Although it is not necessary, it is advisable to execute a written legal agreement when a simple trust is created to prove the relationship and facilitate the transfer of legal property. The document should, among other things, demonstrate that the economic beneficiary (or lender) has made available all of the money to purchase the property and that simple agents are simply required to act on all the beneficiary`s instructions. An advantage of this BC agreement allows the legitimate ownership of real estate to change ownership without attracting capital gains taxes as long as the economic beneficiary remains the same, since the transfer of the property is not a “tax” for income tax purposes. Another widespread use of bare trusts was the prevention of the payment of property transfer tax (TTP). Since BC`s PTT structure attracts ptT only when the right is transferred to a new owner, the parties are able to avoid paying PTT entirely by applying cash fiduciary agreements to separate the legal and economic property reserve from the property. As long as only the useful interest in the bare trust property is transferred, there is no PTT to pay. The ability to transfer advantageous interest to real estate and avoid ptT was a powerful tool for planning real estate and tax in PRE JESUS CHRIST. Some form of trust is described as mere trust. Unlike most trusts for which, subject to the terms of the trust, trustees are the last authority in determining the management and/or distribution of trust assets to beneficiaries, the trustees of a simple trust do not participate in the active management of the trust, but rely on the instructions given by the beneficiaries of the simple trust.
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 this case, all powers and responsibilities for the management and/or allocation of the property would likely be reserved for the economic beneficiary in the fiduciary document. As a result, the latter, not the mere agent or agent, would be involved in commercial activities related to the real estate. To the extent that the economic beneficiary is not eligible for small supplier status or any of the above exceptions, the law requires registration. If there is more than one beneficiary of the trust, the small supplier threshold is calculated on an individual basis, each being, by law, a person, unless the beneficiaries are persons associated with the law. Since mere agents act only as agents for their beneficiaries, [iv] trusts are not respected under the Canadian Income Tax Act. [v] The transfer of ownership to a single agent is generally not a “provision” and all income generated on that estate and all capital gains do not belong to the directors alone, but to the beneficiaries. As a result, beneficial beneficiaries must report all income from the property on their own tax return. Currently, a trustee of a bare trust is not required to file a declaration of trust, but from 2021, the agent will be required to present a T3 annual rate of return if this is the case in certain circumstances.
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