St.Michael Trust Corp., as Trustee of the Fundy Settlement v. Her Majesty the Queen (March 13, 2012)
Case # 34056
The Fundy Settlement was settled by a resident in the Caribbean island of St.Vincent and had Canadian beneficiaries. The trustee is a corporation resident in Barbados. When the Trust disposed of shares it owned in a Canadian corporation, the purchaser remitted amounts to the Canadian government in accordance with s. 116 of the Act. The trustee sought a return of the withheld amount, claiming an exemption from tax pursuant to the Agreement Between Canada and Barbados. Under the exemption, tax would only be payable in the country in which the seller was resident. The trustee claimed that the Trust is a resident of Barbados. The Minister of National Revenue claimed the tax exemption didn’t apply because the Fundy Settlement was a Canadian resident. The trustee then appealed the assessments on behalf of the Fundy Settlement, which the Tax Court of Canada and the Federal Court of Appeal dismissed.