Mar 29th, 2023
Aug 16th, 2023
By Daniel Frajman
My attached article at this link, just published in Tax Topics, a Wolters Kluwer publication, points out the unique nature of Quebec trusts, and how this may be helpful to registered charities in a particular new context.
As referred to in more detail in my article at the link, Quebec trusts differ from those in the common law provinces. Quebec does not divide ownership among legal and beneficial owners, rather a Quebec trust provides for the administration of a separate trust patrimony (the patrimony by appropriation) by trustees on behalf of beneficiaries, or on behalf of a charitable purpose in the charitable context.
This may prove helpful in dealing with an apparent position of the Canada Revenue Agency that has come to light during the summer, under which the CRA seems to have the view that if a restricted gift held by charities (often booked by charities as deferred revenue), for example some endowment funds, are in fact trusts set up to benefit a particular purpose, then that particular gift must be reported each year, beginning with new trust reporting rules to be used for the first time in the March 2024 trust tax filing season, on is own trust tax return. That could impose a heavy and unexpected filing burden on charities, which may have received many of such gifts. It is not clear that such a CRA position is well-founded, but if the CRA does not reverse the position, charities in Quebec or that have otherwise received gifts from Quebecers that might be subject to Quebec law, might have to argue that Quebec trusts (due to their just described unique nature) are not as easy to find as in the common law, with the result, it might be argued on a case-by-case basis, that such gifts under Quebec law are gifts with restrictions that are not trusts, and therefore are not subject to the new trust reporting rules.
Once again we see the importance of taking account of the unique aspects of Quebec civil law, whether dealing with private law strictly speaking, or tax law. Feel free to be in touch with me if you need assistance in this regard, and I would be happy to go into detail beyond the general nature of this post.