Does the CRA position on the use of personal-use property (e.g., homes, cottages, boats and cars) by an individual beneficiary also apply to a trust that is an alter ego trust or a joint spousal trust or a common-law partner trust? After noting that the referenced policy was that where, pursuant to the terms of the trust indenture or will, a trust owns personal-use property for the benefit or personal use of a beneficiary, no taxable benefit will be assessed to that beneficiary for the rent-free use of such property, CRA stated:
When considering the use of the personal-use property by another individual, one must remember that in order for an alter ego trust to meet the conditions outlined in s. 73(1.01)(c), the alter ego trust must be a trust under which no person except the settlor may receive or otherwise obtain the use of any of the income or capital of the trust before the settlor’s death. Similarly, in the case of a joint spousal trust or a common-law spousal trust, the terms of the trust must provide that no person other than the settlor or the spouse may obtain the use of any of the income or capital of the trust before the death of these individuals.