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: Change of trustee - does trust cease to exist
Position: Where terms of trust allow for a change of trustees, generally the trust would not cease to exist.
Reasons: Trust law, contract law and definition of "dispostion".
XXXXXXXXXX 990347
M. P. Sarazin
Attention: XXXXXXXXXX
May 19, 1999
Dear Sirs:
Re: XXXXXXXXXX: Deferred Salary Leave Plan
This is in reply to your letter dated February 1, 1999 wherein you ask whether a change of the trustee of a deferred salary leave plan from one financial institution/trustee to another for plan administration purposes would result in the creation of a new trust or the taxation of amounts held within the existing trust.
It appears that the interpretation you seek relates to proposed transactions to be undertaken by a specific taxpayer and, therefore, we bring to your attention Information Circular 70-6R3 dated December 30, 1996. Confirmation of tax consequences with respect to proposed transactions involving specific taxpayers will only be provided in response to a request for an advance income tax ruling. If you wish to obtain an advance income tax ruling income tax ruling with respect to specific transactions which are contemplated, a written request can be submitted in accordance with the Information Circular. Nevertheless, we can provide you with the following general comments.
The determination of whether a trust exists is a question of trust law. Where it is determined that a trust does in fact exist, then the terms of the trust itself will generally determine when the trust ceases to exist for purposes of the Income Tax Act (the "Act").
Where the terms of a trust provide or allow for the change of the trustee and there are no other changes in the terms of the trust, we are of the general view that the change of trustee, in and by itself, would not result in a disposition of property by the trust or an income inclusion in the hands of the beneficiaries of the trust. In this regard, we refer you to paragraph (e) of the definition of “disposition” in section 54 of the Act where it states that a change in legal ownership without a change in beneficial ownership (other than specific exclusions which do not appear to be applicable to this issue) would not constitute a disposition for purposes of the Act.
We trust these comments will be of assistance.
Yours truly,
Paul Lynch
for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
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