All material subject to strictly enforced copyright laws. © 2022 ITR is part of the Euromoney Institutional Investor PLC group.

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 from across our site

This week European Commission officials consider legal loopholes to secure minimum corporate taxation, while Cisco and Microsoft shareholders call for tax transparency.
The fast-food company’s tax settlement with French authorities strengthens the need for businesses to review their TP arrangements and documentation.
The full ALP model will be adopted through a new TP regime, which is set to boost the country’s investments and tax certainty.
Tax professionals have called on the UK government to reconsider its online sales tax as it would affect the economy at the worst time.
Tax professionals have called on companies to act urgently to meet e-invoicing compliance targets as the EU plans to ramp up digitisation.
In the wake of India’s ambitious 25-year plan for economic growth, ITR has partnered with leading tax commentators to discuss what the future will look like for India and for the rest of the world.
But experts cast doubt on HMRC's data and believe COVID-19 would have increased the revenue shortfall.
EY’s plan to separate its auditing and consulting businesses might lessen scrutiny from global regulators, but the brand identity could suffer, say sources.
Multinationals are asking world leaders to put a scale on carbon pricing to tackle climate change at the 48th G7 summit in Germany, from June 26 to 28.
The state secretary told the French press that the country continues to oppose pillar two’s global minimum tax rate following an Ecofin meeting last week.
We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree