In Fiducie Famille Salammbô c. Ville de Montréal (2011 QCCQ 11322), a mutations tax case, the Court found that potential non-designated beneficiaries should not be taken into account as beneficiaries at the moment of registration of the land transfer. In considering whether a person is related to each beneficiary under a trust, does CRA accept that it should consider only the persons who have been designated as beneficiaries at the particular time?
After referring to Propep, where the definition of "beneficially interested" in s. 248(25) was stated to apply for determining that an individual was a beneficiary, CRA stated (TaxInterpretations translation):
The CRA considers that the courts would adopt this expanded sense of the concept of beneficiary for purposes of subparagraph 55(5)(e)(ii). It also could be argued that this expanded concept of beneficiary is inter alia engaged by the text of subparagraph 55(5)(e)(ii), which refers to "each beneficiary under a trust who is or may (otherwise than by reason of the death of another beneficiary under the trust) be entitled to share in the income or capital of the trust." Consequently, the position stated at the 2004 APFF Conference [2004-0086961C6] on the meaning of "beneficiary" for the purposes of subparagraph 55(5)(e)(ii), which was to disregard subsection 248(25), is not valid.
For the purposes of subparagraph 55(5)(e)(ii), as the term "beneficiary" is not defined in the Act, it would be interpreted in the light of its meaning under applicable private law. The definition of "beneficially interested" in subsection 248(25) would also be interpreted in the light of the applicable private law.