In 2010, Trust A, a factual non-resident trust was deemed a resident by s. 94(2)(g) because Corp X, a Canadian resident corporation, issued 100 common shares to Trust A. On August 15th, 2011, the trust sold its 100 common shares of Corp X at fair market value to an unrelated third party as described ins. 94(2)(t). CRA stated:
[P]aragraph 94(2)(t) … applies to expunge the contribution after the time of the sale (i.e., from the time of the sale forward, the contribution is considered to have never occurred). As such, at the end of the 2011 taxation year (i.e., December 31, 2011) of Trust A, paragraph 94(3)(a) would not apply as there is no resident contributor. Conversely, subsection 94(5) would apply since the conditions therein are met, including that at the end of the 2011 taxation year, there is no resident contributor.
Accordingly, pursuant to subsection 94(5) of the Act, Trust A is deemed to cease to be a resident when it ceases to have any resident contributor. As a result, subsection 128.1(4) applies to create a deemed year-end immediately before that time. Trust A would be deemed resident under subsection 94(3) for the taxation year ending August 15th, 2011 since at the end of that particular taxation year, there is a resident contributor. However, Trust A would not be deemed resident for its taxation year beginning on August 16th, 2011 and ending December 31st, 2011 since at the end of that particular taxation year, there is no resident contributor.