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

From Dhruva Advisors to Svalner Atlas, Ryan is growing fast. Tom Shave discusses consolidation, competition, and tax’s private equity debate
Awards
ITR is delighted to reveal the shortlisted nominees for the Middle East Tax Awards
The UK has confirmed its approach to the OECD’s side-by-side deal, but US-parented groups may find pillar two compliance remains far from straightforward
Fragmented pillar two taxation and increased use of AI by tax authorities have left clients fearful of heightened disputes exposure
Grant Thornton Advisors’ latest acquisition has produced the fifth-largest US advisory firm by revenue, but there’s still a clear gulf between it and the big four
Crowe joins Grant Thornton, WTS and Ryan in attracting PE investment, suggesting that dealmakers remain bullish on the tax advisory sector
HMRC expects advisers to meet ever-higher compliance criteria. After 24 consecutive qualified audit opinions, many will ask whether HMRC should hold itself to the same standards
The purchase of Marosa represents the second major tax tech consolidation this week, raising questions of a broader industry trend
Peru’s approach to TP is increasingly at odds with OECD-style profitability policies, exposing multinational groups to asymmetric tax adjustments
Hany Elnaggar examines how the region's legacy economic substance regimes and the OECD's pillar two framework are converging on the same underlying test
Gift this article