17 November 2000 Internal T.I. 2000-0054837 - Residency of a Trust

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues: Residency of an Estate

Position: general criteria (paragraph 1 of IT-447)

Reasons: IT-447

			November 17, 2000

	Headquarters	Headquarters
	International Tax Directorate		Resources, Partnerships and
	Transfer Pricing and Competent 		  Trusts Division
	  Authority Division		Johanne Desparois, M.Fisc.

	Attention: Sudha Dukkipati
			2000-005483

RESIDENCY OF AN ESTATE AND TRUSTS

We are responding to your email of November 6, 2000 regarding the above-noted subject. In brief, we understand that a resident of Canada is the sole executrix and one of the beneficiaries of her late mother's estate. The deceased was a resident of the U.S. when she died in 1993.

Although we have not examined the will and any other relevant documentation, we tend to reiterate your views that the estate is resident of Canada and therefore subject to tax in Canada based on the fact that the sole executrix is a resident of Canada and all decisions appear to be taken by the executrix. This conclusion is consistent with the position expressed in Interpretation Bulletin IT-447. Since you requested a response by November 15, 2000 we felt that a thorough examination of all relevant documentation was not necessary as the facts appear to be straightforward. However, we would be pleased to do such an analysis at a later date if so required.

You have also mentioned that the estate is resident of the U.S. and has filed U.S. returns in 1993, 1994 and 1995. Therefore, there seems to be a dual residency problem for the estate. As you mentioned, where dual residency occurs and there is double taxation of trust income, the determination of the residence of the trust for the purpose of avoiding double taxation of the trust income shall be dealt with by our Competent Authority pursuant to Article IV(4) of the Canada-U.S. Income Tax Convention (1980). If you require assistance in applying the tiebreaker rules under the treaty, we would be pleased to provide our comments.

In addition, you mentioned that upon the settlement of the above estate, two separate trusts were created for the benefit of the executrix's daughters. The above conclusion also applies for these trusts as the sole trustee is resident of Canada and all decisions appear to be taken by the trustee.

Marc Vanasse, CA
Manager
Resources, Partnerships and Trusts Division
Income Tax Rulings Directorate
Policy and Legislation Branch

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