Departure Tax – Becoming a Non-Resident of Canada

Canada levies tax on the basis of an individual’s residency.  Generally, an individual is subject to Canadian tax on his/her worldwide income if he/she is a resident of Canada.  The residency status of an individual is a question of fact to be determined by taking into account all of the circumstances of the individual.  The most important factor in determining …

Pre-Budget Tax Planning

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%”, …

5 Strategies Where COVID-19 Can Reduce Taxes

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 …

Interest in Henson Trust Not An Asset

S.A. v Metro Vancouver Housing Corp.   In the recently released case S.A. v Metro Vancouver Housing Corp.,[1] the Supreme Court of Canada (Supreme Court) had its first opportunity to consider the nature of Henson trusts.  Henson trusts are settled for the benefit of a person with disabilities who relies on publicly funded social assistance benefits.   The issue in …

Children Cannot Be Used As “Accomodating Parties” For Tax Planning

Caplan v Agence du revenue du Quebec[1] (Caplan) concerned distributions allocated from a discretionary trust to beneficiaries of a trust and then transferred to their father (also a beneficiary).  The court found that the children acted as an “accommodating party, whether as an agent or nominee, for their father.”  Moreover, they never had control over amounts paid to them by …

Federal Budget 2019 – Will This Be The End of Capital Gains Planning

  As the personal tax rates have increased to 53.53%, the tax spread between dividend income and capital gains has widened significantly.  As a result, planning has evolved whereby a taxpayer creates a capital gain as a means of extracting corporate funds instead of paying themselves a dividend, which would be taxable at a higher rate.  For example, if an …

Milne Decision Overturned

In September 2018, the decision of Milne Estate (Re)[1] was released and cast doubt whether the long-standing practice of preparing two Wills—one, which is submitted to court for probate and the second, which is not and is used to reduce probate fees  (also known as Estate Administration Tax)—could continue to be used as an estate planning tool in Ontario to …

Employee Stock Option Plans

Deemed Benefit and Tax under Section 7   Section 7 of the Income Tax Act[1] taxes an employee’s benefit derived from the exercise of rights under a legally binding agreement with an employer to sell or issue shares to the employee.  Section 7 applies where a corporation has agreed to sell or issues shares to the employee.  If there is …

Minimizing the Estate Administration Tax (also known as “Probate”)

Applying for Probate   Applying for probate is the process of registering the deceased’s Will with the Ontario Superior Court of Justice and applying for a “Certificate of Appointment of the Estate Trustee” (the executor).  Probate also requires the payment of the estate administration tax.   A Will must be probated in order to formally pass assets from the deceased …