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.
Peter Lee (613)957-2745
December 15, 1988
Dear Sir:
Re: Reversionary Trust
We are writing in reply to your letter of September 26, 1988 wherein you requested our opinion whether, in certain situations, we would consider that property is being held in a trust subject to any of the conditions listed in paragraphs 75(2)(a) and (b) of the Income Tax Act.
Our Opinions
While we are not prepared to comment on specific fact situations, except on an advance ruling basis, we would offer the following comments on the general situation.
In our opinion, generally a genuine loan to a trust or an unconditional bona fide sale of income-producing property to a trust would not, in and by itself, be considered to result in property being held in the trust on any of the conditions listed in paragraphs 75(2)(a) and (b), assuming that the loan or the sale is outside or independent of the terms of the trust. It is a question of fact whether a loan is a genuine loan or whether a sale of property is an unconditional bona fide sale.
Subsection 56(4.1) or section 74.1 may however be applicable in certain situations.
Our opinion would ordinarily remain the same whether or not the person making the loan or selling the income-producing property is the settlor of the trust, the sole trustee of the trust, or both.
We hope that our above-noted views are helpful to you. Our opinions are not advance income tax rulings and accordingly are not binding on the Department.
Yours truly,
for Director Financial Industries Division Rulings Directorate
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