St Michael Trust Corp loses Canada SC battle

International Tax Review is part of Legal Benchmarking Limited, 1-2 Paris Garden, London, SE1 8ND

Copyright © Legal Benchmarking Limited and its affiliated companies 2026

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

St Michael Trust Corp loses Canada SC battle

canada.jpg

St Michael Trust Corp has today lost its Supreme Court of Canada (SCC) battle over the tax residence of a trust.

The decision was unanimous, with all seven judges ruling against the taxpayer.

At stake was $450 million of capital gains realised by Barbados-constituted trusts. The Canada Revenue Agency said that the trusts owe Canadian income tax on the gains realised as residents of Canada.

The question before the court was whether these trusts were resident in Canada or the Barbados.

“The SCC decided the issue based on its application of the corporate test of central management and control to trusts,” said Ed Kroft QC, of Blake, Cassels & Graydon. “It deferred to the reasoning of the tax court judge and the Federal Court of Appeal panel on this issue. It agreed with the findings of fact by the trial judge that in this case there was no central management and control exercised by the trustees who only rendered administrative services.

“The last paragraph of the decision is interesting in that the SCC is saying that no one should infer that the SCC is agreeing or not with the Federal Court of Appeal on the application of section 94 or GAAR given that it dismissed the appeal on the basis that the trusts were resident in Canada.”

More to follow...

more across site & shared bottom lb ros

More from across our site

In the first of a two-part series on capital v revenue in R&D, Jayne Stokes explores these key concepts and where UK companies need to tread carefully
Magnus Pantzar is set to join as managing director after spending nearly a decade as EQT’s global head of tax
The OECD’s project was up for debate as Matt Williams spoke to ITR following BDO’s tax strategist survey, which uncovered increased complexity and costs among multinationals
Sponsored by Deloitte
Sameer Nurmohamed, partner, Deloitte Legal Canada
Sponsored by Deloitte
George Ankomah, partner, Tax & Regulatory Services, Deloitte Africa (Ghana)
The recent spree of firm mergers and acquisitions proves that geographic scale is the name of the game
The big four spin-off firm becomes Taxand’s second UK member; in other news, Haynes Boone launched a UK tax practice
Sponsored by Deloitte Luxembourg
Jean-Michel Henry and Mona El-Begawi of Deloitte Luxembourg examine the complexities created by timing differences in Luxembourg, EU, and OECD tax regimes
Stephanie Pantelidaki’s economic expertise will give Norton Rose Fulbright’s other teams ‘extra firepower,’ she says
Sponsored by MFA Legal & Tech
Samuel Fernandes de Almeida of MFA Legal & Tech assesses whether Portugal’s 7.5% surcharge on non-residents aligns with the EU’s free movement of capital principle and passes the proportionality test
Gift this article