The beneficial owner is the beneficial owner of the property. A naked agent, also commonly referred to as a Nominee, has a registered title (ownership) of ownership for someone else and often that property is a country. The obligation of a mere agent is to transfer the legal property to the beneficial owner upon request. A mere agent cannot manage the trust`s assets in any other way unless ordered to do so by the beneficial owner. Often, a simple agent is a company with no other assets. However, the tax is collected by the creator or head of the trust if the beneficiary is under 18 years of age. For example, a grandparent who opens a naked trust for a grandchial would have to pay taxes on the trust`s income until age 18. Beneficiaries may also be liable for the payment of inheritance tax if the trust-settlor dies within seven years of the trust being set up, as simple trusts are treated by the tax authorities as potentially tax-exempt transfers. However, no inheritance tax is due if the setlor survives these seven years. There is no tax implications for the person who creates a simple trust because he or she waives the right to the assets when they are transferred to the trust. The asset submitted to the Bare Trust always belongs to the beneficiary, so all tax issues related to income tax are related to the beneficiary.
For example, rental income must be reported annually by the beneficiary and not by the agent. While the PTT exception remains valid for cash trusts, the future usefulness and usefulness of these trusts in BC real estate transactions has recently been questioned. Specifically, a new PTT form was introduced on 17 September 2018, which requires that additional information now be disclosed when a real estate transaction takes place via a trust, including a simple trust. In addition to disclosing the rightful owner of the property, the parties must also disclose certain information about any other party interested in the property, including a party with an economic interest. These new advertising obligations apply to both residential and commercial real estate transactions. In the context of a Bare Trust, the agent is not able to fulfil active obligations going beyond the transfer of ownership to beneficiaries when asked to do so. (Kafatris & Anor vs. FC T 2008 ATC 20-048, 8649 (Lindgren J)). The representative is only the candidate of the beneficiaries. Similarly, the agent is a straw man or a puppet controlled by the puppeteer, the beneficiary. Lenders would be well advised to require a “tripartite” beneficial ownership agreement between the mere agent, the beneficial owner and the lender. In the absence of such an agreement, the creditor shall not have recourse to the beneficial owner in the event of non-payment.
The lender`s sole recourse is directed against the country and any other guarantee given by the mere agent, which is not ideal in a falling market or in the event of a high lending rate. . . .