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 …

Enhanced Disclosure Required For Family Trusts Beginning in 2021

In February 2018, the federal government tabled its annual budget, which contained proposals to require certain trusts to file T3 Trust Income Tax and Information Returns (T3 returns) and to provide certain information with respect to the trust’s settlor(s), trustees, beneficiaries and protectors.  On July 27, 2018, draft legislation was released which would give effect to this proposal. The changes …

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 …

Changes to the Estate Administration Tax Effective January 1, 2020

The Estate Administration Tax   The Estate Administration Tax (“EAT”) (formerly known as “probate fees”) is a tax charged on the total value of the deceased’s estate.   The current EAT rates are: $5.00 for each $1,000 (there is no EAT payable if the value of the estate is $1,000 or less) of the first $50,000 of the value of …

Gekas v. Canada – CRA Is Forced to Overturn TFSA Over-Contribution Penalties

Section 207.02[1] imposes a tax on over-contributions to an individual’s tax-free savings account (TFSA) of 1 percent each month of the individual’s highest excess TFSA amount that month.  Section 207.03 imposes a similar tax on contributions by non-residents.   Section 207.06(1) provides the Canada Revenue Agency (CRA) with the discretion to waive or cancel the taxes imposed under sections 207.02 …

Choosing the Will or Family Law – A Surviving Spouse Has the Choice

On the death of a spouse, the surviving spouse has the right to choose between accepting his / her entitlement under their partner’s will (where there is a will) or claim an equalization of net family property (an “equalization payment”) under section 6 of the Family Law Act.[1]   Where there is no will, the surviving spouse has the right …

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 …

New Ownership Disclosure for Private Corporations

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 …