One of the simplest business structures involves one party (typically a company) holding legal title for and on behalf of the true beneficial owner (in a group). This can be done for various reasons, both tax and non-tax related. The holder of the legal title – typically called a “bare trustee”, “nominee”, or “mere agent” – is disregarded for income tax purposes. Surprisingly, in Peragrine v. The Queen (2012 TCC 348, released October 10), the CRA reassessed a bare trustee in relation to a gain realized on real estate held in the bare trustee’s name, even though a written agreement was in place (evidencing the relationship) and no evidence indicated that the bare trustee received any of the sale proceeds. Fortunately, the Tax Court soundly rebuffed this reassessment in a thorough judgment that usefully reviews the common law. A bare trustee (or nominee or mere agent) relationship exists where the person holding title has no independent powers, discretions or responsibilities; his only responsibility is to carry out the instructions of the beneficial owner. This common law principle also appears in s. 104(1) of the Income Tax Act (Canada), which further clarifies that a bare trustee is generally ignored for income tax purposes.