Principal Issues: [TaxInterpretations translation] (1) Can a payment described in paragraph (d) of the definition of trust in subsection 146.1(1) be subject to a right of control by the payer? (2) What is the meaning of the word "trust" in that paragraph?
Position: (1) No answer (2) The meaning given by the Common Law or the Civil Law, as the case may be, must be taken.
Reasons: ((1) Question of fact (2) There is no specific definition of trust in the Act that applies to paragraph (d). Therefore, the law of the provinces applies.
XXXXXXXXXX 2006-021685 Michel Lambert CA, M.Fisc. February 15, 2007
XXXXXXXXXX,
Subject: Registered Education Savings Plan (RESP)
Request for Opinion and Advance Ruling
This is in response to your letter of November 30, 2006, requesting an opinion and advance ruling on behalf of XXXXXXXXXX.
Unless otherwise indicated, all statutory references herein are to provisions of the Income Tax Act (the "Act").
You asked whether a person who irrevocably holds property in an RESP can have some control over the use of RESP proceeds by an educational institution described in paragraph (d) of the definition of trust in subsection 146.1(1).
In our view, this question can only be answered after considering all the relevant facts in the context of a request for an advance income tax ruling. In this regard, we refer you to Information Circular 70-6R5 which we issued on May 17, 2002. A copy of the circular is available on the Canada Revenue Agency's website at http://www.cra-arc.gc.ca/E/pub/tp/ic70-6r5/READ-ME.html.
You are also asking us for an advance ruling on whether a particular organization qualifies as an educational trust within the meaning of paragraph (d) of the definition of trust in subsection 146.1(1).
For the purposes of that paragraph, we are of the view that in order to determine whether an entity constitutes a trust, reference must be made to the private law of the provinces, either the civil law in Quebec or the common law elsewhere in Canada. Since that determination is not a tax issue but a matter of provincial private law, we cannot issue the advance ruling requested.
Best regards,
Manager
Financial Sector and Exempt Entities Section
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
c.c. Lorraine Veilleux