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.
XXXXXXXXXX 931765
Attention: XXXXXXXXXX
December 17, 1993
Dear Sirs:
Re: Subsection 75(2) of the Income Tax Act (the "Act")
We are writing in reply to your letter of June 8, 1993 concerning subsection 75(2) of the Act. We apologize for the delay in responding to your letter.
In your letter you have outlined four hypothetical scenarios for our consideration. The information in these scenarios is brief, making it difficult to consider the application of subsection 75(2) of the Act.
There is not enough information to determine whether subsection 75(2) of the Act would apply in scenario 1. The fact that the settlor and trustee are two different people does not automatically mean that subsection 75(2) of the Act would not apply. As indicated in paragraph 3 of Interpretation Bulletin IT-369R there will be attribution to the person from whom the property was directly or indirectly received (the settlor in your scenarios) if the terms of the trust are such that the property:
(a) may revert to the person,
(b) may be distributed to beneficiaries to be determined by that person at a time after the trust was created, or
(c) may only be disposed or with the consent of, or at the direction of, that person while alive.
In scenarios 2, 3 and 4 the settlor is also a trustee of the trust and all decisions require the unanimous consent of the trustees. In our opinion, paragraph 75(2)(b) of the Act would apply to the settlor in those scenarios as the property held by the respective trusts could only be disposed of with the consent of, or in accordance with the direction of, the settlor of those trusts. We do not have enough information to determine whether any other provisions of those trusts would also result in the application of subsection 75(2) of the Act.
This opinion is not an advance income tax ruling. It represents our opinion of the law as it generally applies and is provided in accordance with the procedures outlined in paragraph 21 of Information Circular 70-6R2.
Yours truly,
for Director Manufacturing Industries, Partnerships and Trusts Section Rulings Directorate Legislative and Intergovernmental Affairs Branch
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© Her Majesty the Queen in Right of Canada, 1993
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