Generally, the rules introduced in Bill C-208 were designed to allow a sale of shares that otherwise qualify for the capital gains exemption to be sold to a non-arm’s length corporation (referred to here as the “business transfer rules”). The business transfer rules allow the vendor to benefit from the capital gains exemption without being recharacterized as a dividend under …
Budget 2023 The Federal Budget 2023 introduced several amendments to strengthen and modernize the General Anti-Avoidance Rule (“GAAR”). Some of the more notable amendments include the changes to the definition of “Avoidance Transaction” as well as the introduction of the concept of “Economic Substance”. Avoidance Transaction – This test has been significantly broadened by replacing the “primary purpose” test with …
With a top personal tax rate in Ontario of 53.53%, the tax spread between dividend income and capital gains is significant. As a result, planning has evolved over the last number of years whereby a taxpayer creates a capital gain as a means of extracting corporate funds in lieu of or in combination with paying themselves a dividend/salary, which would …
The Federal budget for 2020-2021 was initially scheduled to be presented in the House of Commons on March 30, 2020. This was of course delayed as a result of Covid-19. Fast forward to January 2021, and a lot has changed with Canada’s economic situation. Are tax increases coming? Most likely. The Federal government has been very open that the typical “1%”, …
There are are at least 5 strategies that can be executed under existing tax legislation to use COVID-19 to generate tax relief. These strategies were originally posted by us 7 weeks ago on March 19th. In particular, strategy No. 5 discussed below anticipated a reduction in the prescribed interest rate to 1% from the current rate of 2%, which will now be …
The Canadian federal, provincial and territorial finance ministers executed the Agreement to Strengthen Beneficial Ownership Transparency in 2017. The agreement required the finance ministers of each government and territory to pursue legislative amendments to corporate statutes (and other relevant legislation) to ensure that corporations hold “accurate and up to date information on beneficial owners that will be available to law …
It is not uncommon, especially in privately-held corporations, for a payment or transfer to be made by a corporation on a particular date and the nature of the payment or transfer may be determined on a later date, at which time a director’s or shareholders’ resolution may be required. The Canada Revenue Agency (CRA) and the Tax Court of Canada …
Solicitor-Client Privilege Generally Solicitor-client privilege (also known as “legal advice privilege”) operates to protect communication between a lawyer and his/her client from disclosure to third parties. The privilege belongs to the client and can only be waived by the client. Solicitor-client privilege is not time sensitive and does not expire. Communication is subject to solicitor-client privilege when three …
There are three common types of legal structures for a business: sole proprietorship, partnership, and corporation. The advantages and disadvantages of each structure are explained below. Sole Proprietorship This structure is informal and easily created. The business and the operator are the same to legal and tax authorities. The business’s profits, debts and responsibilities are those of the …
Over the past 4 years or so, we have experienced an unprecedented increase in the complexity of private company taxation. With another Liberal government recently elected, which is supported by the NDP and Green Party, we can certainly expect further tax changes which will more likely than not include increasing tax rates. Of particular concern is the rumor that both …
