The Resource Sommerer v R : 2011 TCC 212

Sommerer v R : 2011 TCC 212

Sommerer v R : 2011 TCC 212
Sommerer v R : 2011 TCC 212
Judgment by the Tax Court of Canada dated 14 April 2011. The taxpayer was an Austrian citizen who had migrated to Canada and became a Canadian citizen. He maintained a holiday home in Austria but had no intention of returning there to live. Austria passed legislation allowing the setting up of private foundations, or Privatstiftungen. Such foundations were legal entities with an executive board which held funds for purposes stipulated by the founder. Members of executive boards were under legal duties to carry out their obligations subject to legal penalties. The taxpayer's father established a Privatstiftung, the beneficiaries of which were to be his descendants provided they were resident in Austria, and various charitable objects. In the event of liquidation, the ultimate beneficiaries were to be the taxpayer and his wife. There was to be an executive board and an advisory board, the latter consisting of the founder, the taxpayer and his wife. The executive board was to be appointed by the founder as long as he was alive and thereafter to be self-selecting. The executive board was not required to act according to the wishes of the advisory board and in fact did not always do so. The taxpayer sold some shares to the Privatstiftung at full market value. Subsequently, the executive board sold the shares at a profit. The Canadian tax authorities assessed the taxpayer on the basis that the Privatstiftung was an overseas trust and the income was therefore attributed to him under s 75(2) of the Canadian Income Tax Act. Alternatively, the Revenue argued that the executive board had acted as the taxpayer's agents in selling the shares. The taxpayer denied that the Privatstiftung was a trust; denied that there was an agency relationship; and that even if these arguments were wrong, the Canada-Austria tax treaty prevented Canada from taxing the income. The Court found in favour of the taxpayer
Citation source
In: International tax law reports. - London. - Vol. 13 (2011),
Language note
Baker, P
  • case law
  • tax treaty
  • trust
  • foundation
  • fiduciary
  • capital gains tax
Sommerer v R : 2011 TCC 212

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