B.C. Investment Management – Supreme Court of Canada indicates that a statutory trust is not necessarily a trust

BCI was a B.C. Crown agent which was formed to manage and hold investments for the provincial pension plans. The B.C. governing Act (the PSPPA) created a statutory trust under which each pension plan only had an entitlement to units in the investment pools managed by BCI and did not have ownership in any investment pool assets. CRA took the view (and ultimately assessed BCI for $40M in uncollected GST on the basis) that ETA s. 267.1(5)(a) deemed the statutory trust to be a person separate from BCI as agent for the provincial Crown, so that the investment services of BCI were supplied to that separate person.

In finding that such assessments would contravene s. 125 of the Constitution Act, 1867 but for the effect of Intergovernmental Agreements between B.C. and the federal government, Karakatsanis J focused on the ownership interest of BCI (the provincial Crown agent) in the portfolio assets:

In this case, the ETA places the burden of the tax on the Portfolio assets to which BCI holds legal title. BCI, a Crown agent, has thus successfully shown that it has an ownership interest in the property which bears the federal tax. I recognize that the beneficiaries of the trust may also be seen as bearing the burden of the tax. However, the key point is that the provincial Crown’s interest is being taxed under federal law, which is not permitted by s. 125.

In interesting obiter, she questioned whether the statutory arrangement created by the PSPPA, which stated that the portfolio assets were to be “held in trust,” in fact created a trust, stating:

[I]t is not clear whether the PSPPA … contain sufficient language to satisfy the three certainties. For example, the statutory framework does not identify a beneficiary for the Portfolio assets.

Neal Armstrong. Summaries of Canada (Attorney General) v. British Columbia Investment Management Corp., 2019 SCC 63 under ITA s. 104(1) and Constitution Act, s. 125.