All About Estates

Category: Small Business

Total 20 Posts

Valuators – 2018 Might be a Very Good Year

I mentioned in my last blog that the government is proposing measures to limit the application of the lifetime capital gains exemption (“LCGE”) to owners of eligible small business corporations, based on age and “reasonableness”. Subject to certain exceptions, the proposals ensure that property held by a trust will no…

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For Whom the Bells Toll: It Tolls for Family Trusts?

As we continue to absorb the draft legislation (together with explanatory notes and consultation paper) introduced by the Department of Finance to overhaul the system of taxation for private companies, some things have are becoming clear. If essentially enacted as currently drafted, the legislation will likely spell the end of…

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The Principal Residence Exemption: Can you Divide and Conquer?

Recently, the Canada Revenue Agency (‘CRA”) was asked for its opinion on a fact situation with implications on the availability of the principal residence exemption for tax purposes, that I think also has applicability to estate planning in general and to some of the issues one can encounter when trying…

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DEATH BENEFITS: CAN THEY BE APPLIED TO THE INCORPORATED OWNER-OPERATOR?

A death benefit is an amount received after a person’s death for their employment service. In general, any amount up to $10,000 received is not subject to tax, pursuant to regulations contained in the Income Act (“ITA”). What if the deceased was the sole shareholder of a corporation and received…

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ATTRIBUTION RULES AND PLANNING REVISITED

Recently the Canada Revenue Agency (the “CRA”) issued a technical interpretation on the application of the income attribution rules under the Income Tax Act (“ITA”) which serves as a good primer particularly when a personal representative is looking at the deceased’s prior year returns with joint accounts and the potential…

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CAPITAL DIVIDEND ACCOUNT ELECTIONS AND THE DATE GONE WRONG?

As I mentioned in a previous blog, the capital dividend account (“CDA”) is often a central feature of tax planning for individuals with private corporations with the opportunity to make tax-free distributions to shareholders on the disposition of certain capital assets. It gains particular focus in estate planning scenarios and…

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Determining the CAPITAL DIVIDEND ACCOUNT BALANCE: no longer a shot in the dark?

The capital dividend account (“CDA”) is a tax free surplus account within a private corporation which gives shareholders designated capital dividends, tax-free. The CDA typically contains the non-taxable portion of the company’s capital gains net of capital losses, capital gains received by other companies, proceeds of life insurance on death…

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SHARES ISSUED FOR NOMIMAL CONSIDERATION: BE WARY OF VALUATION

Recently, the Canada Revenue Agency (“CRA”) was asked to comment on the tax consequences that may result from implementing an estate planning or income splitting arrangement which involves the issuance of shares that entitled the holder to discretionary dividends, for nominal consideration. The CRA was presented with a hypothetical small…

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ESTATE FREEZES AND CORPORATE ATTRIBUTION RULES: A QUICK REFRESHER

When an individual taxpayer transfers or loans directly or indirectly property to a corporation, certain provisions of the Income tax Act (“the Act’) may deem the transferor to have received annual interest income on the property at the prescribed rate as set out in the Regulations of the Act. The…

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CAPITAL DIVIDENDS FROM A TRUST TO NON-RESIDENTS – TAX ISSUES

Subject to the relevant sections of the Income Tax Act, a Canadian private corporation has a special corporate tax account known as a capital dividend account (“CDA”) which gives shareholders designated capital dividends, tax free. The CDA of a corporation may include the non-taxable portion of the company’s capital gains,…

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