The new trust reporting rules require a trust to provide information about settlors, trustees and beneficiaries. The rules also require a trust to provide information about every person “who has the ability (through the terms of the trust or a related agreement) to exert influence over trustee decisions regarding the appointment of income or capital of the trust” (Income Tax Regulations section 204.2). What does it mean to have “the ability to exert influence”? What is a “related agreement”?
The authors suggest that those with the ability to exert influence might include persons (including professional advisers) with authority over investment and asset management, persons who can add, remove or “influence the entitlement of beneficiaries” and persons who can add or remove trustees. This influence might be direct or indirect.
Related agreements might include a shareholder agreement, an oral agreement or a letter of wishes.
Chris Johnston and Matt Trotta “Disclosing Persons Who Exert Influence on Trustees” Canadian Tax Focus 11:2 (May 2021)
