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 2025

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

As World Tax unveils its much-anticipated rankings for 2026, we highlight the two Brazilian firms that had a standout year of tier promotions
ITR understands that UK Chancellor Rachel Reeves will announce a consultation on the proposed financial reward scheme, which had left advisers fretting
The long-running dispute centres on Medtronic’s use of the comparable uncontrolled transaction TP method; in other news, Paul Hastings and FTI Consulting both made double tax hires
The boutique Australian firm’s TP award recognition proves that world-class advisory services aren’t limited to the ‘big four’, the firm’s founder tells ITR
Canadian and Indian dual VAT models have been a source of inspiration for the Brazilian model, but the latter has unique and innovative features, the OECD paper claimed
More sophisticated use of technology, heightened TP scrutiny and stricter filing requirements are making South African Revenue Service audits a formidable challenge
The hire of Doug Wick expands Baker McKenzie’s state and local tax practice and adds to the firm’s growing ex-IRS expertise
One year after Nuwaru joined the WTS network, leaders James Jobson and Matthew Missaghi reflect on the firm’s mission to offer mid-tier pricing but deliver top-tier results
Join ITR's Head of Research, John Harrison, for an overview of key dates, new developments, best practices, and more for next year’s research cycle
The president’s tariff regime has already caused misery for taxpayers. Losing at the Supreme Court would mean it was all for nothing
Gift this article