CRA confirms that an agent not acting in relation to a trust has no trust reporting obligations

Regarding whether the new trust-reporting rules apply to an arrangement under which a person can reasonably be considered to act as agent for one or more other persons with respect to all dealings with certain property, without the arrangement being a trust, CRA indicated that ss. 104(1) and 150(1.3) do not apply to an arrangement if it is not a trust, and that the determination of whether an arrangement is a trust is not something on which it generally comments as this is the responsibility of the parties, and then stated:

To the extent that a given arrangement is not a trust and does not give rise to the creation of a trust under the applicable private law, and is not otherwise deemed to be a trust for the purposes of the Act, it will not be an arrangement described in subsections 104(1) and 150(1.3). Accordingly, the arrangement will not be a trust for the purposes of section 150.

These comments generally support the proposition that a general partner holding limited partnership property as agent for the partners does not in this regard have trust reporting obligations. Note that, in the common law provinces, the GP cannot hold the partnership property as trustee for the partnership, which is not an entity, it cannot hold such property as bare trustee for the limited partners as it rather than they have the discretion as to such property’s use, and it is, vis-à-vis the limited partners, the one with the entitlement to exercise control and other ownership rights over the partnership property by virtue of the limited partnership law (see Hudson’s Bay v. OMERS, Kucor and Lehndorff) rather than by virtue of trust law.

Neal Armstrong. Summary of 27 February 2024 External T.I. 2024-1006681E5 under s. 150(1.3).