Canadian Ownership and Control Determination Regulations, 1984 (SOR/84-431)

Beneficial Canadian Ownership of Classes of Formal Equity of a Trust

• 49 (1) If the beneficial Canadian ownership of a class of formal equity of an applicant or of an investor that controls the applicant in any manner that results in control in fact, whether directly through the ownership of units or indirectly through a trust, contract, the ownership of units of any other entity, or otherwise, or that is a member of a group that so controls the applicant cannot be determined for the purpose of paragraph 48(b) without reference to the designated rate of interest, the beneficial Canadian ownership of that class shall be the lowest Canadian ownership rate of any of the beneficiaries whose interests constitute that class determined as if the words “rounded to the nearest whole number” in section 16 read “rounded to the nearest 10th of a percentage point”.

• (2) Subsection (1) does not apply to a trust that is an investor that would not have a direct or an indirect equity percentage in the applicant if all publicly traded classes of formal equity were disregarded in the measurement of direct or indirect equity percentage.

50 Where a trust certifies that each of the beneficiaries that has an interest in a trust is a person that has a Canadian ownership rate of 100%, the trust shall be considered to have a Canadian ownership rate of 100%.

Transitional Provisions

• 51 (1) Where a trust created before March 10, 1982 is an applicant or an investor and under the trust a discretionary power with respect to all or any part of the income or capital of the trust cannot be exercised in favour of any person other than

  • (a) one or more of the beneficiaries who have interests in that income or capital or in that part of the income or capital as the case may be, independently of the existence of the discretionary power,

  • (b) any individual related to any one or more of the beneficiaries referred to in paragraph (a), or

  • (c) a person obliged to make use of its interest in income or capital exclusively for charitable purposes,

  the trust may elect, in determining its Canadian ownership rate, that the existence of the discretionary power shall be disregarded in determining the Canadian ownership rate.

• (2) Notwithstanding any other provision of these Regulations, where a trust created before March 10, 1982 is an applicant or investor and the Minister is satisfied that, in the circumstances and when considering the terms and conditions of the trust, the main purpose of the trust is to provide for the benefit of any one or more individuals related to any individual from whose contributions of property to the trust made prior to March 10, 1982 more than 25% of the value of the capital of the trust shall be determined as if all interests of the beneficiaries in the trust constituted one class of formal equity of the trust consisting of 100 units and as if all the units of that class of formal equity were owned by the beneficiaries, other than any beneficiary excluded by the Minister for the purposes of this subsection equally or in such unequal shares as the Minister considers appropriate having regard to previous distributions, if any, made under the trust.

• (3) For the purposes of this section, where the terms of a trust have been amended or varied after March 9, 1982, regardless of whether such amendment or variation has been effected by virtue of a court order, an exercise of a power of amendment or variation conferred or reserved in the terms of the trust, an agreement of the beneficiaries or otherwise, the trust shall be deemed to have been created after March 9, 1982.

• (4) Subsection (3) does not apply to a trust that was created before March 10, 1982 and that was amended or varied after March 9, 1982 or was resettled after March 9, 1982 where the sole effect of such amendment, variation or resettlement was to require, either expressly or otherwise, that any beneficiary or member of a class of beneficiaries have a Canadian ownership rate of 100%.

• (5) For the purpose of this section,

  • (a) individuals are related to each other if each individual or the spouse of that individual is a lineal descendant, by birth or adoption, of a parent of an individual who is alive before a trust is created; and

  • (b) an individual is related to himself if that individual is a beneficiary of and a contributor of property to a trust.