25 October 1989 Ruling AC 45333 F - Attribution and Inter Vivos Transfer Shares of the Capital Stock of a Small Business Corporation

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.

Subject: 19(1) Form T2211

We are replying to your memorandum of August 15, 1989, concerning attribution and the inter vivos transfer shares of the capital stock of a small business corporation.

In the situation under your review, the following facts were presented:

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Although a properly filed election will not be invalidated a late filed return, there is no provision in the Act which would permit the election to be filed late (i.e. after the filing of the return).  Unless Assessing and Enquiries Directorate has a policy which allows for elections to be filed late, our view as expressed in our memorandum of April 5, 1989, remains unchanged.

With respect to the second question raised, it is a question of fact to whether or not a trust exists.  The submission of part of the separation agreement does not, in our view, support the existence of a trust.  While there is no easy definition of a trust, DWM Waters, in his Law of Trusts in Canada quotes the following:

     "A trust is an equitable obligation binding a person (who is called a trustee) to deal with property over which he has control (which is called the trust property), for the benefit of persons (who are called the beneficiaries or cestuis que trust), of whom he may himself be one, and anyone of whom may enforce the obligation".

Three essential characteristics fundamental to a trust are the certainty of the intent to create a trust, the certainty of the property to be placed in trust and the certainty as to who are the beneficiaries of the trust.  In an inter vivos family trust such as that which you describe, these characteristics would normally be expressed in a written trust document.  In the absence of documentation which indicates

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We trust our comments will be of assistance to you.

B.W. DathDirectorBusiness and General DivisionSpecialty Rulings DirectorateLegislative and IntergovernmentalAffairs Branch