Rickson9, this assessment is incorrect. A REIT is a trust. Like most mutual funds, REITs are structured as trust such that the income distributed to the beneficiaries of the trust (the unitholders) does not lose its characterisation. REITs were deliberately left out of the 2007 income trust legislation, and are not subject to tax if they distribute almost all of their net income to unitholders.
Retired at 31, I'm afraid I don't have much advice to offer, except that it's understandable that the CRA would want to scrutinise the payment of management fees by a corporation holding property. As a shareholder of a private corporation, who also happens to be an employee, the CRA could determine that the benefits conferred by the private corporation to you through the payment of management fees are not arm's length and deny the corporation a deduction for the management fee. They would likely recharacterise some amount of the fees to be dividends and tax them accordingly. I'm not completely sure, but I think if you can demonstrate that the management fees paid by the corporation to you are equivalent to those that would be incurred in a arm's length setting, then the CRA will have a hard time recharacterising the management fee payments as dividends.
Sorry, but I don't have much expertise in this part of the income tax act (I think subsection 15(1) applies in this situation). If anyone has questions about section 247 though, I can be of significantly more assistance.
