The complainant in Cheema acquired a new residential property for the purpose of his and his wife living there. To support the financing, the purchase and sale agreement was presented by the complainant`s friend, with the extent that the friend would have no real interest in the property. In this regard, the complainant and his friend entered into a written trust agreement, confirming that the friend`s interest in the property for the complainant and his wife as the beneficial owner of the property was in trust and that this interest would be transferred upon application. The trust is held in the name of an agent responsible for prudently managing the trust in order to provide the beneficiary benefit or, as legally ordered by the beneficiaries or the creator of the trust. However, the agent has no say in how or when to allocate the capital or income of the trust. However, a change in use may occur when the beneficial owner of the property held in a simple trust carries out tax-exempt activities and the simple trust can carry on exclusively commercial activities. In considering the CBT`s conclusion that the friend should not be considered a mere fiduciary agent, the majority found that subsection 254(2)(b) was worded in such a way that the friend had only a legal interest as a mere agent: given that mere agents act only as intermediaries for their beneficiaries, [iv] Naked trusts are not considered under Canadian income tax law. [v] The transfer of ownership to a mere agent does not normally constitute a “disposition”, and all income from that property and all capital gains do not belong to the mere agents, but to the beneficiaries. Therefore, beneficial owners must report all income from the property in their own tax returns. Currently, a trustee of a trust is not required to file a fiduciary tax return, but starting in 2021, the trustee will, in certain circumstances, have to file an annual T3 return.

Once one or two beneficiaries are defined for simple trust, the decision can no longer be overturned. The agent in a simple situation of trust can be a nominee corporation. In a simple trust situation, the beneficial owner is required to register and take into account the GST in respect of deliveries related to the property held in trust and has until 1 January 1993 to do so. Similarly, a simple trust, which is currently registered and which pays taxes on supplies relating to property held in a cash trust, may apply for the cancellation of registration. Such termination would be effective on the same day as the beneficial owner is registered. Under Section 242(1) of the Act, the Minister is free to delete a registration. The provisions on becoming and ceasing to be registered shall not apply where the beneficial owner registers and the trust unsubscribes. There is no transfer of ownership through an assignment or acquisition, since there is no change in legal ownership or the equity of fiduciary ownership, but only a change in who is considered to be acting with respect to ownership within the meaning of the law. In the presence of a simple trust with several beneficiaries, it may be possible for them to choose one of the beneficiaries who is responsible for the settlement of the tax on the immovable property as part of the choice of the joint venture, in accordance with Article 273. Why use a simple agent to own a registered property of the land? While the obligations of the agent may generally indicate a dominant agency relationship in a simple position of trust, it is necessary to examine the nature of the obligations contemplated by the trust in order to determine whether the agency`s principles and not the principles of trust are applicable. Beneficiaries may also be liable for the payment of inheritance tax if the trust-settlor dies within seven years of the trust being set up, given that simple trusts are treated by tax authorities as potentially tax-exempt transfers….