Interpretation of the Land Owner Transparency Act and Regulation

Most terminology related to the Land Owner Transparency Registry is defined in the Land Owner Transparency Act ("the Act") and the Land Owner Transparency Regulation ("the Regulation").

The following information is provided to help clarify the interpretation and enforcement of the Act and Regulation. This information is provided for your convenience and guidance and is not a replacement for the legislation.

Learn more about:

• Societies
• Relevant trusts
• Filing when you're both a trustee and a partner
• Partial interests in land
• Contingent interests and discretionary trusts
• Beneficial owners of a corporation's shares
• Class beneficiaries
• Beneficial ownership and partnerships
• Dissolved and restored companies

See also Interest holders: indirect control and the guide for local governments.

Societies

Under the Act, the definition of a corporation includes an incorporated society. To identify corporate interest holders, a society must apply section 3 of the Act.

As societies do not issue shares, section 3(2)(a) of the Act does not apply. However, an individual would meet the definition of a corporate interest holder under 3(2)(b) if they have the ability to appoint or remove the majority of directors.

It may be the case that a society doesn’t have any individuals who meet the definition of a “corporate interest holder”; for example, where each member has a single vote and none of the members are acting in concert in a way that gives them control of the appointment or removal of directors. In this scenario, the society would simply submit a transparency report indicating there are no interest holders (as indicated under section 21(2)).

Relevant trusts

No written trust agreement

Trusts without a written trust agreement are considered relevant trusts under the Act. The obligation to file still exists for trusts under an implicit trust agreement even if no written trust agreement (or a trust agreement registered with the Land Title Office under the Land Title Act) exists.

Alter ego trusts and bare trusts

Under the Act, a bare trust is considered a relevant trust while an alter ego trust is not. The exclusion of alter ego trusts is only relevant when the alter ego trustee is the registered owner on title.

If a bare trustee holds an alter ego trustee's legal interest in land in trust for the alter ego trustee, the trustee of the bare trust would file a transparency report identifying the alter ego trustee as the beneficial owner.

Filing when you’re both a trustee and a partner

The Act establishes rules for filing a transparency report when the person filing is both a partner in a relevant partnership and relevant corporation but it doesn’t establish a similar rule for when a person is both a partner in a relevant partnership and a trustee of a relevant trust (section 13.3). 

If the interest in land is or will be partnership property, you should file as a partner of a relevant partnership.

However, if the interest in land isn’t partnership property, you should file as a trustee of a relevant trust and identify beneficial owners.

Partial interests in land

An individual may be the registered owner of a small (such as 1%) interest in land; for example, in a situation where a parent is assisting with the down payment on property.

In these situations, it’s possible the parent would be considered a trustee of a relevant trust and therefore a reporting body who would generally be required to file a transparency report. Whether this is the case depends on the specifics of the agreement between parties.

However, under section 13(6) of the Act, the trustee of a relevant trust is not required to file a transparency report if the interest in land is or will be registered in the names of all the beneficial owners. That is, if both the parent and the child are registered owners of the interest in land, the parent is not required to file a transparency report as the trustee of a relevant trust. If there are any additional beneficial owners who are not registered on title, the trustee would be required to file a transparency report. 

To determine whether you’re a reporting body, you must consider:

• Do you have an actual beneficial interest in the land? (for example, would you be entitled to receive a portion of the sale proceeds from the subsequent sale of the property or enforce other equitable rights in court?), or
• Are you holding the interest for the benefit of the other transferee(s) (such as the child) and are only listed on title for financing or other purposes? If this is the case, then you could consider yourself holding the interest as a trustee for the benefit of the other transferee (such as the child).

If you’re not the legal and beneficial owner of the interest in land, then you’d need to file a transparency report as the trustee of a relevant trust identifying the actual beneficial owner of the interest (such as the child).

Contingent interests and discretionary trusts

The Act captures all express trusts (including bare trusts and discretionary trusts), unless specifically excluded under Schedule 2. An individual is considered to have a beneficial interest in the interest in land, and is therefore considered a beneficial owner under section 2(a) of the Act, if they are a beneficiary of a relevant trust and have the possibility of receiving the benefit of the interest in land (in other words, their interest could be contingent or the trustee may exercise discretion to benefit the individual).

This would exclude interests that are contingent upon the death of another individual or where the terms of the trust document don’t allow for the individual to receive the benefit of the interest in land.

For example, if the terms of a relevant trust don’t provide for the possibility of all beneficiaries benefiting from the interest in land, then a beneficiary who doesn’t or can’t receive any benefit won’t be considered a “beneficial owner” (section 2 of the Act). In other words, these beneficiaries don’t have a vested interest, contingent interest, nor is the trustee permitted to exercise any discretion to benefit those individuals.

Beneficial owners of a corporation’s shares

Under the Act, both the registered owner and the beneficial owner of a significant number of a relevant corporation’s shares must be identified on a transparency report as a corporate interest holder.

A “beneficial owner” of a corporation’s shares includes a person whose interest is held through a trustee, or other representative or agent. If a significant number of shares are held in a trust, the beneficiaries of the trust should be identified as the corporate interest holder(s) unless the terms of the trust document don’t allow for a beneficiary to receive any benefit from the shares of the relevant corporation. This would therefore include situations where a significant number of shares are held in a discretionary trust.

Class beneficiaries

If a relevant trust does not name any specific individuals, but rather a class of beneficiaries, then the transparency report can indicate the class of beneficiaries rather than any specific individuals (per section 21(3) of the Act).

Beneficial ownership and partnerships

Section 2 of the Act sets out the meaning of “beneficial owner” and it applies when the reporting body is the trustee of a relevant trust. Although section 2 explicitly captures beneficial ownership through a corporate interest, it does not specifically reference partnership interests.

For the purposes of the Act, if an interest in land held by a trustee of a relevant trust is partnership property, it’s the partners in the partnership that will be considered the beneficial owners. If a partner is an individual, they will be captured under section 2(a). If a partner is a relevant corporation, any corporate interest holders of that corporation will be captured under section 2(c).

Dissolved and restored companies

When a company is dissolved, it ceases to exist for any purpose. Any real property registered in the name of a dissolved company is deemed to escheat to the government. Because the company no longer exists, it cannot take any action with legal effect, including filing a transparency report as a pre-existing owner under section 15 of the Act. 

When a previously dissolved company is restored or reinstated, the company is considered to exist as if it had not been dissolved. If land of a restored or reinstated company revests in the company pursuant to the Escheats Act after the pre-existing owner deadline (November 30, 2022), the company should immediately file a transparency report to avoid any penalties.