Before concluding that a testamentary trust can qualify as an estate beneficiary for s. 112(3.2)(b) purposes, the Directorate stated:
[A]lthough under civil law a trust does not in itself constitute a separate legal entity, Parliament has chosen, for the purposes of applying the Act, to disregard these legal effects and instead treat the trust as a separate tax entity with ownership of the property it holds. In addition, subsection 104(1) provides, inter alia, that, for the purposes of the Act, and unless the context otherwise requires, a reference to a trust or estate is to be read to include a reference to the trustee, executor, administrator, liquidator of a succession, heir or other legal representative having ownership or control of the trust property.
The combined application of subsections (1) and (2) of section 104 means that, for the purposes of the Act, both the trust and the trustee(s) (or executor(s)) of the trust may be considered to be an individual in respect of the trust property and thus to own or control the trust property, regardless of the applicable private law. The definition "beneficiary" in subsection 108(1) defines beneficiaries of a trust to include persons beneficially interested in the trust. The Act does not otherwise define "beneficiary". Therefore, for any concept not otherwise defined in the Act, including those in subsection 248(25), recourse must be had to the provisions of the CCQ dealing, for the purposes hereof, with estates constituted in Quebec.