Subsection 75(2) - Trusts
Cases
Canada v. Sommerer, 2012 DTC 5126 [at 7219], 2012 FCA 207
The taxpayer (a Canadian-resident individual) sold shares of a Canadian company to an Austrian private foundation (privatstiftung) which had been...
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| Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(1) | Austrian foundation likely not a trust | 181 |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(5) | 84 | |
| Tax Topics - Treaties | treaty applies to economic double taxation | 356 |
| Tax Topics - Treaties - Article 13 | attributed gain not included | 415 |
Patricia M. Fraser v. Her Majesty The Queen, 91 DTC 5123, [1991] 1 CTC 314 (FCTD), aff'd 95 DTC 5684 (FCA)
Subsection 75(2) did not apply to income earned by unit holders in a trust which used the subscription proceeds for the units to acquire mortgages...
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| Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(2) | 76 |
The Queen v. Quinn, 73 DTC 5215, [1973] CTC 258 (FCTD)
Under a contract with the Canadian Scholarship Trust Fund it was agreed that interest on funds deposited by the taxpayer would be transferred to...
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| Tax Topics - Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(c) | 85 | |
| Tax Topics - Income Tax Act - Section 56 - Subsection 56(2) | 90 |
See Also
Brent Kern Family Trust v. The Queen, 2013 DTC 1249 [at 1396], 2013 TCC 327, aff'd 2014 FCA 230
The facts (see para. 29 of the Reasons, which states the opposite of para. 6 of the poorly-drafted Statement of Agreed Facts) appear to be...
Sommerer v. The Queen, 2011 DTC 1162 [at 845], 2011 TCC 212, aff'd 2012 FCA 207
The taxpayer (a Canadian-resident individual) transferred shares of a Canadian company to an Austrian private foundation (privatstiftung) which...
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| Tax Topics - General Concepts - Effective Date | 282 | |
| Tax Topics - Statutory Interpretation - Treaties | 57 | |
| Tax Topics - Treaties | 176 |
Garron Family Trust v. The Queen, 2009 DTC 1568, 2009 TCC 450, aff'd sub nom St. Michael Trust Corp. v. The Queen, 2010 DTC 5189 [at 7361], 2010 FCA 309, aff'd sub nom Fundy Settlement v. Canada, 2012 SCC 14
In the course of the reorganization of the share structure of a Canadian holding company ("PMPL") for a Canadian automotive business, two newly...
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| Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) | 157 |
Howson c. The Queen, 2007 DTC 141, 2006 TCC 644
Monies advanced by the taxpayer to a family trust were found to be a loan rather than a contribution of capital, notwithstanding that a loan...
Administrative Policy
2015 Ruling 2015-0610391R3 - Whether 75(2) will apply to new trusts
Terms of New Trusts
Two new trusts (the “New Trusts”) are settled by Mr. A and Mrs. A, respectively. The trustees of each New Trust consist...
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| Tax Topics - Income Tax Act - 101-110 - Section 108 - Subsection 108(2) | interests vested (but not distributed) before 21st anniversary | 150 |
10 June 2016 STEP Roundtable Q. 13, 2016-0645811C6 - Filing Obligation for 75(2) trust
Reg. 204(1) provides that a trustee having control of or receiving income, gains or profits must file an information return – so that even...
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| Tax Topics - Income Tax Regulations - Regulation 204 - Subsection 204(1) | s.75(2) trust generating losses need not file T3 returns | 201 |
10 October 2014 APFF Roundtable, 2014-0538241C6 F - 75(2) and definition of "earned income" in 146(1)
5(a)
When a rental property has been transferred to a trust, is rental income attributed to the transferor under s. 75(2) transformed into trust...
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| Tax Topics - Income Tax Act - Section 146 - Subsection 146(1) - Earned Income | character preservation of s. 75(2) attributed income | 118 |
| Tax Topics - Income Tax Act - Section 40 - Subsection 40(3.6) | basis adjustment for denied capital loss (otherwise subject to s. 75(2) attribution) at trust level | 209 |
3 October 2014 External T.I. 2013-0476871E5 - Subsection 75(2)
Property settled on a trust includes an LP interest. On termination of the trust, the trust property will revert to the settlor. Will s. 75(2) not...
16 June 2014 STEP Roundtable, 2014-0523061C6 - Trust audit issues
2010-036630117 concerned the sole trustee and capital beneficiary of a trust (the taxpayer) who, had
transferred property to the trust by...
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| Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(21) | capital gain distributed to different beneficiary | 137 |
| Tax Topics - Income Tax Act - 101-110 - Section 105 - Subsection 105(1) | benefit conferred when trust shares redeemed at undervalue | 196 |
| Tax Topics - Income Tax Act - Section 112 - Subsection 112(3.2) | taxpayer stuck with two-transaction form | 155 |
| Tax Topics - Income Tax Act - Section 118.1 - Subsection 118.1(1) - Total Charitable Gifts | executors lacked power to make gift | 92 |
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(a) - Legal and other Professional Fees | legal and accounting expenses | 45 |
16 June 2014 STEP Roundtable, 2014-0523001C6 - Trusts structured to invoke 75(2)
An "evil trust" is structured to deliberately cause the application of subsection 75(2), so as to cause the attribution of dividend income to a...
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| Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(13) | Brent Kern schemes don't work even if Sommerer issue fixed | 315 |
12 February 2014 Internal T.I. 2013-0508841I7 F - Application of subsection 75(2)
Corp transferred its limited partner interest in a partnership ("SEC") to Trust. It then applied s. 75(2) to attribute to itself the business...
23 January 2014 External T.I. 2013-0500711E5 F - Paragraph 75(2)
The will of X provided for the bequeathing of some of his property to family inter vivos discretionary trusts. The liquidator (i.e., executor) of...
11 October 2013 APFF Roundtable, 2013-0495721C6 F - APFF 2013- Round table question 7
Mr. X, who holds all the common shares of Corporation, exchanges his common shares under s. 51 for preferred shares having an equivalent fair...
11 June 2013 STEP Roundtable Q. 9, 2013-0480351C6 - STEP CRA Roundtable Q9 - June 2013
Respecting whether CRA accepted Sommerer decision, it stated that the decision stood:
for the general proposition that where property is...
23 May 2013 Internal T.I. 2013-0481651I7 F - Attribution rules- business loss
S. 75(2), which otherwise would apply to attribute income and loss of a trust to the settlor, did not so apply to any losses on income account...
S4-F3-C1 - Price Adjustment Clauses
CRA will consider a price adjustment clause to represent pricing at fair market value if:
- the agreement reflects a bona fide intention of the...
5 July 2012 Internal T.I. 2010-0388551I7 F - Fiducie - retour de sommes
In the course of a 10-page consideration of complex transactions involving a Quebec estate freeze, CRA stated (TaxInterpretations translation):
As...
4 March 2013 External T.I. 2011-0428661E5 - trust payments to minor
The trustees of a Quebec trust exercise their discretionary power in order to allocate an amount of income or taxable capital gain to a minor...
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| Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(24) | distribution note in Quebec | 341 |
5 October 2012 APFF Roundtable, 2012-0453591C6 F - Prêt à une fiducie
The question described a situation where most of the income generated by a discretionary family trust was generated from a loan made to the trust...
5 October 2012 APFF Roundtable, 2012-0453891C6 F - Price Adjustment Clause
The summary (which is more specific than the actual question) describes an estate freeze in which a taxpayer exchanges his common shares of of a...
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| Tax Topics - General Concepts - Effective Date | 345 |
28 November 2010 CTF Roundtable, 2010-0386351C6 - 2010 CTF Q#10 - T3 Reporting and 75(2)
The correspondent asked how to report income attributed to a non-beneficiary settlor under s. 75(2). CRA stated:
Where income is allocated...
11 September 2006 STEP Roundtable Q. 4, 2006-0185571C6 - 2006 STEP Conference -Question 4
Although CRA does not apply s. 75(2) to a genuine loan of cash to the trust, this position does not extend to a loan of income-producing property...
2004 Ruling 2004-006020
Ruling re attribution of income to a First Nation (which was exempt under s. 149(1)(c)) from investments transferred by it and exclusion of such...
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| Tax Topics - Income Tax Act - Section 149 - Subsection 149(1) - Paragraph 149(1)(c) | 42 |
7 February 2003 External T.I. 2002-012676
A trust of which the settlor and family members are beneficiaries uses the settlement proceeds to buy a net profits interest in a particular oil...
25 September 2000 External T.I. 2000-002585
A Nova Scotia company limited by guarantee would not constitute a trust for purposes of s. 75(2). Corporations incorporated under the Nova Scotia...
13 October 1999 T.I. 983238
Where the settlor of a trust changes his common shares of a corporation into preferred shares and the trust then subscribes for common shares, s....
6 July 1998 T.I. 981111
Discussion of when a loan of money by a parent to a trust will qualify as a "genuine loan" so that s. 75(2) does not apply.
May 1998 Advance Life Underwriting Round Table, No. 9807000
Where property held by an RCA trust may revert to the employer corporation that settled the trust, e.g., where employees do not satisfy vesting...
3 December 1997 T.I. 962276
RC noted that, notwithstanding a previous memorandum, it was now its position that "in circumstances where the conditions for the application of...
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| Tax Topics - Income Tax Act - Section 94 - old | 43 |
10 January 1996 External T.I. 5-940686
Unlike s. 94(1), there is no mechanism for the utilization of foreign tax credits by a person to whom income is attributed under s. 75(2).
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| Tax Topics - Income Tax Act - Section 94 - old | 103 |
21 August 1995 T.I. 951427 (C.T.O. "75(2) - Estate Freeze - Subscription of Shares by a Trust")
S.75(2) would apply where under the trust agreement, decisions are made by majority vote and the affirmative vote of the settlor must be included...
22 June 1995 T.I. 950818 (C.T.O. "Attribution of Income to a Trust")
Where contributions made by members of a union to a benefit plan (that was established by the union in accordance with a collective agreement),...
14 June 1994 T.I. 940584 (C.T.O. "Trust Property Acquired by Mortgage")
S.75(2) would not apply where a trust acquires a property from an arm's length vendor (who is not a trustee or beneficiary of the trust) in...
28 April 1994 T.I. 941111 (C.T.O. "Attribution")
"Where subsection 75(2) of the Act applies to attribute income to a person, that income is never income of the trust for tax purposes and...
27 January 1994 T.I. 933257 (C.T.O. "Attribution of Income")
S.75(2) will apply where the terms of the trust provide that the transferor of property to the trust (including a transfer for fair market value...
1994 A.P.F.F. Round Table, Q. 24
"The Department considers that subsection 75(2) of the Act could apply if the deed of trust or any other contract between the trustees and a...
1994 I.C.A.A. Round Table, Q.4
Where s. 75(2) applies to the settlor of a non-resident trust who becomes a resident of Canada, income or loss from property settled on the trust...
19 May 1993 T.I. (Tax Window, No. 31, p. 13, ¶2528)
Where a trust indenture allows the settlor to reacquire the contributed property, s. 75(2) will apply even where the relevant provision can apply...
13 January 1993 T.I. (Tax Window, No. 28, p. 20, ¶2380)
A loan to a trust which is a genuine loan as discussed in IT-258R2, paragraph 8 and IT-260R, paragraph 3 would not be considered to result in...
11 August 1992, T.I. 921396 (May 1993 Access Letter, p. 197, ¶C56-226)
S.75(2) would apply if the transferor retains the power to veto distributions of property to beneficiaries or could select beneficiaries from a...
22 July 1992, T.I. 920736 (March 1993 Access Letter, p. 71, ¶C56-219)
Where unanimity was required in respect of any decision by the two trustees of a trust and the settlor was a trustee, s. 75(2)(b) would...
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| Tax Topics - Income Tax Act - 101-110 - Section 107 - Subsection 107(4.1) | 26 |
1992 A.P.F.F. Annual Conference, Q. 19 (January - February 1993 Access Letter, p. 57)
S.75(2) will apply to a taxpayer who establishes a usufruct for another person with respect to property of which the taxpayer is the naked owner.
19 June 1992 T.I. 9218450 (January - February 1993 Access Letter, p. 20, ¶C56-212)
S.75(2) can apply by virtue of a right of the contributor of property to reacquire that property at fair market value.
16 June 1992 External T.I. 5-920008
S.75(2) will apply where the settlor is able to select additional beneficiaries or delete beneficiaries after the creation of the trust.
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| Tax Topics - Income Tax Regulations - Regulation 2800 - Subsection 2800(3) | 61 |
27 February 1992 T.I. (Tax Window, No. 17, p. 8, ¶1766)
S.75(2) will apply where the settlor, in his capacity of sole trustee, has the discretion as to whom the trust property will be distributed on a...
91 C.R. - Q.8
A genuine loan to a trust, or the unpaid purchase price for a property on an unconditional bona fide sale, will not by itself be considered to...
90 C.R. - Q23
Where a law firm receives funds from its clients to be held in trust pending the application of the funds for disbursements or against fees for...
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| Tax Topics - Income Tax Regulations - Regulation 201 - Subsection 201(2) | 95 |
16 November 89 T.I. (April 90 Access Letter, ¶1175)
Father settles an irrevocable trust of which he is the sole trustee and whose terms are totally discretionary as to income and capital payments,...
88 C.R. - Q.32
Because a bare trust is reversionary and revocable, all income, losses, capital gains and capital losses will be attributed to the transferor.
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| Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(2) | 24 |
88 C.R. - Q.48
Capital gains attributed to the transferor by virtue of s. 75(2) are not eligible for the capital gains exemption.
86 C.R. - Q.46
A reversion requires a transfer of property, and the making or repayment of a loan does not constitute a transfer of property.
84 C.R. - Q.30
S.75(2)(b) may apply where the trustee may amend the dispositions of the trust deed with the approval of the settlor.
IT-369R "Attribution of Trust Income to Settlor"
1. ...A genuine loan to a trust would not...by itself result in the application of subsection 75(2)..., if the loan is outside and independent of...
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| Tax Topics - Income Tax Act - Section 248 - Subsection 248(28) | 24 |
Articles
Carmen Thériault, "Alter Ego and Joint Partner Trust", 21 Estates, Trusts & Pensions Journal, p. 345.
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| Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(4) - Paragraph 104(4)(a) | 0 |
Darling, "Bare Trusts", 1989 Corporate Management Tax Conference, c. 8.
Saunders, "Inter Vivos Discretionary Family Trust: A Potpourri of Issues and Traps", 1993 Conference Report, pp. 37:6-14.
Subsection 75(3) - Exceptions
Cases
Labow v. Canada, 2012 DTC 5001 [at 6501], 2011 FCA 305
The taxpayer, who employed both his wife and two part-time employees in his medical practice, deducted $150,000 and $247,691 for contributions he...
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| Tax Topics - Income Tax Act - 101-110 - Section 108 - Subsection 108(1) - trust | 213 | |
| Tax Topics - Income Tax Act - Section 251 - Subsection 251(1) - Paragraph 251(1)(c) | settlor with power to dismiss trustee | 84 |