News of Note

S. 237(1.1) requires a “disclosing person” to provide their tax identification number to a “collecting person,” being a person who is required to make an information return under the Act. Additionally, s. 237(2)(a) requires the collecting person to make a “reasonable effort” to obtain the number.

CRA indicated that repeated attempts at the last known contact would generally be consistent with “reasonable effort,” provided the collecting person maintained adequate records of their efforts. In particular, the collecting person should keep a record of the date of the verbal or written request, an example of the request form, the names of the people contacted, and copies of any written requests. Repeatedly sending mail to the same address might not amount to a reasonable effort if the collecting person had other means of contacting the disclosing person, such as a phone number or an email address.

Regarding the offence under s. 239(2.3) to knowingly use, communicate, or permit another to use or communicate a tax identification number other than for a purpose required under the Act or otherwise by law, without the written consent of the disclosing person, CRA noted that it would generally consider this requirement to be met where the disclosing person affirmatively checks any unchecked-by-default checkbox, which is separate from or clearly distinguished from general terms and conditions, using clear and specific language describing the particular use or communication of the tax identification number in question.

Neal Armstrong. Summaries of 2 June 2026 STEP Roundtable, Q.11 under s. 237(2) and s. 239(2.3).

The corporate trustee (“Gleewin”) of a discretionary trust resolved to set aside, for the benefit of two beneficiaries (Mr. Bendel and a family company (“Gleewin Investments”)), amounts out of its income to be held on separate trusts. Unlike Mr. Bendel, Gleewin Investments did not call for payment of the amount set aside for it.

The Commissioner assessed on the basis that, by not so doing, Gleewin Investments had made a “loan” to the trust that, thus, was deemed to be a dividend. “Loan” was defined to include:

• “a provision of credit or any other form of financial accommodation” (s. 109D(3)(b) of the 1936 Act); and
• “a transaction (whatever its terms or form) which in substance effects a loan of money” (s. 109D(3)(d)).

The majority first noted that:

Plainly, Gleewin Investments' forbearance here did not … even meet the substance of such a concept [of loan], as no promise of repayment was ever given.

The majority then stated:

[T]here is no "provision ... of financial accommodation" for the purposes of s 109D(3)(b) when a private company does nothing. The provision of financial accommodation requires some initial or anterior transfer of value or, put in different terms, the supply or grant of some sort of pecuniary assistance, involving some bilateral activity.

In further finding that there was no loan within the meaning of s. 109D(3)(d), the majority stated (at para. 74)

Simply doing nothing, or acquiescing to the retention of funds, is not a transaction which in substance effects a loan. To find otherwise would be to ignore the word "transaction", which by its ordinary meaning refers to some interchange or interaction between entities. … Moreover, if the Commissioner were correct, it would mean that a private company beneficiary in the position of being able to invoke the rule in Saunders v Vautier would be taken to have made a loan to a trustee for the purposes of s 109D(3) for the period during which the beneficiary could have called for the trust to be terminated, but did not. That is a highly improbable outcome.

In her dissenting reasons, Jagot J stated that, at common law, “if … a trustee admits to a beneficiary that the trustee has appropriated a sum as payable to the beneficiary, the character of the relationship is changed so that the trustee is liable in law to the beneficiary for the payment of that sum, which obligation the beneficiary could vindicate by an action for money had and received against the trustee. …"

She further stated:

[I]rrespective of the fact that Gleewin determined to "set aside" portions of Trust income rather than to "pay" such portions, Gleewin was immediately bound by the resolutions either to pay a beneficiary its entitlement (as and when calculated) or to credit the amounts payable in its books of account whether or not a beneficiary required it to do so. … [I]f Gleewin took the latter option in respect of a beneficiary's entitlement … the beneficiary could either accept that Gleewin could continue to hold those amounts or require Gleewin to pay those amounts to it.

This decision may be relevant to the question whether s. 15(2) can apply where a corporate beneficiary chooses not to require payment of an amount that a trust (with a connected individual beneficiary) has set aside for it, and of whether such amount would be considered to be payable for s. 104(24) purposes.

Neal Armstrong. Summary of Commissioner of Taxation v Bendel [2026] HCA 18 under s. 15(2).

The designations by the Minister of notifiable transactions under s. 237.4 in NT 2023-02 include transactions and series of transactions that seek to avoid or defer the 21-year deemed realization rule in s. 104(4) or that seek to avoid the rules in ss. 107(5) and (2.1) on the distribution of trust property to a non-resident beneficiary, even though the property continues to be held directly or indirectly by a trust or by a non-resident beneficiary.

However, para. 81 of the CRA guidance provides an exception, stating:

“Generally, transactions which limit, in whole or in part, the future growth in the value of shares of Opco (common shares) by having the owner - Old Trust- exchange the common shares for new shares that have a fixed value (preferred shares) that is equal to the fair market value (FMV) of the common shares and where a New Trust subscribes to the growth in the value of shares of Opco (“a freeze”) or where the Old Trust sells the common shares at FMV to the New Trust would not be considered substantially similar to NT 2023-02 insofar as no rights and restrictions are expected to avoid or defer the 21 -year deemed realization rule or to avoid the rules in subsections 107(5) and (2.1) through a significant reduction in FMV.”

CRA indicated that it would generally not seek to apply the GAAR to these para. 81 transactions because they would not, in and by themselves, be considered to result in a misuse or abuse of s. 104(4), 104(5), 107(2.1) or 107(5).

Neal Armstrong. Summary of 2 June 2026 STEP Roundtable, Q.9 under s. 245(4).

CRA confirmed that, generally, where the designated beneficiary of an RRSP was the former spouse of the annuitant, that beneficiary would received the RRSP proceeds on a tax-free basis to the extent of the FMV on death, so that the estate of the deceased (and, thus, ultimately its beneficiaries), would instead bear the full tax liability associated with the RRSP. In particular, the amount that was deemed to have been received as income by the deceased annuitant under s. 146(8.8) equal to the RRSP FMV on death would be excluded from the former spouse’s income and, thus, would be received tax-free.

Neal Armstrong. Summaries of 2 June 2026 STEP Roundtable, Q.7 under s. 146(8.8) and s. 160.2(1).