STEP Canada requests CRA comments on the application of the EIFEL "excluded entity" definition to an “eligible group entity” that is a discretionary trust holding a US residence

The Tax Technical Committee of STEP Canada requested a technical interpretation regarding the situation where a discretionary personal trust for the benefit of the spouse and child of the individual (Mr. X) controlling various Canadian real estate corporations constituted an “eligible group entity” in respect of those corporations under the EIFEL rules.

Would such trust qualify for the exemption in s. (c)(i) of the excluded entity definition if its only asset was a US personal residence? Ideally, CRA will indicate that the ownership of personal property outside Canada by a trustee in Canada will constitute a Canadian activity or undertaking of the trust for these purposes if any decisions that are made regarding the personal residence are made by the trustee while in Canada.

The Committee also asked CRA if it would make any difference if there was incidental rental income earned by the property.

Neal Armstrong. Summary of 21 April 2025 letter of Tax Technical Committee of STEP Canada to the Income Tax Rulings Directorate entitled “Technical Interpretation Request Relating to EIFEL and Cross-Border Trust Holding Foreign Personal Use Property” under S. 18.2(1) - Excluded Entity - Subparagraph (c)(i).