Budget 2023 proposed amendments to the Income Tax Act (“ITA”) to allow for the sale of a “qualifying business” to an Employee Ownership Trust (“EOT”). The rules are effective as of January 1, 2024. There must be a qualifying business transfer to the EOT, which occurs when a taxpayer disposes of shares of a subject corporation to an EOT …
The Canada Revenue Agency’s prescribed rate of interest will increase from 2% to 3% on October 1, 2022. A prescribed rate loan strategy allows high-income earners to income split with their family members (spouses, children, grandchildren, etc.) who earn income taxed at a lower marginal tax rate or earn no income at all. The strategy requires the high-income individual …
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 …
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 …
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 …
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 …
One of the ways an individual may qualify for income support under The Ontario Disability Support Program Act[1] is to qualify under the definition of a “person with a disability.” Generally, to qualify as a person with a disability, the individual must have a substantial physical or mental impairment that is expected to last at least 12 months and substantially …
In 2016, the Department of Finance introduced the “graduated rate estate” (GRE). Since that time, any special relief in the Income Tax Act which applied to testamentary trusts now only applies to GREs. There are various advantages to an estate which is designated a GRE. One of the most significant benefits relates to testamentary donations. What is a Graduated …
Family trusts are often used as part of tax and estate planning. When a trust has been settled, the trustees should be aware of their duty to disclose. Trustees owe a fiduciary duty to act in the best interests of the beneficiaries and there are practical reasons for why beneficiaries need information about the trust: to complete their tax …
