The CRA was asked to consider a situation where a trust owns all of the issued shares of a corporation. Would there be an acquisition of control in the following scenarios? The CRA reponse is given in all capitals.
(a) The trust has one trustee, A, who resigns. B, who is related to A, takes over as trustee. 256(7)(a) MIGHT APPLY
(b) The same circumstances as (a) except that A and B are not related. YES
(c) The trust has two trustees, D and E. The trust document requires unanimous decision making. E resigns and is
replaced by F. E and F are related. 256(7)(a) MIGHT APPLY
(d) The trust has two trustees, D and E. The trust document requires unanimous decision making. E resigns and is
replaced by G. E is not related to G. YES
(e) The trust has three trustees, H, I and J. The trust requires majority decision making. J resigns and is replaced by K. Each of H, I, J and K are not related. YES
STEP Round Table 2022, question 6, summarized in CCH Tax Topics no 2656 (January 31, 2023)
