One of the most popular specfic uses of a trust is for prospective Canadian residents. This is also a good illustration of how the trust can be used.

A Canadian resident is subject to Canadian income tax on his or her world-wide income from the time Canadian residence is obtained.

They operate a split year basis which means that when you become resident the tax year is split into the non resident part and the resident part. In the non resident period only Canadian source income is taxed, whereas a Canadian resident is taxed on his or her worldwide income.

For CGT purposes, any non-Canadian property owned at the time of immigration is deemed to have a base cost for CGT purposes of the market value on the date that Canadian residency is obtained.

If you have significant overseas assets and sources of overseas income one of the most commonly used techniques is to use an immigrant trust established in a tax haven jurisdiction such as the Bahamas.

However, by establishing a properly planned immigrant Trust, you can avoid taxation in Canada on all trust assets for up to five years. If the transfer to Canada will last less than five years, this exemption becomes permanent.

Any amounts paid to or for the benefit of a Canadian resident beneficiary are taxable in the hands of the beneficiary. Distributions of capital are not subject to Canadian tax.

Note that the trust would be settled in a tax haven jurisdiction by way of a gift from non-residents of Canada.