All About Estates

Category: Tax Issues

Total 299 Posts

U.S. Gift Tax – It May Apply To Canadians

The U.S. gift tax is often overlooked by Canadians and their advisors. Most U.S. citizens living in Canada are aware of the U.S. estate tax and gift tax application. However, when it comes to Canadian residents who are not U.S. persons, only a minority are aware of the potential application…

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Taxable Preferred Shares – Some Potential Relief for Specified Amounts

Andrew Coates, Associate, Gowling WLG (Canada) LLP The potential tax implications of estate trustees finding themselves holding taxable preferred shares (“TPS“) owned by a deceased and the “substantial interest” exception for Part VI.1 tax was explored previously in the March 2, 2021 post, but TPS is a complicated subject so…

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What Makes an Indigenous Trust Unique?

What makes an Indigenous trust unique from other inter vivos trusts? Two factors in particular are worth noting: (1) the nature and involvement of the beneficiaries of the trust, and (2) the manner in which Indigenous entities as settlors can utilize the income attribution rule under s 75(2) and their tax-exempt status under s 149(1)(c) of the Income Tax Act.

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Non-Resident and Rental Income – Not so Fast.

When a non-resident of Canada generates rental income from a Canadian rental property, the tenant (or agent for the non-resident) must withhold 25% of the gross rental payment (unless a tax treaty reduces the withholding rate) and remit it to the Canada Revenue Agency by the prescribed date. It’s important…

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Non-Resident Beneficiary and Part XIII Withholding Tax – Trustee Beware

When trustees distribute income of a trust to a non-resident beneficiary, they must be mindful of potential Canadian tax implications. Part XIII tax is a tax withheld at source when income is paid to a non-resident. For Canadian trust and estate purposes, Part XIII requires a non-resident beneficiary to pay…

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Section 116 and Capital Distributions by Trust to Non-Resident

When a trust makes a capital distribution to a non-resident beneficiary, the beneficiary is deemed to have disposed of a part or the whole of their capital interest in the trust.[2] Where the capital interest in the trust is “taxable Canadian property” (“TCP”),[3] the vendor of the TCP (i.e. the beneficiary who is deemed to be “disposing” of their interest in the trust) must apply for a clearance certificate from the Canada Revenue Agency (the “CRA”) under section 116, either in advance of the disposition or within 10 days of the disposition.

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Trustees – it’s time to start gathering information

With 6 weeks until the end of 2023, it is a good time to remind trustees of their obligations in respect of the trusts that they are responsible for managing and administering. Last year, I wrote a blog where I reminded trustees of discretionary trusts of the importance of documenting…

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Non-Resident Beneficiary and Part XII.2 Tax

It’s not uncommon for a trust or an estate to have a non-resident beneficiary. When such a situation arises, trustees should consider whether Part XII.2 tax applies. Essentially, Part XII.2 imposes a 40% tax on the non-resident beneficiary if the trust or estate earns designated income that would, if earned…

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Exercise Caution: Different Countries – Different Tax Regimes at Death

This blog has been written by Rahul Sharma, Partner at Fasken LLP A couple of recent telephone calls reminded me of the perils of estate and tax planning that crosses borders without proper planning. The first case is regrettably quite common.  An entrepreneur in the technology sector (we will call…

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No good deed goes unpunished by the CRA

Part I – Personal Attribution This blog has been written by Pritika Deepak /Associate at Fasken LLP Gifting property or making loans to family members is a common way for individuals to transfer and share their wealth with their loved ones. There are, however, several rules in the Income Tax…

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