What Is A Bare Trust Agreement In Canada

After the sale and sale agreement was concluded, the complainant applied for an NHR. The Canada Revenue Agency rejected the rebate and found that the complainant was not subject to an NHR according to the point. SECTION 254, paragraph 2, point b) of ETA is possible, since the friend of the co-buyer never intended to occupy the property as principal residence. While the PTT exception continues to apply to bare trusts, the future usefulness and usefulness of these trusts in BC real estate transactions have recently been called into question. In concrete terms, a new PTT form was introduced on September 17, 2018, which requires that additional information be disclosed when a real estate transaction takes place through a trust, including a bare trust. In addition to disclosing the rightful owner of the property, the parties must also disclose certain information about any other party interested in the property, including a party with an economic interest. These new advertising obligations apply to both residential real estate transactions and commercial transactions. Holding a title registered on behalf of an agent can reduce the number of parties who must sign documents to complete a transaction. This is particularly useful for joint ventures with several participants.

The fiduciary assets are held in the name of an agent who is responsible for the prudent management of the trust in order to make the most of it for the beneficiaries or, as is legitimately managed by the beneficiary or creator of the trust. However, the agent has no say in the distribution of the trust`s capital or income. 94 … [paragraph 254, paragraph 2, point b) ] speaks of the person`s reason for acquiring the complex at the time that person “becomes or assumes responsibility in the context of a purchase and sale contract.” It is the relationship of the person who acquires the complex with the owner – a relationship with the purchase and sale – that is relevant, not the relationship between the co-buyers. Over the years, there has been a lot of discussion about the real role of an agent, perhaps more in terms of simple trust. The community of law is not yet unanimous about the nature of the relationship between the agent and the economic beneficiary. In support of its decision, the majority of the ACF found that the existence of a simple trust on the basis of the wording of Rule 254, paragraph 2, point (b) was irrelevant and that it was considering why a “particular person” acquired real estate at the time of the acquisition and sale of the complex. However, the problem with this argument is that it assumes that a mere agent is a “particular individual,” which would not be the case under the general principle that a mere agent is a non-tax entity. With respect to income tax, cash trusts are ignored and the economic beneficiary is considered the owner of the property.

While other trusts are considered individuals and must file a tax return, it is considered that the definition of “trust” under the Income Tax Act does not contain an agreement that the trust can reasonably be considered an agent for all its beneficiaries for all transactions involving the trust`s entire estate. Therefore, if Smith holds property and transfers the right to Jones, who is considered a mere agent of Smith, the transfer is not at all considered an transfer for income tax purposes, since the economic beneficiary does not change. By far the most common use of bare trusts is to retain a beneficiary`s right of ownership over real estate, whether residential or commercial. As with other trusts, the legal interest and favourable interest in the property is separated between the agent and the beneficiary.