A Canadian corporation is wholly owned by a trust, which is a discretionary trust, so that s. 256(7)(i) does not apply. Is there an acquisition of control of the corporation if:
(a) The sole trustee resigns and is replaced by a related trustee,
(b) The same as (a) except that the replacement trustee is unrelated.
(c) The trust has two trustees, who are required by the trust deed to make their decisions unanimously. One of them (E) resigns and is replaced by an individual related to E.
(d) The same as (c) except that the replacement is unrelated to E.
(e) The trust has three trustees, H, I and J. The trust requires majority decision making. J resigns and is replaced by K. Each of H, I, J and K are not related.
CRA indicated that, based on Consolidated Holding, where the majority of the voting shares of the corporation are held by a trust, it is the trustees of the trust who have legal ownership of the shares, who have the right to vote those shares, and who therefore control the corporation. Where a trust has multiple trustees, the determination as to which trustee or group of trustees controls the corporation can only be made after a review of all the pertinent facts including the terms of the trust documents.
CRA considers there to be a rebuttable presumption that all of the trustees would constitute a group that controls the corporation so that there would be an acquisition of control in situations (b), (d) and (e) of the question. For situations (a) and (c), s. 256(7)(a)(i)(A) may apply to deem there to be no acquisition of control where the shares are acquired by a person related to the former trustee provided that the replacement trustee is appointed concurrently with the resignation of the former trustee.