,canada ,cu/oms                       #a
& ,rev5ue ,ag5cy

          ,9t]pret,n ,bullet9
    
,subject3 ,9come ,tax ,act
  ,transf]s & ,loans ( ,prop]ty made af
  ,may #bb1 #aihe 6a ,relat$ ,m9or
,numb]3 ,,it-#eaj
,date3 ,decemb] #cj1 #aihg
,ref];e3 ,subsec;n #gd.a7#b7 7al sec;n
  #gd.c1 subsec;ns #gd.a7#c71 #gd.e7#a71
  7#b7 & 7#f7 to 7#aa7 & p>agraph
  #gd.e7#ab77b77

               ,applic,n
    
  ,? bullet9 applies 6transf]s & loans (
prop]ty made af ,may #bb1 #aihe 6relat$
m9ors4 ,= transf]s ( prop]ty made 2f
,may #bc1 #aihe 6m9ors1 see
,,it-#bfj;,r1 ! ,special ,rel1se "!to &
subsec;n #ge7#a7 (! ,act4

                                      #a
                ,summ>y              a#a
    
  ,? bullet9 4cusses a -preh5sive set (
rules 9t5d$ 6prev5t a taxpay] &a relat$
m9or f splitt+ 9come f prop]ty s z
6reduce ! total am.t ( tax paya# "!on4
,except ": fair m>ket value 3sid],n is
pd 0! relat$ m9or1 9come e>n$ on prop]ty
transf]r$ or loan$ f a taxpay] 6a relat$
m9or 7& on prop]ty sub/itut$ "!=7 is
g5],y deem$ 6be 9come (! taxpay] & n (!
relat$ m9or4
  ,! -;t>y 2l 4cusses ! applica# rules 9
grt] detail4

     ,4cus.n & ,9t]pret,n 7p>agraph
                  #a7
    
#a4 ,=! purposes ( ? bullet91 ! foll[+
  t]ms & _! m1n+s >e expla9$3

  ,transf]r$ or ,loan$ ,prop]ty--m1ns
  all transf]s or loans ( prop]ty :e!r
  a3ompli%$ directly or 9directly1 0m1ns
  (a tru/ or 0any o!r m1ns :at"e4     #b
               ,,it-#eaj             b#a
  ,a transf] 9cludes a sale :e!r or n at
  fair m>ket value1 z well z gifts b has
  n"e 9clud$ a g5u9e loan4 7,prior 6,may
  #bc1 #aihe loans t 7 n 3sid]$ g5u9e
  7see ,,it-#bfj;,r7 7 tr1t$ z transf]s
  b ? 4t9c;n is no l;g] nec47

  ,relat$ ,m9or--a p]son :o is "u #ah
  ye>s ( age1 & :o
  7a7 does n d1l )! 9dividual at >m's
    l5g? 7e4g4 a p>5t &a * or o!r
    desc5dant :e!r 0blood rel,n%ip or
    adop;n1 d n d1l at >m's l5g?--see
    ,,it-#dai71 or
  7b7 is a niece or nephew (! 9dividual4
--------------------------------------#b
  ,b5efici,y ,9t]e/$--,an 9dividual is
  8b5efici,y 9t]e/$0 9 a tru/ if !
  9dividual has any "r 7:e!r imm or
  future1 :e!r absolute or 3t+5t or :e!r
  3di;nal on or subject 6! ex]cise (a
  4cre;n>y p[] 0any p]son or p]sons7
  6rcv any (! 9come or capital (! tru/
  ei directly f ! tru/ or 9directly   #c
               ,,it-#eaj             a#b
  "? "o or m o!r tru/s4 ,see #ab 2l =
  examples ( situ,ns ": an 9dividual is
  b5efici,y 9t]e/$ 9 a tru/4

  ,sub/itut$ ,prop]ty--,p>agraph
  #bdh7#e77a7 provides t 9 ! circum/.es
  4cuss$ 9 ? bullet91 ": a taxpay] has
  4pos$ ( or ex*ang$ a "picul> prop]ty &
  acquir$ o!r prop]ty 9 sub/itu;n "!= &
  subsequ5tly1 0"o or m fur!r
  transac;ns1 has e6ect$ "o or m fur!r
  sub/itu;ns1 ! prop]ty acquir$ 0any s*
  transac;n is deem$ 6h be5 sub/itut$ =!
  "picul> prop]ty4

         ,attribu;n ( ,9come f
      transf]r$ or ,loan$ ,prop]ty
             7p>agraph #b7
    
#b4 ,subsec;n #gd.a7#b7 provides t ": an
  9dividual has transf]r$ or loan$
  prop]ty 79clud+ m"oy7 6a relat$ m9or
  or 6a tru/ 9 : a relat$ m9or is
  b5efici,y 9t]e/$ at any "t any      #d
               ,,it-#eaj             b#b
  9come or loss f ! prop]ty or prop]ty
  sub/itut$ "!= is deem$ 6be 9come or
  loss (! 9dividual =a tax,n ye> un.s !
  m9or has atta9$ ! age ( #ah ye>s 2f !
  5d (! ye>2 see #ae 6#ah 2l = a4i;nal
  excep;ns 6! rule4

     ,applic,n ( ,attribu;n ,rules
           7p>agraphs #c-ad7
    
#c4 ,x is nec 64t+ui% 2t 9come or loss f
  prop]ty & 9come or loss f a busi;s4
  ,subsec;n #gd.a7#b7 does n apply
  6attribute busi;s 9come or losses ev5
  if ! busi;s op]ates ) "s or all (!
  prop]ty obta9$ orig9,y f ! transf]or4
#d4 ,9come or loss deriv$ f ! 9ve/;t or
  o!r use (! 9come f transf]r$ prop]ty
  is n attribut$ 6! transf]or & ?us =
  9come tax purposes is 9come or loss (!
  transf]ee4 ,= example1 9t]e/ on any
  9t]e/ all[$ 6a3umulate is n attribut$
  6! transf]or & is 9come (! transf]ee4
                                      #e
               ,,it-#eaj             c#b
#e4 ,pursuant 6subsec;n #gd.a7#c7 !
  attribu;n rules 9 subsec;n #gd.a7#b7
  apply 6transf]r$ or loan$ prop]ty : is
  us$ ei 6repay1 9 :ole or 9 "p1 borr[$
  m"oy t 0 us$1 9 :ole or 9 "p1 6acquire
  prop]ty or 6reduce an am.t paya# 9
  respect ( t prop]ty4
#f4 ,z x applies 6a relat$ m9or 7a
  8specifi$ p]son0 "u subsec;n
  #gd.e7#h77 subsec;n #gd.e7#f7 provides
  t ": an 9dividual has transf]r$ or
  loan$ prop]ty 6a ?ird "py
--------------------------------------#c
  7a7 & t prop]ty or prop]ty sub/itut$
    "!= is1
  or
  7b7 on 3di;n t any prop]ty 2
  transf]r$ or loan$ directly or
  9directly 0! ?ird "py 6or =! b5efit (a
  relat$ m9or1 pursuant 6p>agraph
  #gd.e7#f77c71 ! prop]ty transf]r$ or
  loan$ 0! ?ird "py is deem$ 6h be5
  transf]r$ or loan$ 0! 9dividual 6or =!
  b5efit (! relat$ m9or1 & pursuant   #f
               ,,it-#eaj             a#c
  6p>agraph #gd.e7#f77d7 any 3sid],n
  rcvd 0! ?ird "py is deem$ 6h be5 rcvd
  0! 9dividual4
#g4 ,subsec;n #gd.e7#g7 provides t ": an
  9dividual is obligat$ ei absolutely or
  3t+5tly 6e6ectively 5sure repay;t 9
  :ole or 9 "p (a loan or any 9t]e/ 9
  respect "!( made 0a ?ird "py directly
  or 9directly 6or =! b5efit (a relat$
  m9or1
  7a7 ! prop]ty loan$ 0! ?ird "py is
    deem$ 6h be5 loan$ 0! 9dividual 6or
    =! b5efit (! relat$ m9or1 &
  7b7 9t]e/ pd on ! loan 0! 9dividual is
    ignor$ =! purposes ( p>agraphs
    #gd.e7#b77b7 &
  7c7 7see #ag 2l74
#h4 ,subsec;n #gd.e7#i7 provides t ": an
  9dividual has transf]r$ or loan$
  prop]ty 6a tru/ 9 : a relat$ m9or is
  b5efici,y 9t]e/$ ! transf] or loan is
  deem$ 6be =! b5efit (! relat$ m9or4
#i4 ,z x applies 6a relat$ m9or 7a
  8designat$ p]son0 "u subsec;n       #g
               ,,it-#eaj             b#c
  #gd.e7#e771 p>agraph #gd.c7#a77a7
  applies ": an 9dividual has transf]r$
  or loan$ prop]ty 6a tru/ 9 : a relat$
  m9or is b5efici,y 9t]e/$ at any "t &
  det]m9es an am.t t is deem$ 6be !
  9come (! relat$ m9or : is 9clud$ 9 !
  9dividual's 9come pursuant 6subsec;n
  #gd.a7#b74
#aj4 ,pursuant 6p>agraph #gd.c7#a77a7 !
  9come (! m9or describ$ 9 #i abv is !
  less] (
  7a7 ! m9or's 9come "u p>agraph
    #ab7#a77m7 f ! tru/1 &
  7b7 ! propor;n (! 9come e>n$ 0! tru/ f
    ! transf]r$ or loan$ prop]ty t
    7;i7 ! m9or's 9come "u p>agraph
      #ab7#a77m7 f ! tru/ is (
    7;ii7 ! a7regate 9come f ! tru/ (
      all p]sons ea* ( :om is "?\t ! ye>
      a relat$ m9or or ! 9dividual's
      sp\se4
  ,9 7b7 ! 89come e>n$ 0! tru/0 excludes
  capital ga9s & is calculat$ 2f
                                      #h
               ,,it-#eaj             c#c
  deduc;ns >e made "u subsec;ns #ajd7#f7
  & 7#ab74
--------------------------------------#d
#aa4 ,an example (! op],n ( p>agraph
  #gd.c7#a77a7 foll[s3

  ,an 9dividual transf]s1 = no 3sid],n1
  bonds : pay 9t]e/ ( 4#a1bjj p] annum
  6a family tru/ ! b5efici>ies ( : >e !
  9dividual's ?ree *n1 two ( :om >e less
  ?an #ah ye>s ( age "?\t ! ye>4 ,!
  tru/'s 9come prior 6any deduc;ns "u
  subsec;ns #ajd7#f7 or 7#ab7 is
  4#a1ejj4 ,ea* b5efici>y has an equal
  5title;t 6! tru/ 9come all ( : is
  paya# 9 ! ye>4

  ,! two relat$ m9ors >e designat$
  p]sons4

  ,! 9come f ! transf]r$ bonds 9 respect
  ( ea* (! relat$ m9ors is ! less] (3

                                      #i
               ,,it-#eaj             a#d
  7a7 ! 9come (! designat$ p]son f !
    tru/ 74#ejj1 i4e41 "o-?ird (
    4#a1ejj71 &
  7b7 ;,a multipli$ 0;,b divid$ 0;,c
  ":
  
  ;,a is ! 9come (! tru/ f ! transf]r$
    prop]ty 74#a1bjj71
  ;,b is ! 9come (! relevant m9or f !
    tru/ 74#ejj71 &
  ;,c is ! 9come ( all ! designat$
    p]sons f ! tru/ 74#a1jjj74
  4#a1bjj multipl$ 04#ejj divid$
    04#a1jjj equals 4#fjj
  
  ,?us ! am.t ( 9come attribut$ 6!
  9dividual 9 respect ( ea* relat$ m9or
  is 4#ejj4
#ab4 ,! foll[+ >e examples ( situ,ns ":
  an 9dividual is b5efici,y 9t]e/$ 9 a
  tru/3
  7a7 tru/ 9come is paya# 6! 9dividual2
  
                                     #aj
               ,,it-#eaj             b#d
  7b7 9come is held 9 tru/ & w 2 pd ^u !
    9dividual's atta9+ a c]ta9 age2
  7c7 ! 9dividual is "o 9 respect ( :om
    a pref]r$ b5efici>y elec;n may 2
    made2
  7d7 ! 9dividual is "o (a class :o has
    a rema9d]%ip 9t]e/ "u ! tru/4
  ,! 9dividual is b5efici,y 9t]e/$ 9 !
  tru/ 9 7b7 ev5 if ! "r 6rcv ! 9come
  5ds %d ! 9dividual die 2f atta9+ !
  specifi$ age & 9 7c7 ev5 if ! tru/ees
  h full 4cre;n>y p[]s 3c]n+ ! 4tribu;n
  (! capital or 9come (! tru/ s t !
  9dividual may 9 fact rcv no?+ f !
  tru/4
#ac4 ,": deprecia# prop]ty is transf]r$
  6a relat$ m9or &! m9or has no o!r
  prop]ty (! same class z ! prop]ty
  transf]r$1 ! 9come or loss f ! prop]ty
  attribut$ 6! transf]or %d reflect any
  am.t ( capital co/ all[.e1 t]m9al loss
  or recapture ( capital co/ all[.e 9
  respect (! class : wd o!rwise 2 tak5
  96a3.t 9 -put+ ! 9come (! m9or4    #aa
               ,,it-#eaj             c#d
  ,": deprecia# prop]ty is transf]r$ 6a
  relat$ m9or &! m9or has o!r prop]ty (!
  same class z ! prop]ty transf]r$1 9
  -put+ ! 9come or loss f ! prop]ty
  attribut$ 6! transf]or
--------------------------------------#e
  7a7 a r1sona# por;n (! capital co/
    all[.e claim$ 0! m9or 9 respect (!
    class 7: por;n may n exce$ ! maximum
    capital co/ all[.e t wd 2 deducti# 9
    respect (! transf]r$ prop]ty if !
    prop]ty 7 9 a sep>ate class7 may 2
    deduct$1 &
  7b7 a t]m9al loss or recapture (
    capital co/ all[.e : >ises & wd
    o!rwise 2 9clud$ 9 -put+ ! 9come (!
    m9or 9 respect (! class ( deprecia#
    prop]ty %d 2 tak5 96a3.t 6! ext5t t
    s* am.t c r1sonably 2 3sid]$ 6relate
    6! transf]r$ prop]ty4
  
  ,af ! ye> ( 4posi;n (! transf]r$
  prop]ty & provid$ a sub/itute
  deprecia# prop]ty is n acquir$     #ab
               ,,it-#eaj             a#e
  0! m9or1 "! is no attribu;n ( capital
  co/ all[.e1 t]m9al loss or recapture (
  capital co/ all[.e t >ises 9 respect
  (! class4
#ad4 ,": 9come >ises f deprecia# prop]ty
  transf]r$ 6a tru/ ! am.t attribut$ 6!
  transf]or is det]m9$ z describ$ 9 #aj
  abv1 ev5 ?\< ! tru/'s 9come calcul,n
  9cludes am.ts 9 respect ( capital co/
  all[.e1 t]m9al loss & recapture (
  capital co/ all[.e 9 respect (! class4

      ,exclu.ns 7p>agraphs #ae-ah7
    
#ae4 ,subsec;n #gd.a7#b7 does n apply
  6attribute 9come or loss 6a transf]or
  t relates 6a p]iod
  7a7 foll[+ ! d1? (! transf]or or
    transf]ee or
  7b7 "?\t : ! transf]or is n resid5t 9
    ,canada4
#af4 ,pursuant 6subsec;n #gd.e7#a71
  9come or loss f transf]r$ prop]ty does
  n attribute 6! transf]or ":        #ac
               ,,it-#eaj             b#e
  7a7 ! sale or o!r transf] is made =
    3sid],n equal 6fair m>ket value (!
    transf]r$ prop]ty1 &
  7b7 ! sale price or o!r 3sid],n =!
    transf] is
    7;i7 fully pd 0! transf]ee 9 ca% or
      k9d 7& n f prop]ty furni%$ 0!
      transf]or71 or
    7;ii7 satisfi$ 9 :ole or 9 "p
      09debt$;s 9 respect ( : 9t]e/ is
      *>g$ at a rate n less ?an ! less]
      (! rate ( 9t]e/ prescrib$ =!
      purposes ( subsec;n #afa7#a7 &!
      rate t wd 2 agre$ ^u 2t >m's l5g?
      "pies "u simil> circum/.es at ! "t
      t ! 9debt$;s is 9curr$1 if all s*
      9t]e/ is pd n lat] ?an #cj "ds af
      ! 5d (! ye> 9 : x 2comes paya#4
--------------------------------------#f
#ag4 ,pursuant 6subsec;n #gd.e7#b71
  subsec;n #gd.a7#b7 does n apply 9
  respect ( loans ": 9t]e/ is *>g$ on !
  9debt$;s at a rate n less ?an ! less]
  (! rate ( 9t]e/ prescrib$ =!       #ad
               ,,it-#eaj             a#f
  purposes ( subsec;n #afa7#a7 &! rate t
  wd 2 agre$ ^u 2t >m's l5g? "pies "u
  simil> circum/.es at ! "t ! 9debt$;s
  is 9curr$1 if all s* 9t]e/ is pd n
  lat] ?an #cj "ds af ! 5d (! ye> 9 : x
  2comes paya#4 ,:5 s* a loan is =giv5 !
  exemp;n 9 subsec;n #gd.e7#b7 c1ses
  6apply & sec;n #hj 2comes applica#4
#ah4 ,pursuant 6p>agraph #gd.e7#ab77b71
  ! attribu;n rules describ$ 9 #b abv d
  n apply 6a transf] ( prop]ty 6a relat$
  m9or :5 transf]r$ z or on a3.t ( an
  am.t pd t is
  7a7 deducti# 9 det]m9+ ! pay]'s 9come
    =! ye>1 &
  7b7 requir$ 6be 9clud$ 9 ! payee's
    9come4
  ,= example1 ! pay;t ( m"oy 6a relat$
  m9or z remun],n = s]vices provid$ 9 a
  busi;s 3duct$ 0! pay] is a transf] (
  prop]ty1 b1 ": 3di;ns 7a7 & 7b7 >e
  satisfi$1 n a transf] 6: attribu;n
  applies4 ,9 s* cases1 any 9come or
  loss >is+ f any subsequ5t 9ve/;t   #ae
               ,,it-#eaj             b#f
  (! remun],n 0! m9or is n attributa# 6!
  pay]4

        ,capital ,ga9s & ,losses
           7p>agraphs #ai-bj7
    
#ai4 ,": prop]ty is transf]r$ 6a relat$
  m9or or 6a tru/ ": a relat$ m9or is
  b5efici,y 9t]e/$1 subsec;n #gd.a7#b7
  does n apply 6attribute 6! transf]or
  any taxa# capital ga9 or all[a#
  capital loss >is+ f a subsequ5t
  4posi;n ( t transf]r$ prop]ty 0! m9or
  or ! tru/4 ,h["e1 9 respect (! 9t]
  vivos transf] ( c]ta9 f>m prop]ty 6a *
  "u #ah ye>s ( age1 sec;n #ge.a may
  apply 6attribute 6! transf]or any
  taxa# capital ga9 or all[a# capital
  loss f ! 4posi;n (! transf]r$ prop]ty
  0! * 7see ,,it-#bfh;,r#c74
#bj4 ,any taxa# capital ga9s & all[a#
  capital losses on 4posi;ns ( prop]ty :
  >e attributa# 6a transf]or 0virtue (
  sec;n #ge.a may 2 9clud$ 9 -put+   #af
               ,,it-#eaj             c#f
  ! transf]or's life"t capital ga9s
  deduc;n "u sec;n #aaj.f4

         ,>tificial ,attribu;n
             7p>agraph #ba7
    
#ba4 ,subsec;n #gd.e7#aa7 provides t !
  attribu;n rules d n apply ": "o (! ma9
  r1sons =a transf] or loan ( prop]ty or
  a s]ies "!( is 6reduce ! am.t ( 9come
  tax t wd 2 paya# on ! 9come or ga9s4

     ,divid5d ,tax ,cr$it 7p>agraph
                  #bb7
    
#bb4 ,subsec;n #hb7#b7 provides1 9
  e6ect1 t ": ! transf]or ( prop]ty
  9cludes 9 9come a divid5d rcvd or
  deem$ 6be rcvd 0! transf]ee f a
--------------------------------------#g
  taxa# ,canadian corpor,n1 ! transf]or
  is requir$ 6gross-up ! divid5d & is
  5titl$ 6! divid5d tax cr$it4
                                     #ag
        ,non-,resid5t ,transf]ee     a#g
             7p>agraph #bc7
    
#bc4 ,": an am.t pd or cr$it$ 6a non-
  resid5t ( ,canada is 9clud$ 9 ano!r
  taxpay]'s 9come 0virtue ( sec;ns #gd
  6#ge & is "!by subject 6tax "u ,"p ,i
  (! ,act1 subsec;n #bab7#ab7 provides t
  non-resid5t )hold+ tax is n exigi# on
  s* am.t4

       ,liabil;y = ,pay;t ( ,tax
             7p>agraph #bd7
    
#bd4 ,": z a result (a transf] ( prop]ty
  an am.t 79clud+ a taxa# capital ga9 f
  ! 4posi;n (! transf]r$ prop]ty7 has
  be5 9clud$ 9 ! 9come (a transf]or =a
  tax,n ye> 0virtue ( sec;ns #gd 6#ge.a1
  ! transf]ee & transf]or >e jo9tly &
  s"e,y lia# "u p>agraph #afj7#a77d7 =&
  9cr1se 9 ! transf]or's ,"p ,i tax
  liabil;y result+ f ! 9clu.n ( t am.t 9
  9come4 ,fur!rmore1 p>agraph
  #afj7#a77e7 provides t !           #ah
               ,,it-#eaj             b#g
  transf]ee & transf]or >e jo9tly &
  s"e,y lia# = any liabil;y (! transf]or
  "u ! ,act 9 respect (! ye> 9 : !
  transf] took place or any prec$+ tax,n
  ye>1 6! ext5t t1 at ! "t (! transf]1 !
  fair m>ket value (! transf]r$ prop]ty
  exce$$ ! fair m>ket value ( any
  3sid],n rcvd = x4 ,not)/&+ ! jo9t &
  s"eal liabil;y describ$ abv1 sec;n
  #afj does n limit ! liabil;y (!
  transf]or "u ! ,act4












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