CRA concludes that a Liechtenstein stiftung was a trust for ITA purposes

A Liechtenstein stiftung was formed in order to invest its funds and make distributions to beneficiaries as determined in the discretion of its foundation council. It had legal personality and owned the property allocated by the founder.

CRA first noted that “[d]escribing a trust by reference to dual ownership or equity in an international context would have the result of ignoring all civil law arrangements that have adopted the trust idea of the administration of assets for the benefit of others.” It concluded that the stiftung had more in common with a trust than a corporation (and, thus, should be treated as a trust for ITA purposes) given inter alia that:

• it had no form of “share capital” or other ownership interests which conveyed a right to distributions of earnings or capital
• it was created by an endowment from a founder much like a trust settlement
• it had beneficiaries, named in its by-laws
• its executive bodies administered and used the property transferred by the founder for the benefit and advantage of the beneficiaries similarly to a trustee
• unlike a corporation, it was restricted to investing rather than carrying on a commercial business.

These conclusions were consistent with 2008-0266251I7 and 2010-0388611I7.

Neal Armstrong. Summary of 22 July 2023 Internal T.I. 2021-0883241I7 under s. 104(1).