Subsection 104(2) of the Act applies where there is more than one trust and all of the property of the various trusts has been received from one person and the income from these trusts ultimately accrues to the same beneficiary or group or class of beneficiaries. Under this provision, the trustees designated by the CRA are deemed to be in respect of all the trusts an individual whose property is the property of all the trusts and whose income is the income of all of the trusts.
The common meaning of "class of beneficiaries" is used, as this term is not defined in the Act for the purposes of this provision. The Concise Oxford Dictionary defines "class" as a "group of persons or things having some characteristics in common". The Webster's Dictionary provides that "class" is "a group, set, or kind sharing common attributes".
At issue is whether subsection 104(2) applies where a taxpayer dies leaving his property equally to three testamentary trusts, which provide that the taxpayer's spouse is the only capital and income beneficiary during her lifetime. On her death, the taxpayer's three children will each be an individual beneficiary of one of the three trusts.
The CRA said that its view was that "members of the same family" could be one class of beneficiaries. To make a determination, the CRA said it may consider several factors, including:
- Whether there was a clear intention to create separate trusts, according to the provisions of the will or trust deed
- Whether the trusts have common beneficiaries, in particular the number of common beneficiaries and the nature of their respective interests in each of the trusts
- Whether the assets of each of the trusts are administered and accounted for separately
- The powers of the trustees.
The CRA noted that it is not necessary that each trust have the same beneficiaries; it is sufficient that the beneficiaries of each trust are of the same group or class of beneficiaries.
In the situation presented, the CRA said that the taxpayer's surviving spouse is the one common beneficiary of all of the trusts at the time that the trusts are created. Therefore, the CRA believes that the multiple trusts would be designated a single trust under subsection 104(2).
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