Principal Issues: With respect to an estate, can a legatee by particular pursuant to the Quebec Civil Code be considered a person beneficially interested pursuant to subsection 248(25)?
Position: Yes.
Reasons: Wording of subsection 248(25).
FEDERAL TAXATION ROUNDTABLE 10 OCTOBER 2014
2014 APFF CONFERENCE
Question 4
Right to Benefit
Paragraph 251(1)(b) provides, in particular, that a person who is beneficially interested in a personal trust under subsection 248(25) (but on the basis of not applying subclauses (b)(iii) (A)(II) to (IV) thereof), does not deal at arm's length with the trust.
Under subsection 248(1), the definition of a personal trust includes a succession.
Furthermore, the Civil Code of Québec, in section 808 et seq., treats a legatee by particular title as a creditor of a succession.
Question to the CRA
In the context of a succession, can the CRA confirm that a legatee by particular title can be considered to be a person beneficially interested pursuant to subsection 248(25), as long as he or she has not received his or her legacy?
CRA response
Subsection 248(25) states, among other things, that persons who are beneficially interested in a trust include any person who has any right (whether immediate or future, whether absolute or contingent or whether conditional on or subject to the exercise of any discretion by any person or partnership) as a beneficiary under a trust to receive any of the income or capital of the particular trust either directly from the particular trust or indirectly through one or more trusts or partnerships.
In our view, despite the fact that a particular legatee has payment priority over the heirs under certain provisions of the Civil Code of Québec, the fact remains that a particular legatee holds a beneficial interest in a succession within the meaning of subsection 248(25).
Furthermore, a particular legatee holds a beneficial interest in the succession as long as he or she retains his or her right to the legacy.
Lucie Allaire
(613) 957-8962
October 10, 2014
2014-053823