In responding to an inquiry regarding the payment by the trustee of a trust, that potentially qualified with the non-discretionary elements described in s. 104(18), of maintenance, living and educational expenses for the benefit of the minor beneficiaries, CRA stated:
Although the position published in Income Tax Technical News, No. 11 is intended to apply to the situation of a discretionary trust, it may also apply, with necessary modifications, in situations where the trust is not discretionary on the basis that the income is payable to the minor pursuant to the provisions of the trust indenture in such a situation rather than through the exercise of the trustee's discretion.
… The expenses covered by our position … include expenses that a parent may be obligated to pay as a result of a parental obligation. Notwithstanding that fact, the CRA considers the minor beneficiary to have received the income from the trust when the position is applied, and not the parents. Further, in that situation, the parents would not be taxed pursuant to subsection 105(1) by virtue of the payment of those expenses by the trust.
… Among the examples mentioned, we are of the view that tuition fees for the education of a minor beneficiary or fees paid at a summer camp attended by the minor beneficiary would relate to an expense incurred for the child, the payment of which, subject to the other conditions stated in Income Tax Technical News, No. 11, would be considered to be payment of income to the child. On the other hand, with respect to the acquisition of a car, one would have to examine the relevant facts to determine whether the acquisition is for the benefit of the minor child or for the benefit of another person. …