Change of trustee and acquisitions of control

The CRA takes the position that, where a new individual becomes a trustee, a corporation controlled by the trust is controlled by a new group so that there will be an acquisition of control unless one of the exceptions in paragraph 256(7)(a) applies.

In 2019-0812781C6, the CRA took the position that the exception in paragraph 256(7)(i) did not apply to a spousal trust because it included the power to encroach on capital for the benefit of the spouse. As a result, according to the CRA, the condition in subparagraph 256(7)(i)(ii) was not met.

Jin Wen “Acquisition of Control on a Change of Trustee” 20:3 Tax for the Owner-Manager (July 2020)

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