"St. Michael Trust Corp. v. The Queen - Central Management and Control Test Applies to Trusts", OBA Taxation Law Section Newsletter, Vol. 21, No. 2, April 2011
Date:
April 1 2011
In this article, Jesse Brodlieb discusses the decision of the Federal Court of Appeal in St. Michael Trust Corp. v. The Queen (commonly referred to as Garron) regarding the residency of trusts for purposes of the Income Tax Act (Canada).
The Federal Court of Appeal found that Canadian-resident taxpayers could not escape taxation of a capital gain on the disposition of shares by placing those shares in a trust which was centrally managed and controlled by those taxpayers from Canada. In so ruling, the Court confirmed the finding by the Tax Court of Canada that the central management and control test long applicable to corporations is also applicable to trusts. However, this decision may have added a new level of uncertainty to the taxation of trusts in Canada.
This article is reprinted with permission by the Ontario Bar Association (OBA). It was originally published in the OBA newsletter, Taxation Law: Vol. 21, No. 2, April 2011.
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