Subsection 108(1) - Definitions
Beneficiary
Administrative Policy
24 June 2015 External T.I. 2015-0565951E5 F - Legatee by particular
Is a legatee by particular title (i.e., the recipient of a specific bequest, even if not an heir by virtue of the Civil Code of Quebec ("CCQ"), a...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 104 - Subsection 104(13) | allocation of interest income of succession to legatee by particular title | 208 |
7 May 2003 External T.I. 2002-0164995 F - SENS DE ENSEMBLE DES BENEFICIE
CRA indicated that the extended definition of beneficiary in s. 108(1) applied only for the purposes of ss. 104 to 108, and that although the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 110.6 - Subsection 110.6(14) - Paragraph 110.6(14)(c) - Subparagraph 110.6(14)(c)(ii) | “all of the beneficiaries” only references those of the potential class who have been designated as beneficiaries | 119 |
19 August 1994 External T.I. 9415745 - DEFINITION OF BENEFICIARY
A properly executed release or surrender of all of an individual's interest in a trust, including any right within the meaning of s. 245(25) as...
Capital Interest
Articles
Hayhurst, "Transactions in Income and Capital Interests in Trusts", 1988 Conference Report, c. 38
Discussion of background to introduction of personal trust rule.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - General Concepts - Fair Market Value - Other | 10 | |
| Tax Topics - Income Tax Act - Section 107 - Subsection 107(2.1) | 29 | |
| Tax Topics - Income Tax Act - Section 107 - Subsection 107(2) | 30 |
Cost Amount
Administrative Policy
10 October 2014 APFF Roundtable, 2014-0538261C6 F - Disposition of capital interest/personal trust
In order to settle the capital interest in a discretionary family trust of a beneficiary who is related to the trustees, that beneficiary agrees...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 107 - Subsection 107(2) | issuance of note by trust is not distribution of trust property | 81 |
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) | non-deductible interest on note issued to beneficiary | 198 |
Eligible Taxable Capital Gains
Administrative Policy
26 November 2020 STEP Roundtable Q. 17, 2020-0837001C6 - Trust Pass-Through of CGE
A graduated rate estate distributed a taxable capital gain - realized from the sale of qualified small business corporation (QSBC) shares,- to the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 104 - Subsection 104(21.2) | the QSBC share character of capital gains can be flowed out in a 2-tier trust structure | 412 |
Income Interest
Cases
Canada v. Propep Inc., 2010 DTC 5088 [at at 6882], 2009 FCA 274
As an individual was an income beneficiary of the trust, he was to be regarded for purposes of the Act as a beneficiary of the trust.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(25) | potential beneficiary was a beneficiary | 284 |
| Tax Topics - Income Tax Act - Section 256 - Subsection 256(1.2) - Paragraph 256(1.2)(f) | potential beneficiary was a beneficiary | 282 |
Administrative Policy
IT-385R2 "Disposition of an Income Interest in a Trust"
Preferred Beneficiary
Administrative Policy
17 May 1994 External T.I. 9411285 - STEP GRANDCHILD AS A PREFERRED BENEFICIARY
The word grandchild includes a step-grandchild.
Settlor
Administrative Policy
IT-374 "Meaning of 'Settlor'"
Testamentary Trust
Administrative Policy
16 December 2014 External T.I. 2014-0539841E5 F - Testamentary Trust
Would a trust created by will in favour of the child of the deceased (the "Child Trust") cease to qualify as a testamentary trust in the year of...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(8) - Paragraph 248(8)(a) | subsequent will-directed transfer from spousal trust to residue trust occurred as consequence of death | 182 |
11 October 2013 APFF Roundtable, 2013-0493671C6 F - Testamentary trust beneficiary of inter vivos trust
When asked to confirm that 2011-0417391E5 F signified that "all the testamentary trusts which are created in the future for one of the...
12 June 2012 STEP CRA Roundtable, 2012-0442931C6 - 2012 STEP Question 8
In the situation where the estate trustees are instructed under the Will to set up a number of trusts from the residue of the estate, CRA...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(8) - Paragraph 248(8)(a) | trusts established out of residue | 42 |
26 June 2012 External T.I. 2011-0417391E5 F - Bien remis à une fiducie
Where the trustees of a Quebec inter vivos trust have the power to appoint beneficiaries including a testamentary trust, does the testamentary...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(25) | testamentary trust that was included in the class of potential beneficiaries of a discretionary inter vivos trust was a beneficiary | 248 |
14 March 2012 External T.I. 2011-0423291E5 F - Fiducie pour soi-même sans limite d'âge
Two spouses (Mr. X and Ms. X) and their two adult children wish to contribute their jointly owned shares of Holdco to a newly-settled protective...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 73 - Subsection 73(1.01) - Paragraph 73(1.01)(c) - Subparagraph 73(1.01)(c)(ii) | joint protective trust would not satisfy s. 73(1.01)(c)(ii) | 180 |
| Tax Topics - Income Tax Act - Section 73 - Subsection 73(1.01) - Paragraph 73(1.01)(c) - Subparagraph 73(1.01)(c)(iii) - Clause 73(1.01)(c)(iii)(A) | two spouses separate from their children can create a joint spousal or common-law partner trust | 156 |
| Tax Topics - Income Tax Act - Section 107.4 - Subsection 107.4(1) - Paragraph 107.4(1)(a) | joint protective trust would not satisfy paras. (a) and (e) of "qualifying disposition" | 209 |
30 November 1998 External T.I. 9826465 - 108(1) - TESTAMENTARY TRUST
A trust created out of an individual's estate by a court order for the sole benefit of the mentally handicapped son of the deceased during the...
23 September 1998 External T.I. 9800555 F - FIDUCIE SUCCESSIVE - FIDUCIE TESTAMENTAIRE
Trusts for the minor children which, by pursuant to an individual’s will, were to receive a gift over of the remainder from a spousal trust...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(9.1) | trusts for the minor children which, by will, were to receive a gift over of the remainder from a spousal trust established by that will, were deemed by s. 248(9.1) to be testamentary trusts | 152 |
23 February 1994 External T.I. 9336735 F - Testamentary Trust - IT-381R2
The comments in IT-381R2, paragraph 21 (respecting paragraph (b)) also apply to paragraph (c) of the definition.
5 March 1991 T.I. (Tax Window, No. 1, p. 22, ¶1137)
A payment of cash to an estate to enable it to pay its liabilities is a contribution of property, which could result in the trust losing its...
30 April 1990 Memorandum: 26 April 1990 T.I. (September 1990 Access Letter, ¶1427)
An income beneficiary may agree to pay a trust's tax liability arising from a designation under ss.104(13.1) or (13.2) without there being...
19 April 1990 T.I. (July 1990 Access Letter, ¶1324)
After reconsidering its technical interpretation of 7 December 1989, RCT was of the view that where an income beneficiary has agreed to bear the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 70 - Subsection 70(6) | 46 |
7 December 1989 T.I. (May 1990 Access Letter, ¶1225)
Where a beneficiary makes a payment to the trustee to enable the trustee to pay the tax liability of the trust caused by a designation under s....
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 104 - Subsection 104(13.1) | 33 | |
| Tax Topics - Income Tax Act - Section 70 - Subsection 70(6) | 53 |
26 September 89 T.I. (February 1990 Access Letter, ¶1113)
The payment of tax on behalf of a testamentary trust potentially can convert it into an inter vivos trust.
IT-381R2 "Trusts - Deduction of Amounts Paid or Payable to Beneficiaries and Flow-Through of Taxable Capital Gains to Beneficiaries" under "Double Taxation Relief"
An income beneficiary may agree to pay a trust's tax liability arising from a designation under ss.104(13.1) or (13.2).
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 104 - Subsection 104(21.2) | 0 | |
| Tax Topics - Income Tax Act - Section 104 - Subsection 104(6) | 124 |
Articles
Elie Roth, Tim Youdan, Chris Anderson, Kim Brown, "Classification of Trusts for Income Tax Purposes", Chapter 2 of Canadian Taxation of Trusts (Canadian Tax Foundation), 2016.
Multiple testamentary trusts under will (p. 63)
[T]he estate of a deceased individual and other trusts funded from the estate generally qualify as...
H. Carr, "Definition of a Testamentary Trust", Goodman on Estate Planning, Vol. VII, No. 1, 1998, p. 490.
Paragraph (b)
Administrative Policy
10 June 2016 STEP Roundtable Q. 2, 2016-0634881C6 - GRE and multiple wills
CRA’s position respecting the graduated rate estate rules, that there is only one estate, which encompasses all of the world-wide property of...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Graduated Rate Estate | one estate even if offshore will unknown | 134 |
10 June 2016 STEP Roundtable Q. 1, 2016-0634871C6 - GREs and Testamentary Trusts
If the will of the deceased provides for the division of the residue into testamentary trusts (e.g., a spousal and children’s trust), the estate...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Graduated Rate Estate | division of an estate into testamentary trusts may accelerate (perhaps back to inception) the demise of the estate as a GRE | 449 |
| Tax Topics - Income Tax Act - Section 118.1 - Subsection 118.1(5.1) | estate must continue to satisfy the other GRE requirements following 36 mos. | 135 |
7 October 2011 Roundtable, 2011-0411851C6 F - Fiducie de protection d'actifs
For asset protection purposes, Mr. X transferred his preferred shares of Opco to an asset protection trust of which he was the sole beneficiary....
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - General Concepts - Effective Date | trust deed clause deeming trust property to be distributed immediately prior to death would not be recognized as taking effect at that time | 230 |
Paragraph (c)
Administrative Policy
26 February 2007 External T.I. 2005-0159431E5 F - Renonciation aux revenus d'une fiducie
CRA found that the renunciation of the income of a spouse trust by the spouse under Article 1285 of the Civil Code of Québec would not constitute...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 106 - Subsection 106(2) | s. 106(2) inapplicable to renunciation of income not yet realized | 36 |
Articles
Elie Roth, Tim Youdan, Chris Anderson, Kim Brown, "Classification of Trusts for Income Tax Purposes", Chapter 2 of Canadian Taxation of Trusts (Canadian Tax Foundation), 2016.
Waiver as contribution (p. 66)
On the basis of the ruling in Greenberg Estate [97 DTC 1380], the CRA has stated that the waiver of income by a...
Subparagraph (c)(i)
Administrative Policy
18 April 2005 External T.I. 2004-0093821E5 F - Fiducie créée par testament
Under a spouse trust, the spouse has the exclusive and unconditional right to all annual income but it remains in the spouse's discretion to not...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 70 - Subsection 70(6) - Paragraph 70(6)(b) | spouse electing not to receive income, so that it is added to corpus, does not taint spouse trust status | 181 |
Paragraph (d)
Administrative Policy
11 March 2013 External T.I. 2012-0432201E5 F - Payment of tax by an institute
A Quebec resident bequeaths property by way of substitution to the individual’s surviving spouse, with the property remaining on the spouse’s...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(3) - Paragraph 248(3)(a) | application of testamentary trust rules to a substitution by testament | 178 |
Articles
Elie Roth, Tim Youdan, Chris Anderson, Kim Brown, "Classification of Trusts for Income Tax Purposes", Chapter 2 of Canadian Taxation of Trusts (Canadian Tax Foundation), 2016.
Purpose (p. 64)
[T]his rule [in para. (d)] was implemented to prevent beneficiaries in the top marginal tax bracket from lending money to a...
Trust
Paragraph (a.1)
Cases
Labow v. Canada, 2012 DTC 5001 [at at 6501], 2011 FCA 305
The taxpayer, who employed both his wife and two part-time employees in his medical practice, deducted $150,000 and $247,691 for contributions he...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 251 - Subsection 251(1) - Paragraph 251(1)(c) | settlor with power to dismiss trustee | 84 |
| Tax Topics - Income Tax Act - Section 75 - Subsection 75(3) | 213 |
Administrative Policy
21 November 2002 External T.I. 2002-0141455 F - TITRES DETENUS PAR UN FIDUCIAIRE
CCRA indicated that the amendment of para. (a.1) to explicitly exclude s. 7(2) trusts confirmed that, under the more ambiguous previous language,...
Paragraph (g)
See Also
The Queen v. Boger Estate, 93 DTC 5276, [1993] 2 CTC 81 (FCA)
Heald JA summarized findings of the trial judge (p. 5279), which he later adopted (at p. 5281) as being "accurately stated":
- that an interest is...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 70 - Subsection 70(9) | 287 |
Administrative Policy
2022 Ruling 2020-0858451R3 F - Trust to trust transfer
Background
An inter vivo trust (“Trust1”) has the children and spouse of Mr. X and Aco (a corporation of which Trust 1 holds shares) as...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition - Paragraph (f) | no disposition on transfer of assets of Trust 1 to Trust 2 with essentially the same terms other than a clause facilitating irrevocable-vesting designations | 324 |
2022 Ruling 2021-0904611R3 F - Corporate reorganization and trust to trust transfer
A special-needs minor child (CC4), who was the sole beneficiary of an inter vivos trust for the child’s exclusive benefit, held non-voting Class...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition - Paragraph (f) | para. (f) applicable to transfer of shares for no consideration to new trust for same incapacitated minor beneficiary | 494 |
15 June 2021 STEP Roundtable Q. 6, 2021-0883021C6 - Vested Indefeasibly
(a) What is required for all interests in a trust to have vested indefeasibly; and
(b) how is this disclosed on the trust return?
(a) CRA noted...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 70 - Subsection 70(5) | s. 107.4(4) establishes floor for FMV proceeds under s. 70(5) of a trust capital interest that has vested indefeasibly | 97 |
29 May 2018 STEP Roundtable Q. 9, 2018-0744111C6 - Vested Indefeasibly
For purposes of the 21-year deemed disposition rule, a trust does not include a trust "all interests in which … have vested indefeasibly". What...
2016 Ruling 2014-0552321R3 F - Trust to trust Transfer
A discretionary inter vivos family trust (the “Old Trust”), which was approaching its 21st anniversary and originally had been settled by a...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition - Paragraph (f) | para. (f) exception applied on transfer from old discretionary inter vivos family trust to new trust with terms considered to be substantively the same | 782 |
| Tax Topics - Income Tax Act - Section 74.4 - Subsection 74.4(4) | having a trust interest vest indefeasibly in a minor is consistent with the minor not receiving or having any use of the trust capital | 468 |
| Tax Topics - Income Tax Act - Section 104 - Subsection 104(5.8) | 104(5.8) applied to transfer to new trust with the same beneficiaries and essentially the same terms | 51 |
2015 Ruling 2015-0610391R3 - Whether 75(2) will apply to new trusts
CRA rules that s. 75(2) does not apply to trust fund where the income therefrom but not the capital can be distributed to the settlor, and no...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 75 - Subsection 75(2) | 75(2) does not apply to trust fund where the income therefrom but not the capital can be distributed to the settlor, and no encroachment decision occurs during his lifetime | 226 |
18 December 2013 External T.I. 2011-0414841E5 F - All interests vested indefeasibly
The trust indenture of a discretionary trust will be modified for it to become a non-discretionary trust, in order to avoid the application of the...
10 October 2008 Roundtable, 2008-0285051C6 F - Fiducies exclues aux fins de 104(4)
A trust was created in the course of an estate freeze of an operating corporation (OPCO). After the freeze, this trust subscribed for all of the...
17 March 2003 External T.I. 2002-0130685 F - Limite inférieure - JVM Participation
After referring to the meaning of “vested indefeasibly” discussed in IT-449R, CCRA stated:
Therefore, where the rights of the beneficiaries in...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 107.4 - Subsection 107.4(4) | purpose of s. 107.4(4) | 176 |
7 November 2001 External T.I. 2000-0038195 - Indefeasible Vesting of Interest in Trust
Respecting the application of the 21-year deemed disposition rule where a trust has one beneficiary that is neither the settlor nor the settlor's...
5 January 1995 External T.I. 9427445 - WHEN DO TRUST INTERESTS VEST INDEFEASIBLY?
At what point must all interests in a pre- 1972 spousal trust be vested indefeasibly in order for the exclusion in para. (g) to apply so as to...
30 June 1994 External T.I. 9408895 - TRUSTS - MEANING OF "VESTED INDEFEASIBLY"
Respecting a question as to whether that all interests in a Trust had vested indefeasibly for purposes of the predecessor of para. (g), CRA...
Articles
Catherine Brown, "Vested Indefeasibly: Its Importance for Tax Purposes", 2006 Canadian Tax Journal, Issue No. 4
Framework for determining indefeasible vesting
[T]he following may serve as a useful framework to determine whether an interest is ‘vested...
Subsection 108(2) - When trust is a unit trust
Paragraph 108(2)(a)
Administrative Policy
2023 Ruling 2022-0958681R3 - Conversion to open-end unit trust
Background
The Fund is a mutual fund trust, a REIT and a closed-end unit trust described in s. 108(2)(b). Except for its Special Units, it has...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 97 - Subsection 97(2) | description of use of exchangeable unit structure by REIT | 146 |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition | no disposition on conversion of closed-end to open end unit trust | 90 |
OSC Staff Notice 81-734 “Summary Report for Investment Fund and Structured Product Issuers” September 13, 2023
OSC position on "redeemable on demand" (p. 8)
What is an Investment Fund
There are two main types of investment funds: mutual funds and NRIFs...
2018 Ruling 2017-0723421R3 - Creation of a new Mutual Fund Trust
Trust and LP
The Trust, which will be settled by an officer of its Manager, will invest directly, but mostly through investing in the single class...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 253.1 | MFT investing directly in subsidiary LP | 113 |
16 November 2015 External T.I. 2015-0595041E5 - Mutual Fund Trusts & 108(2)(a)(i)
Where a provincial securities commission has a policy on what it considers to be redeemable on demand, will CRA generally accept such policy in...
OSC, Proposed Amendments (Related to Modernization of Investment Fund Product Regulation (Phase 2)), Supplement to the OSC Bulletin,, Vol. 36, Issue, 13, 27 March 2013
Annex A
Specific Questions of the CSA Relating to the Proposed 81-102 Amendments
Annual Redemptions of Securities Based on NAV
1. Securities...
2004 Ruling 2004-0074311R3 - Income Trust
The Class A units of a trust (the "Trust") are redeemable for the lesser of X% of their market price [over an unspecified period] and X% of the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 104 - Subsection 104(7.1) | subordinated Class B units with catch-up feature, acceptable | 218 |
13 August 2004 Internal T.I. 2004-0076861I7 F - Investissement à l'étranger
Regarding the possibility that the taxpayer had an interest in a non-resident trust from which she was prohibited from receiving any distribution...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(c) | return payable on maturity that was not expressed as a percentage or fraction qualified as interest | 263 |
| Tax Topics - Income Tax Act - Section 75 - Subsection 75(2) | s. 75(2) would apply where loan proceeds would ultimately revert to the taxpayer | 74 |
2000 Ruling 2000-0007513 - Index Tracking Mutual Fund
Ruling that provision for suspension of the right of unitholders to redeem in the event that units ceased to trade by order of a competent...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 132 - Subsection 132(6) | securities lending | 32 |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition | no disposition on consolidation of units | 72 |
2000 Ruling 2000-0041683 - Redeemable on Demand - Ruling
Ruling that a trust would satisfy the redeemable-on-demand requirements of s. 108(2)(a) where its net asset value was calculated on a monthly...
1999 Ruling 9914303 - CONVERSION TO OPEN END UNIT TRUST
Favourable ruling where the units were redeemable for the lesser of 95% of the closing unit price on the date the units were surrendered for...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition | no disposition on conversion to open-end fund | 35 |
1999 Ruling 9918323 - XXXXXXXXXX Business of a Commercial Trust
The only assets of an inter vivos trust (the "MFT") are (as to a cost of 85%) interest-bearing promissory notes ("First Notes") with a term of 25...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 206 - Paragraph 206(1)(h) | notes of subsidiary unit trust of MFT were not foreign property - so that MFT's units also not foreign property | 52 |
27 May 1997 CTF Roundtable Q. 6, 9707276 - REDEEMABLE ON DEMAND
The trust deed for a "quasi-mutual fund trust" described in s. 204.4(2)(d) provided that payment of unit redemption proceeds “shall be made...
29 September 1994 Internal T.I. 9409416 - MUTUAL FUND AND UNIT TRUST
A trust (for example, a trust whose units are traded on a stock exchange and that gives the unitholders the option of demanding redemption of the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Regulations - Regulation 4803 - Subsection 4803(2) - Paragraph 4803(2)(a) | filing of offering memorandum | 90 |
28 February 1994 External T.I. 9403285 - REAL ESTATE INVESTMENT TRUST
Where the trustees of a REIT have the right to suspend the redemption of its units for valid reasons and such a suspension is imposed, the fund...
11 February 1993 Memorandum (Tax Window, No. 29, p. 9, ¶2428)
The requirements of s. 108(2)(a)(i) will be considered to be met even though the administrator of the unit trust may suspend redemption of units...
91 C.R. - Q.6
RC will not in general view a unit that is issued in accordance with the rules of securities commissions as failing to meet the requirements of s....
22 November 89 Review Committee Memorandum (April 90 Access Letter, ¶1177)
On one occasion, the Committee had been unable to conclude that a fundamental requirement of redemption at the demand of the holder was met where...
Articles
Elie Roth, Tim Youdan, Chris Anderson, Kim Brown, "Classification of Trusts for Income Tax Purposes", Chapter 2 of Canadian Taxation of Trusts (Canadian Tax Foundation), 2016.
Satisfaction of redemption requirement (p. 72)
[T]he CRA has ruled that the redemption requirement was satisfied when a trust indenture provided...
Allgood, "Athabasca Oil Sands Trust: Tax Implications of Royalty Trust", Corporate Finance, Vol. V, No. 1, p. 348
Includes discussion of whether a royalty interest is a "security".
Botz, "Mutual Fund Trusts and Unit Trusts: Selected Tax and Legal Issues", 1994 Canadian Tax Journal, Vol. 42, No. 4, p. 1037.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 104 - Subsection 104(7.1) | 0 | |
| Tax Topics - Income Tax Act - Section 52 - Subsection 52(6) | 0 |
Paragraph 108(2)(b)
See Also
Shaughnessy v. The Queen, 2002 DTC 1272 (TCC)
In the context of a case dealing with whether the taxpayer had acquired an interest in a condominium unit with a reasonable expectation of profit,...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - General Concepts - Onus | 62 | |
| Tax Topics - Income Tax Act - Section 3 - Paragraph 3(a) - Business Source/Reasonable Expectation of Profit | 103 |
Clevite Development Ltd. v. MNR, 61 DTC 1093, [1961] CTC 147 (Ex. Ct.)
Thurlow J. referred with approval to the distinction drawn in IRC v. Desoutter Brothers Ltd., [1946] 1 All E.R. 58 (C.A.) and Tootal Co. Ltd. v....
International Brotherhood of Teamsters v. Daniel, 439 U.S. 551 (1979)
A non-contributory compulsory pension plan did not constitute an "investment contract" for purposes of the Securities Exchange Act of 1934 under...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Statutory Interpretation - Interpretation Bulletins, etc. | 98 |
Re Ontario Securities Commission and British Canadian Commodity Options Ltd. (1979), 22 OR (2d) 278 (HCJ.)
The respondent sold across Canada options to purchase at a future time commodities which were traded on the London commodities market. The option...
Pacific Coast Coin Exchange v. Ontario Securities Commission (1977), 80 DLR (3d) 529, [1978] 2 S.C.R. 112
The appellant offered bags of silver coin for sale on margin (with 85% of all margin account purchasers closing out their account without taking...
Prather v. King Resources Co., [1973] 1 WWR 700 (Alta. C.A.)
An employee was found to have breached the condition in an employee stock option plan that "the purchase of stock thereunder shall be for...
Canadian & Foreign Securities Co. Ltd. v. MNR, 72 DTC 6354, [1972] CTC 391 (FCTD)
Demand loans made to a company which were evidenced by unsecured promissory notes were found to be "securities" for purposes of the definition of...
State of Hawaii v. Hawaii Market Center, Inc., 485 P. 2d 105 (1971 (Hawaii S.C.))
A member of the public, who became a "founder-member" of a retail store by purchasing either a sewing machine or a cookware set for an amount in...
Re Peczenik's Settlement, [1964] 2 All E.R. 339 (Ch. D.)
A clause in a deed of settlement directing the trustees to hold the trust fund "for the purpose of investing such funds in any shares stocks...
C.I.R. v. Reinhold (1953), 34 TC 389 (C.S. (1st. Div.))
Before going on to find that an admission of an intention to resell at the first opportunity did not necessarily mean that rental houses were...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Real Estate | 183 |
Tootal Broadhurst Lee Co. Ltd. v. I.R.C., [1949] 1 All E.R. 261 (HL)
In finding that royalties received by a manufacturer from patents which it had developed in its research department or acquired from others were...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Statutory Interpretation - Ordinary Meaning | 38 |
Re Lilly's Will Trust, [1948] 2 All E.R. 906 (Ch. D.)
In finding that an exclusion in a bequest for "investments securities for money or leasehold property" did not include proceeds of life insurance...
In Re Power, [1947] 1 Ch. 572
A clause in a will stated that "all monies requiring to be invested under this my will may be invested by the trustee in any manner ... including...
SEC v. Howey Co., 328 U.S. 293 (1946)
Units of a citrus grove development coupled with a contract for cultivation, marketing and remitting the net proceeds to the investor constituted...
C.I.R. v. Desoutter Bros., Ltd. (1945), 29 TC 155 (C.A.)
Greene M.R. found that royalties derived by the taxpayer from the licensing of patents covering improvements in electrically operated hand tools...
In Re Ferry, Allen v. Allen, [1945] N.Z.L.R. 448 (S.C.)
In finding that the phrase "my investments of all descriptions" in a will did not include money on current account at a bank, Kennedy J. stated...
In re Lewis' Will Trust, [1937] 1 Ch. 118
In finding that a bequest of "the following securities (or the investments representing the same at my death if they shall have been converted...
Khoo Tek Keong v. Ch'ng Joo Tuan Neoh, [1934] A.C. 529 (PC)
A will which empowered the trustees "to invest all monies liable to be invested in such investments as they in their absolute discretion think...
Pennsylvania Ry. Co. v. Interstate Commerce Commission, 66 F. (2d) 37 (3d C.A. (1933))
An acquisition by one railroad company of shares in another railroad company was found not to be contrary to the Clayton Act by virtue of an...
C.I.R. v. Tyre Investment Trust, Ltd. (1924), 12 TC 646 (K.B.D.)
The taxpayer was incorporated by two individual shareholders of Dunlop Rubber Company, Limited (the "English Company") in order to acquire the...
Wragg v. Palmer, [1919] 2 Ch. 58
A will which authorized the trustees "to invest any monies forming part of the trust estate in their names and at their discretion in or upon such...
Price v. Newton, [1905] 2 Ch. 55
In finding that a bequest of "mortgages, debentures, and other securities for money, shares, stocks, and pecuniary investments" did not include a...
Commissioner of Taxes v. Australian Mutual Provident Society (1902), 22 N.Z.L.R. 445 (C.A.)
When the holder of a life insurance policy fell into arrears on the payment of premiums, the taxpayer was entitled to charge the cash surrender...
Worts v. Worts (1889), 18 OR 332 (Ch. D.)
A clause in a will which authorized the trustees "to invest in such securities as they shall think proper ... with power to retain any investments...
Re Barwick, [1884] OR 710 (Ch. D.)
In finding that a deed of settlement which directed the trustee to "invest" the trust property "in such estate or securities, whether real or...
Smith v. Smith (1876), 23 Ch. R. 114 (Ont CA)
A power in a will authorizing the trustees to "invest" certain proceeds was seen by the majority to authorize the purchase of some land adjoining...
Archibald v. Hartley (1852), 21 L.J. Ch. 399
In finding that a will which empowered the trustees to keep the estate "invested at my decease in or upon any stocks, funds, or securities...
Administrative Policy
2012 Ruling 2011-0429611R3 - Variation of Trust Indenture
Overview
An open end (as described in s. 108(2)(a)) mutual fund trust (the Trust), whose units (the Units) trade on an exchange, wishes to qualify...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 104 - Subsection 104(7.1) | addition of preferred units | 259 |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition | addition of preferred REIT units not disposition/ exercise of right to redesignate fixed preferred units as floating rate, is disposition | 305 |
2012 Ruling 2011-0410181R3 - Variation of trust indenture
An open-end (as described in s. 108(2)(a)) mutual fund trust (the Trust), whose units (the Units) trade on a stapled basis with a second open-end...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 104 - Subsection 104(7.1) | addition of preferred units with proportionate allocation of taxable income to distributions | 345 |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition | addition of preferred units | 210 |
15 April 2003 External T.I. 2002-0167675 - Debt guaranteed by a Mutual Fund Trust
A mutual fund trust that is not engaged in the business of lending money or guaranteeing loans will not violate the requirements of s. 108(2)(b)...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 132 - Subsection 132(6) | guarantee fee may taint | 61 |
17 March 2003 External T.I. 2001-0095675 - Unit Trust investing in a limited partnership
Except where a limited partnership interest is a marketable security, the Act will look through a limited partnership to the assets held by the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 96 | Ontario partnership debt owing to limited partner respected | 309 |
| Tax Topics - Income Tax Act - Section 253.1 | bad activities in sub LP do not jeopardize satisfaction of s. 108(2)(b)(ii) undertaking test | 50 |
2001 Ruling 2001-0075693 - REIT Voting/Income Rights
The operation of parking lots by a REIT will be part of the leasing and managing of its real properties and, therefore, will satisfy the...
2000 Ruling 2000-0028343 - Foreign Prop. held by Registered Investment
It had been accepted in a previous ruling that the holding of each of a number of foreign incorporated businesses through a separate Canadian...
12 March 1997 Ruling 9641723 - Mutual fund trusts - Special warrants
Special warrants are not considered marketable securities.
30 November 1996 Ruling 9726153 - MUTUAL FUND TRUST FOREIGN INVESTMENT
80% and 10% tests were implicitly treated as being based on relative cost amounts.
5 February 1990 TI 5-9434 [bank deposits as cash]
"Cash" for purposes of s. 108(2)(b)(iii) includes bank deposits.
26 January 1994 External T.I. 9401165 - HEDGING TRANSACTIONS
In response to a question on whether a foreign exchange forward contract would be considered to be a marketable security, RC indicated that such a...
13 December 1991 T.I. (Tax Window, No. 11, p. 6, ¶1538)
The activity of buying commodity futures contracts long or short is considered to be investing; and unit trusts which comply with the redemption...
19 April 1990 T.I. (September 1990 Access Letter, ¶1444)
The lending of qualified securities pursuant to a securities lending arrangement as defined in s. 260(1) constitutes an undertaking that is...
6 July 1989 TI 5-8243 [hedging contracts as marketable securities/use of costs rather than FMV]
"We have taken the position that a unit trust may, depending upon the facts, enter into certain hedging contracts on foreign currencies in order...
Articles
Richards, "Real Estate Investment Trust: New Opportunities", Canadian Current Tax, July 1994, p. J. 57.
Brussa, "Creative Use of Mutual Fund Trusts and Royalty Interest as Financing Vehicles", Canadian Petroleum Tax Journal, Spring 1988, p. 35.
K.A. Lahey, "The Taxation of Securities Transactions - II: Recent Legislation", 1980 McGill Law Journal, pp. 46-81, p. 73
Discussion of the meaning of the term "security".
Subsection 108(3) - Income of a trust in certain provisions
See Also
Re Lotzkar (1985), 17 DLR (4th) 539 (BCCA)
Lambert, J.A. stated: "The question of how net income is to be calculated, for a devise of net income, depends, first, on the intention of the...
Carver v. Duncan; Bosanquet v. Allen, [1985] BTC 248 (HL)
Although a settlor may provide that capital expenses shall or may be paid out of income, the settlor cannot alter the capital nature of those...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(b) - Capital Expenditure v. Expense - Improvements v. Repairs or Running Expense | 130 |
Administrative Policy
Folio S6-F4-C1, "Testamentary Spouse or Common-law Partner Trusts," 3 February 2022
1.21 Dividend exclusions. The effect of the dividend exclusions is that “a trust will not be precluded from qualifying as a spouse trust...
Articles
Elie Roth, Tim Youdan, Chris Anderson, Kim Brown, "Taxation of Trusts Resident in Canada", Chapter 3 of Canadian Taxation of Trusts, (Canadian Tax Foundation), 2016.
Determination of income for trust accounting purposes (pp. 129-130)
[A] trust's income for the purposes of the Act often differs from its income...
Subsection 108(5) - Interpretation
Paragraph 108(5)(a)
See Also
Kemp v. MNR, [1947] CTC 343, 3 DTC 1078, [1946-1948] DTC 1078 (Ex Ct)
In the years in question, the only revenues of a testamentary trust were from non-exempt sources. However, the trustees made distributions to the...
Gilhooly v. MNR, [1945] CTC 203, [1941-1946] DTC 725 (Ex Ct)
An estate received a portion of its income as dividends from a Canadian mining company and paid a portion of its income to the taxpayer, who had a...
Archer-Shee v. Baker (1927), 11 TC 749 (HL)
The taxpayer, who under the will of her father was the sole life tenant of the estate, contended that she was taxable in respect of securities...
Administrative Policy
11 October 2019 APFF Roundtable Q. 15, 2019-0812741C6 F - TOSI and interest income earned by a trust
CRA noted that the preamble to s. 108(5)(a) provides that that rule does not apply to s. 120.4, and stated: “Thus, for the purposes of section...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 120.4 - Subsection 120.4(1) - Split Income - Paragraph (d) - Subparagraph (d)(i) | beneficiaries of a family trust can benefit from the excluded debt exception from the TOSI rules | 215 |
13 June 2017 STEP Roundtable Q. 4, 2017-0695141C6 - U.S. grantor trust
A Canadian resident and U.S. citizen who settled a revocable living trust for him and his family, is considered for U.S. purposes to be earning...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 126 - Subsection 126(1) | dual-resident individual who is subject to direct U.S. tax on income from a s. 94(3) trust can generate a FTC if the trust income is annually distributed or he elects under s. 94(16) | 503 |
| Tax Topics - Income Tax Act - Section 94 - Subsection 94(16) | election of US-citizen/Cdn-resident beneficiary of grantor trust so as to generate FTC | 254 |
24 March 2016 Internal T.I. 2016-0634191I7 - Income from a U.S. trust
A Canadian-resident is receiving, for her lifetime, annual distributions of dividends from U.S. companies as an income beneficiary of a U.S....
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Treaties - Income Tax Conventions | all U.S. Treasury Technical Explanations accepted | 47 |
Subsection 108(7) - Interests acquired for consideration
Administrative Policy
11 June 2015 External T.I. 2014-0522641E5 F - Usufruct
A father, who has carried on a farming business for a number of years, grants the bare ownership of the property for consideration to his son...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 110.6 - Subsection 110.6(1) - Qualified Farm or Fishing Property | termination of usufruct between father and son on farmland, which was a deemed trust, did not entail disposition of qualified farm property | 246 |
| Tax Topics - Income Tax Act - Section 73 - Subsection 73(3) | creation of usufruct between father and son entails transfer of trust interest, not farm property | 180 |
S6-F2-C1 - Disposition of an Income Interest in a Trust
1.3 Sometimes a person who contributes property to a personal trust, is also a beneficiary of the trust. In such situations, subsection 108(7)...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 106 - Subsection 106(1) | 195 | |
| Tax Topics - Income Tax Act - Section 106 - Subsection 106(2) | 644 | |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(8) - Paragraph 248(8)(c) | 106 |
7 January 2004 External T.I. 2003-001953
If a trust is established by contributions from two or more unrelated persons and those unrelated persons are beneficiaries of the trust, their...