This article provides a very broad overview of the nature of trusts and why they are sometimes used in real estate. If you are considering buying or lending money guaranteed by real estate, please contact a member of the Houser Henry-Syron LLP team to discuss how best to structure your transaction. However, paragraphs 268 and 269 of the Act provide that a delivery is made for GST purposes when each estate, including the property, is settled with an agent or distributed to beneficiaries. However, since the transfer of ownership represents only a zero or nominal value, the transfer of the property in or out of the bare trust would not be due if the economic estate remained unchanged. However, a change in use may occur when the economic beneficiary of a real estate held in a single trust is engaged in tax-exempt activities and the cash trust has engaged in only commercial activity. The relationship between the liquid trustee and the beneficiary must be established in a written agreement, often referred to as the Bare Trustee Agreement or “Agreement Nominee.” A written agreement will facilitate financing operations and the transfer of real estate with the deferral of tax on land transfers or exemptions. 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. In Universo Home Construction Ltd. The Queen, 2019 TCC87 taxpayers claimed he was the “contractor” of a new home and was entitled to a new home rebate from the buyer of the new home.
The Excise Tax Act (Canada) (the “Law”) authorizes the payment of a new rebate on housing to a contractor if the owner has agreed to pay or credit the new rebate on the dwelling to the purchaser of the new home. In the Court, the question was only whether the taxpayer was a “contractor.” In this case, it was agreed by the parties that the subject was entitled to the rebate. The property law was registered in the name of the spouse of the shareholder of the subject. The spouse and the taxpayer made a declaration of confidence. The Crown challenged the validity of the declaration of trust and asserted that the taxpayer had no interest in characterizing him as a “contractor” for the GST/HST rebate application. The Crown argued that the declaration of confidence was unenforceable for several reasons: there were two versions of the trust that proved it unreliable; it was more likely to be exported by the signatories after the acquisition date; and, in any case, the execution date could not be determined from the document or other evidence. In general, The Crown stated that there were not enough concrete actions or legal measures that ultimately justify a trust or something else. Universo Homes could not justify the absence of this evidence because it was a contractor who was entitled to the surrender under the law. The Tribunal found in favour of the subject and concluded that he was a “contractor” regardless of the questionable status of the declaration of confidence.