The sole trustee of Trust X is Mr. X, who conducts all the management of the business of a general partnership (“SENC”) of which Trust X is a 10% partner. Is Trust X considered to be actively engaged in the business of the SENC because its sole trustee has been actively engaged in the business of the SENC? CRA responded:
Subsection 104(1) provides, inter alia, that, unless the context otherwise requires, a reference in the Act to a trust includes a reference to the trustee who controls the trust property. Consequently, in determining whether a trust, which is a member of a partnership, is actively involved in the partnership's activities, we are of the view that the degree of involvement of the trustee in the partnership's activities can be taken into account.
… [T]he more Mr. X is involved in the management and/or day-to-day operations of the SENC, the less likely it is that Trust X will be considered a specified member within the meaning of subsection 248(1).