22 January 1991 Income Tax Severed Letter

24(1)                                  5-903389
                                                  W.C. Harding
                                                  (613) 957-8953

19(1)

January 22, 1991

Dear Sirs:

Re: Transfer of Assets to a Non-Resident Trust

This is in reply to your letter of November 14, 1990 wherein you requested our opinion on the application of subparagraph 54(c)(v) of the Income Tax Act (the "Act"), together with other relevant provisions, when real estate situated in Canada is settled on certain types of non-resident trusts.

The application of the provisions of subparagraph 54(c)(v) of the Act depends upon a specific trust's compliance with the requirements of the provision. In consequence, the Department cannot provide you with a general statement of opinion in reply to a general description of the provisions of a trust. Should you wish, however, an advance income tax ruling can be provided in respect of a specific proposal, provided such a request is made in proper form as detailed in Information Circular No. 70-6R2.

While we cannot be more specific at this time, in general we can state that, in order for subparagraph 54(c)(v) of the Act to apply, a taxpayer or taxpayers must have capital and income interests in a trust that have rights and attributes that are identical to the rights and attributes attached to the property transferred to the trust such that it can not be considered that there is a disposition of any element of beneficial ownership in the property. The property may then be legally owned by the trust but beneficially owned by the transferor(s).

The above comments are an expression of opinion only and are not binding on the Department.

Yours truly,

for Director Financial Industries Division Rulings Directorate

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