Father, a retired person, who acquired woodlands from his father before 1987 gifts the bare ownership of the woodlands to his Child, while retaining the usufruct of the woodlands. The woodlands have already been commercially exploited in the past, but are not currently used in farming, and Child does not have an intention to commercially exploit them. Before addressing whether the capital gains deduction would be available to Father, CRA stated:
[T]he constituting of the usufruct in respect of Father's woodlands has the effect of creating a deemed trust for the purposes of the Act. Since Child will not pay consideration to Father, the deemed trust would qualify as a personal trust within the meaning of subsection 248(1).
In addition, Father is deemed to have disposed of the woodlands to the trust in return for which he has received a beneficial interest in the use and enjoyment of the land.