REVERSIONARY/REVOCABLE TRUSTS A trust is a relationship under which a person, called a settlor, contributes cash or other property in trust for the benefit of others, called the beneficiaries. The trust is not a legal person or entity for most purposes, but it is considered a “person” and a “taxpayer” for income tax purposes. The […]
DEATH AND TAXES You’ve heard the saying about this − there are two sure things in life. On top of that, when you die, there may be additional income tax payable owing to the “deemed disposition” rules and other rules that apply specifically upon death. Before we get to those issues, in the year of […]
TAX PLANNING AND ADVANCED LIFE-DEFERRED ANNUITIES (ALDAs) If you own a registered retirement savings plan (RRSP), you must wind it up by the end of the year in which you turn 71. At that point, you have the following options. First, you can take out all the funds in one lump sum. However, since the […]
Until recently, it was more financially beneficial to sell a business to a third party in Canada, rather than passing it along to children or grandchildren through an intergenerational business transfer. This had been a longstanding bone of contention among entrepreneurs. Bill C-208, An Act to amend the Income Tax Act (transfer of small business […]
NON-ARM’S LENGTH PROPERTY TRANSFERS Overview There are special rules under the Income Tax Act (the “Act”) that apply to property transfers to a non-arm’s length person. The rules, discussed below, can override the actual proceeds or sales price received on the property transfers. For most purposes, “related” persons, as defined in the Act, are non-arm’s […]
ESTATES AND THE “PIPELINE” STRATEGY When a person dies, they are deemed to dispose of most of their capital properties at fair market value. This deemed disposition may trigger capital gains or losses, depending on the tax cost of the properties relative to their current fair market value. The person who acquires the property as […]
In recent weeks we saw the publication of a landmark investigation into U.S. President Donald Trump’s business dealings surrounding the sweeping real estate empire built by family patriarch Fred Trump, all the way up to the present-day management of the business under Trump scions Donald Jr. and Eric. Indeed, the venerable New York Times declared […]
A new Canada Revenue Agency (CRA) directive is about to make it much harder for entrepreneurs to correct legitimate tax errors without significant repercussions. The CRA recently proposed changes to the Voluntary Disclosure Program (VDP), an initiative that allows taxpayers to correct mistakes or oversights on their Canadian tax returns, or make new submissions, for […]
The federal government last week took another step towards implementing sweeping tax changes that could have a disproportionate impact on small and medium-sized business owners across Canada. The Trudeau Liberals announced plans for a 75-day consultation period during which they’ll be seeking feedback on changes to three common tax-planning strategies for private corporations. The government’s […]
Many aspects of the Income Tax Act are difficult for taxpayers to understand and navigate, but Section 160 is perhaps one of the most obscure. In fact, most taxpayers are not aware that this section exists, let alone do they understand its full implications. That’s because Section 160 gives the Canada Revenue Agency (CRA) broad […]
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