Mutual Fund Trusts: A Powerful Tool for Tax-Efficient Investing in Canada

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Private equity investors and fund managers alike are increasingly turning to Mutual Fund Trusts (MFTs) as part of their investment structuring strategy — and for good reason. These trusts offer a unique blend of flexibility, tax efficiency, and investor appeal, making them an ideal tool to pool capital while minimizing tax drag.

What Is a Mutual Fund Trust?

A Mutual Fund Trust is a flow-through investment vehicle recognized under the Income Tax Act (Canada). Unlike a corporation, an MFT does not pay income tax at the trust level if it distributes all of its income to unitholders annually. Instead, the tax burden flows through to the individual investors, enabling deferral or efficient treatment of gains depending on their own tax profile.

Why Use an MFT in Private Equity?

  • Tax-Deferred Growth: Canadian investors can benefit from the capital gains treatment and other flow-through advantages.
  • Ease of Pooling Capital: MFTs allow for multiple investors to pool funds in a legally recognized trust governed by a trustee and trust declaration.
  • Professional Management: A trustee or manager oversees the trust’s investment strategy, ensuring operational and fiduciary oversight.
  • Attractive to Institutions: MFTs are familiar to many institutional investors and RIAs, making fundraising easier.
  • Eligible for RRSP/TFSA Investment (if qualified): Certain MFTs can be structured to qualify as “registered plan eligible” — a huge bonus for retail investors.


Typical Use Cases

  • Dual-structure deals where the MFT holds LP interests
  • Real estate funds
  • Private lending vehicles
  • Alternative asset strategies (e.g., private credit, venture capital)


Regulatory Considerations

To qualify as a Mutual Fund Trust under the ITA, certain conditions must be met:

  • The trust must have 150+ unitholders within 12 months of its first year-end.
  • It must be widely held and publicly distributed, subject to specific structuring techniques to achieve compliance.
  • It must restrict investments to qualified securities unless exemptions are met.

At Rabideau Law, we regularly advise clients on how to structure their investment vehicles using MFTs, whether as standalone products or paired with Limited Partnerships for added flexibility.


Want to set up a Mutual Fund Trust or learn how it can fit within your investment structure?

Contact Rabideau Law to get started with a custom legal strategy that meets your fundraising goals while staying tax-smart.

What a Homeowner Must Do Before Using Force in Canada

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Unlike the U.S. castle doctrine, Canadian law does not presume that a homeowner can automatically use force when an intruder enters. Instead, the Criminal Code (ss. 34–35) requires that several conditions be met.

1. Assess the Situation

The homeowner must first believe, on reasonable grounds, that they or another person are being threatened with force, or that property is at risk of being damaged or stolen. Mere trespass, without threat, does not usually justify force.

2. Attempt to Avoid Violence (If Possible)

While Canada does not impose a strict “duty to retreat,” courts expect homeowners to consider non-violent options first:

  • Calling police or security
  • Issuing a verbal warning (e.g., “Get out of my house”)
  • Securing themselves and others in a safe area if escape is possible

If a homeowner rushes to violence without trying other measures, the use of force may later be found unreasonable.

3. Use Only the Force Necessary

If force becomes unavoidable, the law requires it to be reasonable and proportionate to the threat.

  • Minimal force (like physically ejecting a trespasser) is permitted to protect property.
  • Escalating to weapons or deadly force is only justified if the intruder poses an imminent threat to life or serious bodily harm.

4. Deadly Force = Last Resort

Lethal force may only be used if the homeowner reasonably believes it is the only way to stop a threat of death or grievous bodily harm. Protecting property alone (like a vehicle, electronics, or cash) never justifies deadly force under Canadian law.

Judicial Considerations

When courts evaluate a homeowner’s actions, they look at factors such as:

  • Immediacy of the threat — Was the intruder armed? Advancing?
  • Options available — Could the homeowner retreat or call for help?
  • Proportionality — Was the force used excessive compared to the threat?
  • Role of the homeowner — Did they instigate or escalate the conflict?

These checks mean Canadian law emphasizes restraint and necessity, not a blanket right to defend property at all costs.

Canadian Case Examples

Canadian courts have already faced difficult decisions in homeowner defence cases. Here are two examples that illustrate the limits of the law:

Example 1 – Homeowner Found Not Guilty

In R. v. Khill, 2021 SCC 37, a Hamilton-area homeowner was charged with second-degree murder after fatally shooting an intruder who was trying to break into his truck at night. The Supreme Court of Canada ultimately ordered a new trial but emphasized that self-defence is highly context-dependent: the jury must consider what the accused reasonably perceived at the time. While Khill was not outright acquitted at the SCC level, the case reflects how a homeowner can successfully argue they acted in defence of themselves and their property when they reasonably feared for their safety.

Example 2 – Homeowner Found Guilty

In R. v. Deegan, 2007 ONCA 81, an Ontario man shot and killed an unarmed intruder who had broken into his home. The intruder posed no immediate lethal threat, and the court found the homeowner’s response to be disproportionate. Deegan was convicted of manslaughter, showing that Canadian courts draw a firm line: force may be used to defend property, but not deadly force unless there is a clear threat to life.

Conclusion

Canadian law makes it clear: defending your home is not the same as having an automatic right to use force. Before acting, homeowners must assess the situation, consider non-violent alternatives, and ensure that any force used is both necessary and proportionate. Deadly force remains an absolute last resort, available only when life or serious safety is immediately at risk.

Cases like Khill and Deegan highlight the fine line Canadian courts draw between justifiable self-defence and criminal liability. For property owners, the lesson is simple: while your home may feel like your castle, the law requires restraint and responsibility before force can be used.

At Rabideau Law, we help homeowners, landlords, and investors understand not only their real estate rights, but also how those rights interact with broader Canadian laws. If you have questions about protecting your property and your interests, our team is here to guide you.

The “Stand on Guard Doctrine”: Could Canada Adopt a Castle Doctrine for Real Estate?

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At Rabideau Law, we spend much of our time helping clients secure and protect their real estate. For many Canadians, their home is their most important asset—financially and emotionally. But when it comes to defending that property from intruders, Canadian law takes a very different approach than the United States.

In the U.S., most states have adopted the castle doctrine, which presumes that a homeowner is justified in using force, even deadly force, against an unlawful intruder. Canada does not have such a law. But what if Canada introduced its own version, a “Stand on Guard Doctrine”? What would need to change, and how might it affect real estate ownership?


How Canadian Law Currently Treats Defence of Property


Under the Criminal Code of Canada (s.35), a person may use reasonable force to prevent someone from entering or trespassing on their property. However:

  • Deadly force cannot be used solely to protect property. It is only permitted when there is a direct threat to life or safety. 
  • Courts look closely at proportionality. For example, striking a trespasser may be lawful; shooting a trespasser who poses no threat to life would almost certainly not be.
  • There is no formal “duty to retreat,” but whether a homeowner could have safely left is a factor courts consider.

From a real estate law perspective, this means that property rights are not absolute. Ownership gives you the right to exclude others, but not to use unlimited force to do so.

For more information on what a homeowner must do before using force in Canada check out this blog. 


What a “Stand on Guard Doctrine” Would Look Like


If Canada adopted a Stand on Guard Doctrine, the legal landscape for real estate owners would change significantly. Such a doctrine would:

  • Presume force is lawful when used against unlawful intruders in a home or dwelling.
  • Remove proportionality concerns within the home, treating unlawful entry itself as a sufficient trigger for defensive force.
  • Provide civil immunity, preventing intruders (or their estates) from suing property owners for damages.

This would give homeowners stronger legal tools to defend not just their families, but their real estate investment itself.


The Laws That Would Need to Change

For Canada to adopt a Stand on Guard Doctrine, Parliament would need to amend the Criminal Code:

  1. Expand s.35 (Defence of Property).
    Create a statutory presumption that force—including deadly force—is justified against intruders inside a dwelling.
  2. Adjust s.34 (Self-Defence).
    Clarify that proportionality does not apply in the same way when a homeowner is defending their residence.
  3. Add civil immunity protections.
    Enact rules preventing trespassers or their families from suing property owners in civil court for injuries sustained during an unlawful entry.
  4. Clarify scope.
    Decide whether the doctrine would apply only to private dwellings, or also to cottages, farmland, rental properties, or even commercial real estate.


Real Estate Implications

For homeowners and investors, a Stand on Guard Doctrine would:

  • Strengthen property rights, affirming the principle that one’s home is legally protected as a “castle.”
  • Impact landlord–tenant law, raising questions about whether landlords could invoke it in rental units.
  • Shift liability concerns, especially for owners of vacation homes, farmland, or rural properties where police response may be slower.

In other words, it wouldn’t just be a criminal law change—it would ripple across Canada’s real estate system

Conclusion

Canada does not currently have a castle doctrine. Any Canadian equivalent, the Stand on Guard Doctrine, would require rewriting our self-defence and property-defence laws. For now, Canadians can defend their homes, but only within the framework of reasonable, proportional force.

As real estate lawyers, we often remind clients that owning property in Canada means balancing strong property rights with equally strong legal limits. Until Parliament changes the law, Canadians should remember that while their home may feel like a castle, the law does not yet treat it that way.

Why the LP/GP Structure Is the Gold Standard in Private Equity

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When it comes to launching a private investment fund, one structure stands out: the Limited Partnership (LP) with a General Partner (GP). It’s flexible, investor-friendly, and — when done right — highly tax efficient.

At Rabideau Law, we help clients build these structures from the ground up to raise capital, protect the general partner, and stay compliant with Canadian tax and securities law.


What Is an LP/GP Structure?

A Limited Partnership consists of two types of parties:

  • General Partner (GP): Manages the day-to-day operations of the fund and assumes liability.
  • Limited Partners (LPs): Passive investors who provide capital but do not participate in management.
    Their liability is limited to their investment.


The GP is often set up as a corporation to shield personal liability — something we strongly recommend and assist with at Rabideau Law.


How It Works (Simplified Flow):

  1. LPs contribute capital
  2. GP deploys the capital into selected investments (e.g., real estate, startups, private companies)
  3. Profits (or losses) flow back through the LP, with distributions typically favoring the LPs until a preferred return is achieved

This setup allows for:

  • Tiered distributions
  • Management fees
  • Carried interest (performance-based profit for the GP)


Why Investors Prefer It

  • Limited liability: LPs are protected
  • Tax efficiency: Pass-through entity, no double taxation
  • Flexibility: Tailored terms in the Limited Partnership Agreement
  • Credibility: Professional investors recognize and respect this structure


Why the GP Matters

The GP plays a critical legal and operational role. It must:

  • Be properly formed (often as a corporation)
  • Be indemnified in the Limited Partnership Agreement
  • Have clearly defined rights and duties

Rabideau Law regularly drafts LP Agreements that reflect your deal terms while ensuring the GP is protected.


Common Use Cases for LP/GP Structures

  • Private equity funds
  • Real estate syndications
  • Venture capital pools
  • Family office funds
  • Joint ventures with third-party investors

Ready to Start? We’re Your Legal Partner.

Whether you’re launching your first fund or expanding an existing one, Rabideau Law provides:

  • GP/LP entity formation
  • Limited Partnership Agreements
  • CRA registration
  • Ongoing legal guidance


Book your strategy call today. Build it right, from the ground up.