11 October 1991 Income Tax Severed Letter

October 11, 1991

International Taxation Office                Personal and General
"Serge Choquette, Acting Director              Division
8 Colonnade Rd.                              A. Humenuk
                                             (613) 957-2134
Attention: Carol Abbass

                                             912664

SUBJECT: Determination of Residence for an Testamentary Trust

As discussed with Carol Abbass of you office, we are enclosing a
letter dated September 19, 1991 from    24(1)         concerning
the determination of residence for the     19(1)      for your
consideration and reply.

We note that the writer suggests a split trust; one resident in Canada and one not resident in Canada. Given our comments in paragraph 3 of IT-447 "Residence of a Trust or Estate", it appears that split control over the assets of a trust does not necessarily create two distinct trusts. Furthermore, we note that it is not clear from the letter who is actually exercising control over the assets nor whether the various administrators involved acknowledge who, in fact, is entitled to control the assets. In our view it is a finding of fact as to who controls the trust.

We would also like to mention that the bankruptcy issue will not affect the determination of residency. If the trust is determined to be resident in Canada at the time of bankruptcy, then section 128 applies. If the trust is determined not to be resident in Canada, then section 128 has no application to the trust.

B.W. Dath Director Business and General Division Rulings Directorate Legislative and Intergovernmental Affairs Branch

000195