Regulation 2600

Subsection 2600(2)

Administrative Policy

28 September 2020 External T.I. 2019-0800551E5 - Provincial Residency of a TFSA Trust

office of investment manager of TFSA treated as a PE of the TFSA

The Alberta-resident holder of a TFSA is responsible for making investment decisions and determining contributions and withdrawals, and its trustee is a trust company with its head office in Ontario that has entered into an agency agreement with an investment firm to which it has delegated responsibility for the day-to-day administration of the TFSA trust, including asset custody, trade execution, handling payments and record keeping and tax filings. The TFSA trust and holder are served by the agent’s Alberta branch. Where does the TFSA trust reside?

After indicating that the trust likely would be resident at the location of the agent’s place of business that serves the TFSA trust and holder, where the administrative and investment functions of the plan had been largely delegated by the trustee to the agent, CRA went on to state:

Where the TFSA trust resides in a province on the last day of the taxation year and has no income from a business carried on through a permanent establishment outside the province, the income earned in the taxation year is the TFSA trust’s income for the year (pursuant to subsection 146.2(6)), which will be taxable in that province. In contrast, where the TFSA trust’s income earned in a taxation year includes income from a business carried on through a permanent establishment outside the province of residence, that business income will be taxable in the province in which it was earned.

A TFSA trust will have a permanent establishment in a province if the TFSA trust carries on business in that province through an agent of the trustee who has a fixed place of business in that province and has general authority to contract for the trustee. This would be the case in the situation you have described.

In summary, non-qualified investment income is taxable in the province where the TFSA trust resides on the last day of the tax year and business income is taxable in the province in which it is earned.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 2 - Subsection 2(1) central management and control of a TFSA trust is generally exercised in the office of the investment firm to which most of the trustee’s functions have been delegated 325
Tax Topics - Income Tax Regulations - Regulation 2601 - Subsection 2601(2) office of investment manager was PE to which securities trading income of TFSA was allocated 202