A Liechtenstein stiftung was formed as a family foundation (later changed to a private-benefit foundation), with a capital contribution from the founder, in order to invest its funds and make distributions to beneficiaries as determined in the discretion of its foundation council. It had legal personality and owned the property allocated by the founder. Its board of curators had the irrevocable power to elect or replace members of the council. It filed a tax return, reporting the disposition of taxable Canadian property, on the basis that it was a corporation rather than a trust.
CRA first noted that separate legal personality was no longer a determinative characteristic, that “[d]escribing a trust by reference to dual ownership or equity in an international context would have the result of ignoring all civil law arrangements that have adopted the trust idea of the administration of assets for the benefit of others” and that the stifting had “characteristics common to trusts under Canadian commercial law” including those discussed in 2007-0236981I7 regarding a Pennsylvania business trust. It concluded that the stiftung had more in common with a trust than a corporation:
- It had no form of “share capital” or other ownership interests which conveyed a right to distributions of earnings or capital
- it was created by an endowment from a founder much like a trust settlement
- it had beneficiaries, named in its by-laws
- its executive bodies administered and used the property transferred by the founder for the benefit and advantage of the beneficiaries similarly to a trustee
- unlike a corporation, it was restricted to investing rather than carrying on a commercial business.
These conclusions were consistent with 2008-0266251I7 and 2010-0388611I7.