The bump under ITA paragraph 88(1)(d) could be denied if a “specified shareholder” receives bumped property unless the shareholder was also a “specified person” as defined in paragraph 88(1)(c.2). Grandchildren who receive bumped property could taint the bump if they…
Post-mortem bumps and capital dividends paid from life insurance
Bump room is determined by the ACB of the target corporation’s shares minus the net tax cost of the underlying assets and the amounts in ITA subparagraph 88(1)(d)(i.1), which include taxable dividends and capital dividends. Accordingly, a target corporation that…
Vefghi appeal allowed
The Federal Court of Appeal has allowed the Crown’s appeal and dismissed the cross-appeal of one of the taxpayers in Vefghi Holding Corp. v R, 2023 TCC 135, which I discussed here. See R v Vefghi Holding Corporation, 2025 FCA…
Trust reporting rules under the August 2024 draft legislation
The following seems to capture the logic of the trust reporting rules, as amended by the August 12, 2024, draft legislation, including the rules that will apply to “bare trusts” for years ending after December 30, 2025. Is the arrangement…
2024 STEP Roundtable Part 2
In response to question 10, the CRA referred to Maurice Kissel Family Trust v R (unreported 2019-4092(IT)G). The trust in question prohibited the distribution of amounts to a “designated beneficiary”, but the trust purported to allocate and deduct gains it…
Trust allocations
Fiducie Historia c HMK, 2024 CCI 76 (French only), affirmed the validity of trust allocations made by trustees where, the CRA alleged, another agreement (entered into to preserve capital losses in a corporation controlled by the trust) seemed to give…
2024 STEP Roundtable
The following is based on the text published in Tax Topics 2713 (September 10, 2024). Question 1 – Spousal Trusts A spousal trust that receives a contribution of capital after the death of the spouse-beneficiary remains a spousal trust, but…
Dissolved trust year-end
At the 2024 CALU conference round table (question 12, addressed in 2024-1005851C6), the CRA confirmed that a bare trust has a December 31 year-end and that a trust (other than a GRE) that dissolves during a calendar year still has…
Making Trust Amounts Payable
The CRA has taken the position that a trust cannot deduct an amount made payable to a beneficiary under ITA subsection 104(6) unless, among other things, the trust was legally entitled to make the payment under the terms of its…
Residence of a trust
In Theodoros Darmos Family Trust v. Minister of Finance et al., 2023 ONSC 6431, the Court was called upon to determine whether two family trusts were resident in Alberta or Ontario. After conducting a detailed review of the relevant facts,…