Section 94.2

An exempt foreign trust (the "Trust") is deemed by s. 94.2(2) to be a non-resident corporation controlled by (and therefore a CFA of) a beneficiary resident in Canada, which is a financial institution under s. 142.2(1). Would the Trust, as a financial institution, be subject to the specified debt obligation and mark-to-market rules in ss. 142.2 to 142.6 in calculating its foreign accrual property income ("FAPI")? CRA stated:

[T]he Trust would be a CFA of that financial institution pursuant to subsection 95(1) and the Trust's FAPI would be determined as though it were resident in Canada and in accordance with the provisions of the Act pursuant to paragraph 95(2)(f). As a result, because a corporation that is controlled by a financial institution would be a financial institution under subparagraph (a)(iii) of the definition of "financial institution" in subsection 142.2(1), the Trust would be a financial institution and would, for purposes of computing its FAPI under section 95, be subject to the specified debt obligation and mark-to-market rules in sections 142.2 to 142.6.

See summary under s. 95(2)(f.14).