Conflict of Interest and Ethics Commissioner Mary Dawson said Trudeau contravened a rule on gifts when he accepted the use of the island in March and December 2016, while there were ongoing official dealings with the Aga Khan and the Aga Khan Foundation Canada was registered to lobby Trudeau's office.
The Commissioner found there were three all-expenses-paid trips to the island.
Mr Trudeau, his family, and some senior members of the Liberal Party vacationed on the island owned by the philanthropist and spiritual leader last December.
She also found that he did not break conflict of interest rules when he accepted the gift of a vacation in 2014 when he was a member of Parliament.
- No minister of the Crown, minister of state or parliamentary secretary, no member of his or her family and no ministerial adviser or ministerial staff shall accept travel on non-commercial chartered or private aircraft for any objective unless required in his or her capacity as a public office holder or in exceptional circumstances or with the prior approval of the Commissioner.
There is an exception in the Act for gifts or other advantages from relatives and friends, but it did not apply in this case, as the Commissioner determined that Trudeau and the Aga Khan can not be characterized as friends within the meaning of the Act.
Mary Dawson released a scathing report on Wednesday into Mr Trudeau's trips.
On both occasions, the report states that Trudeaus were told that the Aga Khan and his family "may or may not be present".
"It was a standing invitation from the Aga Khan and his daughter to spend some time on their island", he said.
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In response to the question Trudeau said, "The date will not be July 1, I can assure you of that", Trudeau said.
Her findings make Trudeau the first prime minister to have been found in contravention of the federal conflict of interest rules.
"Obviously there was a mistake", he said.
The PM says he erred by failing to clear the vacations in advance.
Dawson said Aga Khan developed a friendship with Trudeau's father in the late 1960s but is not a friend of the current president.
As part of her examination of the trip, Ms. Dawson received evidence from 14 people and conducted two interviews with Mr. Trudeau, as recently as October.
Trudeau has repeatedly called the Aga Khan a longtime family friend who was a pallbearer at his father's funeral.
Dawson found that Trudeau also contravened section 21 of the Act when he did not recuse himself from discussions that provided an opportunity to further private interests associated with institutions of the Aga Khan, and section 5 for failing to arrange his private affairs to avoid such an opportunity.
Still, Mr. Trudeau said he felt a close link when he saw the Aga Khan in 2000. The TV interviewer, Pierre Bruneau, asked Trudeau why he was so obsessed with Canada Day being the date for the the legislation to become law. She made a determination that he is not a family friend.