The Supreme Court of Canada recently ruled that, for income tax
purposes, a trust (like a corporation) resides where its central
control and management is located. This case is referred to
as Fundy Settlement. Prior to
Fundy Settlement, the leading case
(Thibodeau) held that a trust is resident
where a majority of the trustees reside.
After Fundy Settlement, it is clear
the taxation authorities and the court will not accept the
residence of the majority of the trustees as being
determinative. The taxation authorities and the courts will
want to know where the central control and management of the trust
is located. If the trustees of the trust administer the trust
and follow instructions from a beneficiary, a protector, a settlor,
or some other non-trustee, then the taxation authorities and the
courts will likely find that the trust is resident where the
central controller or manager is located.
