Décary,
J:—The
point
in
issue
is
to
decide
if
the
income
of
a
trust
for
the
years
1975
and
1976
should
be
assessed
as
income
of
the
plaintiff,
the
settlor,
under
the
provisions
of
subsection
75(1)
of
the
Income
Tax
Act,
or
as
income
of
his
three
children,
each
for
one
third
of
that
income
as
beneficiaries
of
the
trust
and
each
being
under
18
years
of
age.
The
learned
assistant
chairman
of
the
Tax
Review
Board
dismissed
the
appeal
and
held
that
the
amount
of
$9,333.33
for
1975
and
of
$9,333.33
for
1976
paid
to
the
trust
as
dividend
from
shares
transferred
to
the
trust
were
income
of
the
plaintiff
under
the
provisions
of
subsection
75(1)
of
the
Income
Tax
Act,
which
reads
as
follows:
Where
a
taxpayer
had,
since
1930,
transferred
property
to
a
person
who
was
under
18
years
of
age,
either
directly
or
indirectly,
by
means
of
a
trust
or
by
any
other
means
whatever,
any
income
or
losss,
as
the
case
may
be,
for
a
taxation
year
from
the
property
or
from
property
substituted
therefor
shall,
during
the
lifetime
of
the
transferor
while
he
is
resident
in
Canada,
deemed
to
be
income
or
a
loss,
as
the
case
may
be,
of
the
transferor
and
not
of
the
transferee,
unless
the
transferee
has,
before
the
end
of
the
year,
attained
the
age
of
18
years.
The
trust
deed
at
Article
VIII
provides
as
follows:
ARTICLE
VIII:
PAYMENT
OF
INCOME
AND
CAPITAL
The
Trustee
shall
invest
and
keep
invested
the
Trust
Estate
until
the
first
day
of
December,
1991
(hereinafter
referred
to
as
‘distribution
date’)
and
may,
from
time
to
time,
pay
none,
some
or
all
of
the
net
income
derived
therefrom
or
none,
some
or
all
of
the
capital
thereof
to
or
for
the
benefit
of
one,
some
or
all
of
the
children
of
the
Settlor
as
the
Trustee
shall,
in
his
absolute
and
uncontrolled
discretion,
determine;
any
income
not
so
paid
or
applied
in
any
calendar
year
to
be
added
to
form
part
of
the
Trust
Estate;
on
the
distribution
date
the
Trust
Estate
shall
be
divided
into
as
many
equal
shares
as
there
shall
be
children
of
the
Settlor
then
alive;
any
child
of
the
Settlor
who
shall
not
be
then
alive,
but
who
shall
have
children
him
or
her
surviving,
shall
be
considered
alive
for
the
purposes
of
such
distribution;
the
Trustee
shall
keep
the
share
from
each
such
child
invested
and
shall
pay
income
and
capital
to
such
child
upon
such
terms
and
in
such
manner
as
hereinfore
provided
until
such
child
shall
attain
the
age
of
25
years,
whereupon
3
of
his
or
her
share
shall
be
paid
to
him
or
her
for
his
or
her
own
use
absolutely;
the
remainder
of
such
share
shall
be
kept
invested
as
aforesaid
and
the
income
and
capital
shall
be
paid
as
aforesaid
until
such
child
shall
attain
the
age
of
30
years
whereupon
the
amount
of
such
share
remaining
shall
be
paid
to
him
or
her
for
his
or
her
own
use
absolutely;
provided,
however,
that
in
the
event
that
any
such
child
shall
die
prior
to
the
distribution
date
or,
surviving
the
distribution
date
shall
die
prior
to
attaining
the
age
of
25
years
or,
shall
die
prior
to
attaining
the
age
of
30
years,
leaving
children
him
or
her
surviving,
then
the
interest
of
such
child
in
his
or
her
share
shall
be
subject
to
the
defeasance
and
the
share
of
such
child
or
the
amount
thereof
remaining
shall
be
held
in
trust
for
the
children
of
such
deceased
child
alive
at
the
date
of
such
deceased
child’s
death
in
equal
shares
per
stirpes,
upon
such
terms
and
in
such
manner
as
herein
provided;
in
the
further
event
that
such
deceased
child
shall
die
in
such
manner
as
aforesaid,
leaving
no
children
him
or
her
surviving,
then
the
share
of
such
deceased
child
or
the
amount
thereof
remaining
shall
be
subject
to
defeasance
and
shall
be
held
in
trust
for
the
brothers
and
sisters
of
such
deceased
child
alive
at
the
date
of
death
of
such
deceased
child
in
such
manner
as
herein
provided;
in
the
further
event
that
there
shall
be
no
children
of
the
Settlor
alive
at
the
distribution
date
or
all
of
them
shall
die
prior
to
attaining
the
age
of
25
years
or,
if
one
or
some
of
them
shall
have
attained
the
age
of
25
years
but
shall
die
prior
to
attaining
the
age
of
30
years
leaving
no
children
them
Surviving,
to
pay
over
the
Trust
Estate
to
or
for
the
benefit
of
MERIDA
PHYLLIS
SACHS
for
her
own
use
absolutely.
In
view
of
the
provisions
of
that
Article
VIII,
the
children
of
plaintiff
were
vested
subject
to
divestment
if
one
beneficiary
dies
without
any
surviving
children.
The
children
being
under
the
age
of
18
when
the
dividends
from
the
shares
transferred
to
the
trust
were
received
by
the
trust
of
which
they
are
beneficiaries,
the
provisions
of
subsection
75(1)
apply
and
the
plaintiff
was
properly
assessed
on
the
said
income.
The
appeal
shall
be
dismissed
with
costs.
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