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.
923689
XXXXXXXXXX F.B. Fontaine
(613) 957-4364
May 10, 1993
Dear Sir:
Re: Transfer of Land
This is in reply to your letter dated November 9, 1992 concerning whether land was transferred in 1972 by a father to his son in trust for the benefit of the son and his two siblings.
The situation described refers to completed transactions involving specific taxpayers. As indicated in paragraph 21 of Information Circular 70-6R2 (the "Circular") (copy enclosed), requests for written opinions on completed transactions are generally considered by the taxpayer's local District Taxation Office. Advance income tax rulings, as stated at paragraph 3 of the Circular, are given by the Department as to how it will interpret specific provisions of the income tax law in its application to a definite contemplated transaction. Accordingly, we are unable to provide the information requested. However, we are prepared to offer the following general comments.
For the purposes of the Income Tax Act (the "Act"), the existence of a trust can only be determined from the terms under which the trust was created. Whether or not a taxpayer transfers property absolutely to another or in trust for the benefit of others is a question of fact. In this regard, where a retrospective determination must be made as to the existence of a trust at a particular time, the Department would expect to see testimony from the settlor/donor and the beneficiary/donee (or one of them where the other is deceased), including an affidavit, as evidence that the trust was in fact created at that time. In the case where the property is land, it is necessary that such testimony be in writing. Accordingly, it is our view that, without proper testimony, a document purporting that a trust was retroactively created, would not, in and by itself, determine the retroactive existence of the trust.
Assuming that a personal trust exists at a particular time and the trust distributes trust property after that time to its beneficiaries in satisfaction of their capital interests, or part thereof, in the trust, subsection 107(2) of the Act would allow such property to be transferred by the trust on a tax deferred basis to the beneficiaries.
Our comments represent an expression of opinion only and are not to be construed as an advance ruling binding on the Department.
We hope our comments will be of assistance to you.
Yours truly,
for Director Manufacturing Industries, Partnerships and Trusts Division Rulings Directorate Legislative and Intergovernmental Affairs Branch
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