Words and Phrases - "belong"
9 July 2024 Internal T.I. 2023-0976691I7 - Film Tax Credit and Alter Ego Trust
In order for a fee paid to a corporation for the executive producer servicers of an individual employed by the corporation to qualify for the B.C. production services tax credit, there was a requirement (essentially copied from ITA s. 125.4(1) – labour expenditure – (b)(iii) and s. 125.5(1) – Canadian labour expenditure - (b)(iii)) that the shares of the corporation “belong” to a BC-based individual – whereas, here, the shares were held by the individual in his capacity of trustee of an alter ego trust which had been settled by him (to avoid B.C. probate duties) and of which he was the life beneficiary.
In finding that this shareholding satisfied the above “belong to” test, rather than the shares belonging to the trust, the Directorate stated:
[T]he shares … belong to [the individual] and not the Trust for purposes of the tax credit. As a matter of law, a trust does not have an independent legal existence and is a legal relationship. Property to which a trust relationship applies is held by the trustee(s) of a trust in order to fulfil their obligations as trustees. {Here] … [the individual] has legal ownership of the shares in [the individual’s] role as trustee, and beneficial ownership of the shares as the sole beneficiary who is entitled to the income on the shares while [the individual] is alive … .
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 125.4 - Subsection 125.4(1) - Labour Expenditure - Paragraph (b) - Subparagraph (b)(iii) | shares of sole-shareholder corporation “belonged” to the individual who was the trustee and life beneficiary of the alter ego trust holding those shares, rather than to the trust | 270 |
Distillers Corp - Seagrams Ltd v. MNR, 80 DTC 1649 (T.R.B.)
An indirect subsidiary of the taxpayer did not qualify as a subsidiary controlled corporation given that "the word 'belong' means that the shares must belong directly to the parent company". (p. 1659)
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Subsidiary Controlled Corporation | 33 |
Re City of Kitchener and Regional Assessment Commissioner for Regional Municipality of Waterloo (1978), 23 OR (2d) 190 (Ont. D. Ct.)
A property that a municipality had sold to a developer, and leased back from the developer under a net lease that provided that the property would become that of the City upon the expiration of the 20-year term of the lease, was found to belong to the municipality for purposes of the exemption in paragraph 9 of s. 3 of the Assessment Act (Ontario). Pennell J. stated (p. 192):
"It seems to me that it would have been a simple matter for the Legislature to use the expression 'owned by' or 'vested in' if it intended that the words 'belonging to' in s. 3, para. 9 be synonymous with 'absolute ownership'. The use of the word 'belong to' does not import that the whole title to the property is met, because it frequently occurs in transactions that property may 'belong to' one who has less than an unqualified title."