A common estate planning technique is to structure a family trust which owns the shares of a small business corporation in such a way that allows each beneficiary (most commonly being members of the taxpayer’s immediate family – spouse and/or children) to participate in the sale or disposition of the…
Category: Small Business
Total 53 Posts
A fellow blogger wrote very eloquently late last week about succession planning for family owned businesses. Regrettably, as she noted the statistics for the successful transfer of family businesses are not very good. With the introduction of the new tax proposals, the challenge for a successful transfer of business to…
From time to time, I am asked to prepare, review or comment on structures for estate planning purposes with a mind to valuation issues. A common valuation issue is control and whether or not the value of the business interest(s) in the estate plan should be discounted for lack of…
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…
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…
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…
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…
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…
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…
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…