Determining the bearer of the tax burden on income earned in an individual’s estate is not as simple as one might think. There are some basic taxation rules that apply to an estate which result in either the estate or the beneficiaries becoming ultimately liable for the tax. The tax…
Do digital assets e.g. cryptocurrencies (such as bitcoin, ethereum) non-fungible tokens, qualify as investments in deferred tax vehicles such as Registered Retirement Savings Plans (RRSP’s), Tax Free Savings Accounts (TFSA’s), Registered Education Savings Plans (RESP’s) and Registered Disability Savings Plan (“RDSP’s). The simple answer is no and maybe. This issue…
Alter-ego and joint-spousal[1] trusts are inter-vivos trusts commonly used in estate plans to hold legal title of assets for the benefit of the individual and/or their spouse, prior to death, accomplishing some of the following benefits: avoiding probate, providing privacy, expediency of inheritance distribution, and minimization of legal challenge on…
If a taxpayer owns shares of a corporation and passes away, he or she is deemed to have disposed of their shareholding at fair market value (“FMV”) unless a tax-free rollover is applied (e.g., rollover to a surviving spouse). The disposition of shares may cause a tax liability. In the…
The Canada Revenue Agency (CRA) has been asked on numerous occasions to weigh in on whether specific post-mortem planning implemented by taxpayers to avoid double taxation would result in a deemed dividend. In a recent ruling, the CRA concluded that it would not apply either specific tax rules or the…
The Canada Revenue Agency (CRA) was recently asked to provide an update regarding the new online application process for a trust account number. In my capacity as an advisor, I ask clients to make tax payments if an only if there is an account number assigned to the taxpayer responsible…
A charitable remainder trust (CRT), although not widely used in Canada, can be a useful charitable giving tool that generates an immediate tax credit for the donor. In an inter vivos context, an individual establishes an alter ego trust and transfers property to the trust on a tax-deferred basis. The trust holds…
Tax planning can be very complicated with an Income Tax Act (“Act”) consisting of over 1.1 million words. This is a far cry from the original 4,000 words of the Act’s predecessor, Income War Tax Act[1], which was originally enacted as a temporary measure in 1917. The more than 3,000…
The rollover provisions of the Income Tax Act, under subsection 85, permit a taxpayer to elect to transfer “eligible property” to a taxable Canadian corporation in exchange for consideration that includes at least one share of the corporation. “Eligible property” includes most capital property, Canadian or foreign resource property, eligible…
On June 29, 2021, the Private Member’s Bill C-208, regarding the transfer of small businesses and family farm or fishing corporations (the Bill), received Royal Assent. The Bill limits the application of section 84.1 on inter-generational business sales. Avoiding section 84.1 allows the vendor to receive capital gains treatment on a non-arm’s…
