SCC upholds new test for residency of trusts
01 June 2012
Ed Kroft QC and Jeffrey Shafer of Blake, Cassels & Graydon analyse the recent Supreme Court of Canada St Michael Trust Corp ruling and explain why the court’s decision has several implications for taxpayers.
The Supreme Court of Canada (SCC) released its decision in Fundy Settlement v. Canada (St. Michael Trust Corp. or Garron Family Trust). A unanimous panel of seven judges dismissed the taxpayer's appeal, as had the two courts below. This decision confirms the original ruling of Justice Woods of the Tax Court of Canada (Tax Court) that the "central management and control" test used to determine residency of corporations for tax purposes also applies to the determination of the residence of trusts.
Facts of the case
This case – one of two companion cases with substantially similar facts – dealt with a family trust settled by an individual resident in St. Vincent, for the benefit of Canadian resident beneficiaries. The trustee of the family trust, St Michael Trust Corp (St Michael), is a corporation resident in Barbados. When the trust disposed of the shares of two Canadian resident corporations, the purchaser withheld...
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