taxpayer was designated as the beneficiary of her mother’s RRSP, but was orally told by her mother that this was occurring on the condition that she was to use those proceeds to pay various bills and estate-related expenses and divide the remainder equally with her two sisters.

Graham J found that, on this basis, the taxpayer had received the net proceeds of the RRSP under a trust. This trust was a separate person from its trustee (the taxpayer), so that such transfer gave rise to a s. 160(1) liability only to that trust rather than to the taxpayer. CRA could have assessed the taxpayer regarding this s. 160(1) liability under s. 159(3) (the taxpayer had not applied for a s. 159(2) certificate before distributing the trust funds). However, CRA had failed to do so. Thus, before getting to the next point, she had no liability under s. 160(1).

That point was that there was an indirect transfer from her mother to her for s. 160(1) purposes respecting the transfer to her of her share of the residue of the trust and regarding her appropriation of other trust funds including the payment out of such funds of legal fees relating to this tax dispute. However, s. 160(1) did not apply to her charging executor’s fees and paying them out of the trust funds.

Neal Armstrong. Summaries of Goldman v. The Queen, 2021 TCC 13 under s. 160(1), s. 104(2), s. 159(3) and Rule 49(1).