Principal Issues: Whether the principal residence exemption would be available during the years a house was owned by a trust and inhabited by a person who only had a life interest. On her death, her five brothers would have the right to the residual in the trust.
Reasons: A housing unit may be designated as a principal residence of a personal trust that is resident in Canada for each year in which the property is ordinarily inhabited by a specified beneficiary of the trust. In order to qualify as a "specified beneficiary", a person must, inter alia, be an individual who is "beneficially interested" in the trust. The term "beneficially interested" is partially defined in the Act. A person beneficially interested in a trust includes any person that has a right as a beneficiary under a trust to receive income or capital of the trust. Since the amendment to that definition in 1997 to make it an "inclusive" type of definition, the term may now include a person who has the right to reside in a housing unit owned by the trust rent-free.