How Finance s new proposals will affect tax planning for private companies. 1 August, 2017
|
|
- Homer Antony Phillips
- 5 years ago
- Views:
Transcription
1 How Finance s new proposals will affect tax planning for private companies 1 August, 2017
2 Today s presenters Gabriel Baron Tax Partner Private Client Services practice EY Ryan Ball Tax Partner Private Client Services practice EY Page 2
3 Agenda How did we get here? Scope of the proposals Increased tax on corporate reinvestment in passive assets Income sprinkling restrictions Lifetime Capital Gains Exemption (LCGE) restrictions Capital gains tax increase ( conversion of capital gains into dividends) What happens next? Questions Page 3
4 Background and history: How did we get here? Liberal election platform document [from "We will ensure that Private Corporation (CCPC) status is not used to reduce personal income tax obligations for high-income earners rather than supporting small businesses...particularly as high-income individuals use CCPC status as an income splitting tool" Federal budget 2016 Speculation of capital gains and stock option tax increases Elimination of Conservative s income splitting Family Tax Cut credit ($2,000 max value tax credit) Federal budget 2017 Speculation of capital gains tax increases One-page warning about private company tax reform July 18, 2017 Comprehensive proposals Page 4
5 Scope of proposals Every private company in Canada may be impacted in some manner by the proposals Proposal paper includes commentary on: Corporate reinvestment proposals Income splitting Lifetime Capital Gains Exemption (LCGE) Capital gains taxation Draft legislation and explanatory notes released on income splitting, LCGE and capital gains taxation Page 5
6 Scope of proposals Typical family corporate structure Spouse 1 Spouse 2 Children beneficiaries Fam Trust Beneficiary relationship Corp Benef. 60% 20% 20% HoldCo OpCo Page 6
7 Taxation of corporate reinvestment Page 7
8 Taxation of corporate reinvestment What s targeted? Spouse 1 Spouse 2 Children beneficiaries Fam Trust Beneficiary relationship Corp Benef. 60% 20% Dividends 20% Dividends HoldCo Dividends OpCo Page 8
9 Taxation of corporate reinvestment Current system Corporations taxed at lower rates than individuals on business earnings when reinvested in corporate environment (the deferral ) On fully-distributed basis, indifferent between earning funds in corporation or personally Passive investment earnings taxed at high rates, and also indifferent today between corporate or personal investment on fully-distributed basis Page 9
10 Taxation of corporate reinvestment Current example: initial business earnings Personal Corporate Income $100,000 $100,000 Corporate tax (27,000) $73,000 Personal tax (50,000) (23,000) After-tax funds $50,000 $50,000 Example on active business earnings Hypothetically representative tax rates from Department of Finance: Corporate general tax rate: 26.70% High-rate personal tax, ordinary income: 50.37% High-rate personal tax, eligible dividend income: 32.29% Page 10
11 Taxation of corporate reinvestment Current example: passive investment earnings Personal Corporate Income $100,000 $100,000 Corporate tax (50,000) 50,000 Dividend refund 30,000 Taxable dividend 80,000 Personal tax (50,000) (34,000) After-tax funds $50,000 $46,000 Example on passive Canadian investment earnings (income and the taxable portion of capital gains) Hypothetically representative tax rates from Department of Finance: Corporate investment tax rate: 50.37% Refundable component of tax, when sufficient dividends paid: 30.67% High-rate personal tax, ordinary income: 50.37% High-rate personal tax, ordinary dividend income: 42.02% Page 11
12 Taxation of corporate reinvestment Proposed system Objective is to remove benefit of tax deferral when passive investments acquired from business-taxed earnings Two broad systems proposed for input/comment: #1: Current tax method: 1972 Approach levies refundable tax on business earnings invested in ineligible passive assets Government appears to not be pursuing this proposal Page 12
13 Taxation of corporate reinvestment Proposed system #2: Deferred tax method: leave current systems generally in-place EXCEPT remove refundable component of investment tax Applies to investment earnings on corporately taxed retained earnings used to invest in passive assets Double tax results on distributed investment earnings After tax return in corporate investment scenario will proxy same return as if funds had been personally distributed and invested Depending on province of taxation, immaterial advantage may remain to using corporate investment vehicle No tax-free distributions (Capital Dividend Account, or CDA ) for ½ portion of capital gain not subject to tax Discussion on when, if at all, tax free CDA permitted on corporate gains in limited situations Page 13
14 Taxation of corporate reinvestment Future example: initial business earnings Personal Corporate Income $100,000 $100,000 Corporate tax (27,000) $73,000 Personal tax (50,000) (23,000) Consequence of investing surplus? After-tax funds $50,000 $50,000 No change to taxation and distribution of business earnings under proposals However, what happens to taxation of the investment income earned on the $73,000 corporate surplus? Compare investment in passive assets generating 10% rate of return on either: Personal $50,000: would generate $5,000 of income Corporate $73,000: would generate $7,300 of income Page 14
15 Taxation of corporate reinvestment Future example: passive investment earnings Personal Corporate Income $5,000 $7,300 Corporate tax (3,600) 3,700 Dividend refund N/A Taxable dividend 3,700 Personal tax (2,500) (1,200) After-tax cash $2,500 $2,500 Effective rate 50.00% ~66.00% Page 15
16 Taxation of corporate reinvestment Potential income tax rates on investments If after-tax business earnings subject to Small Business Deduction, reinvestment in income/gains produces: ~71% tax rate on investment income ~51% tax rate on capital gains If after-tax business earnings subject to general corporate rate, reinvestment in income/gains produces : ~66% tax rate on investment income ~49% tax rate on capital gains Page 16
17 Taxation of corporate reinvestment Other issues Highly technical discussion material on other issues Proposed grandfathering for existing investments No guidance on how grandfathering will be implemented Existing investments? Existing business retained earnings for future investments? What about accrued but untaxed gains (real estate, business goodwill etc)? Preservation of grandfathering, or forced drawdown of funds on first in first out basis? Unclear when proposals would apply subsequent to the consultation period Proposal document indicates time will be provided before any such proposal becomes effective Page 17
18 Taxation of corporate reinvestment Other issues Proposed preservation of existing refundable tax system for investment-only companies. Unclear scope of this grandfathering Unclear what is meaning of passive investment? Proposals silent on permanent life insurance investments Proposal also indicated will consider/address: Evaluation whether should apply to non-ccpc private companies (no mention of public companies though) System will not be undermined by complex cross-border structures and activities Page 18
19 Income sprinkling restrictions Page 19
20 Income sprinkling What s targeted? Spouse 1 Spouse 2 Children beneficiaries Fam Trust 60% 20% 20% HoldCo OpCo Page 20
21 Income sprinkling Current system Kiddie Tax top marginal rate tax to specified individual on split income Attribution rules rules in place to limit the transfer of investment type income to minor children and spouses Ability to pay discretionary dividends to adult children and spouses Maximum savings depends on the province of residence $25,000 - $35,000 annual tax savings per-person per-year as a point of reference on transfer of $220,000 taxable income to no-income individual Page 21
22 Income sprinkling Proposal to increase tax #1 Expand the base of specified individuals subject to kiddie tax Proposed to include other related individuals (adult children, parents, spouses) and expanded definition of related (aunts, uncles, nieces, nephews) Adults included if the split income is derived from a business carried on by a related person Derived includes directly or indirectly Business carried on includes businesses inside a corporation, trust or partnership Business carried on also includes the year or previous year Possible for both spouses to be specified individuals in respect of the same business? Page 22
23 Income sprinkling Proposal to increase tax #2 Expanding the base of split income subject to kiddie tax Income on previous split income Gains from property that would produce split income Income (eg. interest) from loans to a corporation, partnership or trust in certain situations (eg. Loan to parent s wholly owned corporation) Amounts included in income because of a benefit conferred by another person Page 23
24 Income sprinkling Excluded amounts For individuals over 17, amounts that are reasonable in the circumstances 25 or over year old test, reasonably paid by arm s length party for: Assets contributed to the business Labour contributions to the business year old test, more restrictive Labour only if active on a regular and continuous basis Only prescribed maximum return allowed on assets contributed Anti-avoidance to limit labour contributions to businesses that provide passive income or hold passive assets Page 24
25 Income sprinkling Examples that no longer work Estate freeze dividends paid to an adult child that hasn t provided any services New corporation dividends paid to spouse that provides no capital or services Split income dividend paid to a child. Child reinvests after tax proceeds in own business venture Page 25
26 Income sprinkling Examples that should still work Income paid to individual that is already subject to highest marginal rate of tax Reasonable salaries Dividend paid to 25 year old spouse provided amount is reasonable considering capital and labour provided Splitting eligible pension income on personal tax return Note: unclear whether anti-avoidance proposals may extend to prescribed rate investment loans made to spouses and children where public investment income earned Page 26
27 Income sprinkling When do proposed rules apply? New proposals would become effective for the 2018 calendar tax year of individuals Evaluate what strategies should be utilized prior to the end of 2017 to mitigate exposure to the new proposals Page 27
28 Lifetime capital gains exemption (LCGE) restrictions Page 28
29 Life time capital gains exemption What s targeted? Spouse 1 Spouse 2 Children beneficiaries Fam Trust 60% 20% 20% Opco Page 29
30 LCGE Current System Available to all taxpayers on disposition of qualifying property Amount of exemption $835,000 ($1M for farm property) Certain ownership and use tests Eligible gains are exempt from tax Ability to use exemption for all family members on an arm s length sale of qualifying property Ability to allocate taxable gains out of family trust Page 30
31 LCGE Proposals to increase tax No more LCGE for individuals under 18 Includes gains that are realized or accrued while minor No more LCGE for gains realized or accrued by a family trust, even if property rolled out of trust to beneficiaries No more LCGE on gains from property that would otherwise produce split income Introduces a reasonability test to the amount of the gain that has accrued based on provision of labour or capital to the business Page 31
32 LCGE Transitional rules Generally effective for dispositions occurring after 2017 Elective provision to trigger gains in 2018 and still qualify Increase tax cost for future sale Some relief to holding period tests Election form must be filed (generally April 30, 2019) Transitional rules do not appear to work for minors where shares not sold arm s length by December 31, 2018 Page 32
33 LCGE Next steps Review existing structures for possible use of transitional relief Don t forget about alternative minimum tax Consider necessary changes to current structure Need to weigh commercial reasons to use trusts against ability to access LCGE Page 33
34 Conversion of capital gains into dividends Page 34
35 Capital gains conversion to dividends What s targeted? Spouse 1 Spouse 2??? Children beneficiaries 60%??? 20% 20%??? Fam Trust HoldCo??? OpCo Page 35
36 Capital gains conversion to dividends Current system Capital gains are realized on death Where shares of private company held, can utilize tax paid attributes of shares to draw funds from corporation to mitigate double tax Capital gains realized amongst transfers of related parties (where appropriate taxes are paid) produce hard tax cost in the assets. Tax paid assets can be sold to related corporations for cash, shareholder loans, etc. Does not apply to gains sheltered by LCGE or pre-1972 value Corporate capital gains are generally integrated with personal rates, and funds can be disbursed to individual shareholders at rates comparable to personal capital gains Page 36
37 Capital gains conversion to dividends Proposed systems Two draft legislative anti-avoidance proposals Both proposals apply effective July 18, 2017, regardless of whether transactions initiated prior to July 18 th Potentially a retroactive tax increase as examples will illustrate Government indicated willingness to evaluate exclusions for legitimate intergenerational business transfers, however unclear when that may apply Page 37
38 Capital gains conversion to dividends Proposed systems #1: Limit or suppress hard tax cost of private company shares where any related party has realized gain, and shares are subsequently transferred to related corporation Applies for gains during life or death Applies regardless if capital gains tax have been paid Forever tracing of share history Results in tax increase on death, or potential for double tax (see example) Unclear how rule will interact with capital gains tax antiavoidance proposal #2 Rule applies to transfers on/after July 18, 2017, but captures suppressed tax cost arising from pre-july 18 th transactions (retroactive tax increase?) Page 38
39 Capital gains conversion to dividends Proposed systems #2: Re-characterization of certain tax-free distributions from corporation into taxable dividend Summary description of proposal: Amount received directly/indirectly by individual resident in Canada as part of transaction or series of events As part of transaction/series, there is a disposition of property or increase/decrease of paid-up capital of a corporation Can reasonably be considered that one purpose of transaction/series was to significantly reduce assets of a private corporation, such that as a consequence of the distribution of the amount, tax has been avoided Applies to amounts received on/after July 18, 2017, regardless if transaction/series commenced prior to July 18 th Page 39
40 Capital gains conversion to dividends Proposed systems Ambiguous as to when proposal #2 may apply, particularly in ordinary course transactions: Repayment of shareholder loans arising from sales of assets to corporation? Return of tax-paid capital funded from assets that were disposed of by the corporation? Sales of corporate assets producing capital gains (for example commercial real estate), unclear whether permitted to extract the ½ tax-free capital gain component (CDA)? Interacting with proposal #1, if corporation s assets sold following death to fund winding-up of corporation, are shareholders subject to double tax? Strong technical submissions anticipated to Dept. of Finance to address ambiguity and potential grandfathering Page 40
41 Capital gains conversion to dividends Example of proposal #1: Estate of Surviving Spouse Intent to gift HoldCo shares HoldCo Children beneficiaries Facts of Example Surviving spouse died in March 2017 Children intend to use available pipeline tax planning Capital gains tax bill of ~$252,000 paid by Estate Hypothetical Dept. of Finance tax rates used $1,000,000 GICs Page 41
42 Capital gains conversion to dividends Example of proposal #1: Estate of Surviving Spouse $1,000,000 tax paid note $1,000,000 tax-free intercorporate dividend Children beneficiaries HoldCo2 HoldCo Facts of Example Surviving spouse died in March 2017 Children intend to use available pipeline tax planning Capital gains tax bill of ~$252,000 paid by Estate Hypothetical Dept. of Finance tax rates used $1,000,000 GICs Page 42
43 Capital gains conversion to dividends Example of proposal #1: Existing pipeline planning Impact of new proposal Alternative existing 164(6) planning HoldCo value $1,000,000 $1,000,000 $1,000,000 Estate tax (252,000) (252,000) (420,000) $748,000 $748,000 $580,000 Additional tax to kids - (420,000) - Final after-tax funds $748,000 $328,000 $580,000 Effective rate 25.20% 67.20% 42.00% Tax on death to private corporation owners could be 2.5x its current rate under proposals To avoid double/triple tax, alternative available planning may be used, however: Tax rate significantly higher under alternative planning May not be commercially feasible since typically requires a winding-up of the corporation subject to tax Fact that death occurred before July 18, 2017, irrelevant under proposals Page 43
44 Capital gains conversion to dividends Example of proposal #2: Shareholder HoldCo1 $1,000,000 Value of commercial real-estate Facts of Example $1M of commercial realestate to be sold as capital gain One purpose of sale is enable shareholder to extract proceeds from business for personal use (eg buy cottage) Hypothetical Dept. of Finance tax rates used Page 44
45 Capital gains conversion to dividends Example of Proposal #2: Today Proposals Gain $1,000,000 $1,000,000 Corporate tax (251,000) (251,000) Dividend refund 153, ,000 $902,000 $902,000 Tax-free CDA dist. $500,000 - Taxable dividend 402, ,000 Personal tax (169,000) (379,000) After-tax funds $733,000 $523,000 Effective rate 26.70% 47.70% Note! Even if real estate sale completed prior to July 18, 2017, distribution of funds/cda after July 18 th caught if part of the same transaction or series of events Page 45
46 What happens next? Page 46
47 What happens next? Commentary period closes October 2, 2017 Review existing planning arrangements Understand and identify exposure to new rules Analyze potentially retroactive nature of capital gains proposals Identify planning ideas to implement before rule changes Adjusting structures on go-forward basis Get involved and have your say! Business groups Local MPs Submissions to finance Page 47
48 Page 48 Questions?
49 Contact us Gabriel Baron Tax Partner, Private Client Services Practice Ryan Ball Tax Partner, Private Client Services Practice Page 49
The proposal documents contained 137 pages of material and potentially represent a change in tax policy towards private companies.
2017 Issue No. 33 31 July 2017 Tax Alert Canada Private company insights: federal tax reform EY Tax Alerts cover significant tax news, developments and changes in legislation that affect Canadian businesses.
More informationTAX PLANNING USING PRIVATE CORPORATIONS
TAX PLANNING USING PRIVATE CORPORATIONS A review of the July 18, 2017 proposals from the Department of Finance Jennifer Dunn, CPA, CA, TEP September 29, 2017 TAX PLANNING USING PRIVATE CORPORATIONS INCOME
More informationWelcome: Proposed Tax Changes for Private Corporations
Welcome: Proposed Tax Changes for Private Corporations WEBINAR: Proposed Tax Changes for Private Corporations September 18, 2017 2:30-4:30 PM EST Registration URL: https://attendee.gotowebinar.com/register/5371598472188728579
More informationTaking Action: Revised CCPC tax proposals What you need to know (and do) now
October 23, 2017 Taking Action: Revised CCPC tax proposals What you need to know (and do) now Debbie Pearl-Weinberg Executive Director, Tax and Estate Planning, CIBC Financial Planning and Advice Jamie
More informationTaking Action: CCPC tax proposals What you need to know (and do)
September 2017 Taking Action: CCPC tax proposals What you need to know (and do) Debbie Pearl-Weinberg Executive Director, Tax and Estate Planning, CIBC Financial Planning and Advice Jamie Golombek Managing
More informationUpdates to Proposed Changes to Tax Planning for Private Corporations. Lawrence Tam, CPA, CGA Manager, Davidson & Company LLP
Updates to Proposed Changes to Tax Planning for Private Corporations Lawrence Tam, CPA, CGA Manager, Davidson & Company LLP Income Sprinkling Changes Finance has altered their proposed income sprinkling
More information10/23/17 THE POTENTIAL IMPACT OF THE JULY 18, 2017 PROPOSED TAX CHANGES. Prepared for: 2017 CPA FORUM NORTH
THE POTENTIAL IMPACT OF THE JULY 18, 2017 PROPOSED TAX CHANGES Prepared for: 2017 CPA FORUM NORTH Jasper October 23, 2017 K. John Fuller, CPA, CA Jason Pisesky Page 2 Page 3 1 OVERVIEW OF PROPOSED AMENDMENTS
More informationUpdate on the CCPC tax proposals December 2017
Update on the CCPC tax proposals December 2017 Debbie Pearl-Weinberg Executive Director, Tax and Estate Planning, CIBC Financial Planning and Advice Jamie Golombek Managing Director, Tax & Estate Planning,
More informationTax Update August 14, 2017
Tax Update August 14, 2017 Overview On July 19, 2017, we issued a Tax Alert regarding Potential Changes to Tax Planning Using Private Corporations, and we have had an opportunity to review these changes
More informationSweeping Proposed Tax Changes to Private Corporations
Sweeping Proposed Tax Changes to Private Corporations Speakers: Kay Leung, Business & Tax Law Wesley Isaacs, Business & Tax Law Marc Weisman, Business & Tax Law Moderator: Ari Tenenbaum, Business Law August
More informationUpdate on the July 18 th Tax Proposals. Nathan Wright, LL.B., MTAX, TEP Founding Principal Ph: (416)
Update on the July 18 th Tax Proposals Nathan Wright, LL.B., MTAX, TEP Founding Principal Ph: (416) 203-8338 E-mail: nwright@spectrumlawyers.ca July 18, 2017 Proposed Changes On July 18, 2017 Finance Minister
More informationCTF Policy Conference on Tax Planning Using Private Corporations (September 25, 2017): Questions from Participants
1 CTF Policy Conference on Tax Planning Using Private Corporations (September 25, 2017): Questions from Participants A. General 1. On what date will the new passive income rules become effective? When
More informationA plain language review of the proposed tax legislation
A plain language review of the proposed tax legislation (and how it affects your clients) Wednesday October 11, 2017 7:30-9:30am Agenda 2 1 INTRO 5 TAX ON SPLIT INCOME 2 REVIEW OF POLICY CONCERNS 6 CAPITAL
More informationPrivate Company Income Splitting
Private Company Income Splitting Presented by: William Bernstein September 14, 2017 Topics to Review 1. Background to proposed changes 2. Current rules for income splitting with CCPC 3. Proposed changes
More informationPrivate Company Tax Proposals Now What? November 22, 2017
Private Company Tax Proposals Now What? November 22, 2017 Welcome Introduction STEVEN CARREIRO Tax Partner KPMG LLP Private Company Consultation Paper How Potential Tax Policy Changes May Impact You and
More informationTAX PLANNING RULES FOR PRIVATE CORPORATIONS. November 23, 2017
TAX PLANNING RULES FOR PRIVATE CORPORATIONS November 23, 2017 Presenter Mark McGinnis CPA, CA Tax Partner University of Waterloo Bachelor of Mathematics 2 CORPORATE TAXES - HISTORICAL BACKGROUND INTEGERATION
More informationOver 21,000 individual submissions were made to the proposals, including some that were several hundred pages long.
2017 Issue No. 48 25 October 2017 Tax Alert Canada Private company tax reform: where are we now? EY Tax Alerts cover significant tax news, developments and changes in legislation that affect Canadian businesses.
More informationLifetime Capital Gains Exemption and Converting Income Into Capital Gains
and Converting Income Into Capital Gains Presented by: Josh Harnett September 14, 2017 Table of Contents 1. Lifetime Capital Gains Exemption a) Current Rules b) Perceived Evils c) New Measures i. Age Limits
More informationConsultation on Private Company Taxation. KPMG Submission to Canada s Department of Finance
Consultation on Private Company Taxation KPMG Submission to Canada s Department of Finance KPMG LLP October 2, 2017 Table of Contents 1 Executive Summary 2 2 Introduction 4 3 Income Sprinkling Using Private
More informationFinance Canada releases revised income splitting measures
20 December 2017 Global Tax Alert News from Americas Tax Center Finance Canada releases revised income splitting measures EY Global Tax Alert Library The EY Americas Tax Center brings together the experience
More informationCONSULTATION: TAX PLANNING USING PRIVATE CORPORATIONS. BDO CANADA LLP s RESPONSE TO THE DEPARTMENT OF FINANCE CANADA
Tel: 416 865 0200 Fax: 416 865 0887 www.bdo.ca BDO Canada LLP TD Bank Tower 66 Wellington Street West, Suite 3600, P.O. Box 131 Toronto, ON M5K 1H1 Canada CONSULTATION: TAX PLANNING USING PRIVATE CORPORATIONS
More informationTHE JULY 18, 2017 FEDERAL FINANCE PROPOSALS
THE JULY 18, 2017 FEDERAL FINANCE PROPOSALS - Viscount Gort Hotel Wednesday, September 6, 2017 Larry Frostiak, FCPA, FCA, CFP, TEP President of Frostiak & Leslie CPA Inc. Copyright Frostiak & Leslie CPA
More informationTHE NEW LANDSCAPE OF "INCOME SPRINKLING" DECEMBER 14, 2017 RELEASE
THE NEW LANDSCAPE OF "INCOME SPRINKLING" DECEMBER 14, 2017 RELEASE Introduction When the July 18, 2017 consultation paper was released by the Department of Finance, it became apparent the proposed changes
More informationTechnical Backgrounder on Measures to Address Income Sprinkling
Technical Backgrounder on Measures to Address Income Sprinkling Draft Legislative Proposals The revised draft legislative proposals to address income sprinkling maintain the overall structure of the proposals
More informationUpdate on Proposed Small Business Tax Changes. January 2018
Update on Proposed Small Business Tax Changes January 2018 PRESENTERS Jeff Saunders, CPA, CA, Partner Matt Mahoney, CPA, CA, Partner Rod Doyle, CPA, CA, Senior Manager 1 INTRODUCTION On July 18, 2017,
More informationCHANGES TO THE INCOME
TAX LETTER January 2018 CHANGES TO THE INCOME SPRINKLING PROPOSALS CCPC INVESTMENT INCOME STILL SOME TAX SAVINGS OPPORTUNITIES FOREIGN EXCHANGE GAINS AND LOSSES PRINCIPAL RESIDENCE EXEMPTION GRADUATED
More informationINCORPORATING YOUR FARM BUSINESS
INCORPORATING YOUR FARM BUSINESS If you carry on a farm business, and have significant income, transferring the farm business to a corporation may provide some benefits as there are tax planning opportunities
More informationRecent Developments in Corporate Taxation Post-Mortem Tax Planning A Case Study
Recent Developments in Corporate Taxation Post-Mortem Tax Planning A Case Study 2017 Pamela Cross, Borden Ladner Gervais, LLP David Mason, Deloitte June 7, 2017, OTTAWA Agenda - Post Mortem Planning 1.
More informationNavigator. Incorporating your farm. The. Is it right for you? Please contact us for more information about the topics discussed in this article.
The Navigator INVESTMENT, TAX AND LIFESTYLE PERSPECTIVES FROM RBC WEALTH MANAGEMENT SERVICES Incorporating your farm Is it right for you? On July 18, 2017 the federal government released a consultation
More informationProposed Tax Changes Affecting Business Owners August 3, 2017
Chartered Professional Accountants Chartered Accountants Licensed Public Accountants Business Advisors Stern Cohen LLP 45 St. Clair Avenue West, 14th Floor Toronto ON M4V 1L3 T. 416-967-5100 F. 416-967-4372
More informationPROPOSED CHANGES TO PRIVATE CORPORATE TAX PLANNING. Presented by: Rob Heron, FCPA, FCA, CFP, ICD.D Allan Sawiak, CPA, CA, CAFA, TEP
PROPOSED CHANGES TO PRIVATE CORPORATE TAX PLANNING Presented by: Rob Heron, FCPA, FCA, CFP, ICD.D Allan Sawiak, CPA, CA, CAFA, TEP What changed? Proposed legislation will: 1. Increase personal tax on private
More informationTHE NEW LANDSCAPE OF "INCOME SPRINKLING" DECEMBER 15, 2017 RELEASE
THE NEW LANDSCAPE OF "INCOME SPRINKLING" DECEMBER 15, 2017 RELEASE Introduction When the July 18, 2017 consultation paper was released by the Department of Finance, it became apparent the proposed tax
More informationProposed Tax Changes for Private Corporations
SEPTEMBER 2017 Drew Jackiw CPA, CA Partner Ryan Dorton, CPA, CA Partner www.jmhca.com Agenda 1. Background 2. Key Features of the Income Tax System 3. Tax Planning Strategies a) Income Sprinkling b) Passive
More informationNavigator. Incorporate or not? The. Is incorporating your business right for you?
The Navigator INVESTMENT, TAX AND LIFESTYLE PERSPECTIVES FROM RBC WEALTH MANAGEMENT SERVICES Incorporate or not? Is incorporating your business right for you? Bola Wealth Management RBC Dominion Securities
More informationWhat is incorporation?
The Navigator INVESTMENT, TAX AND LIFESTYLE PERSPECTIVES FROM RBC WEALTH MANAGEMENT SERVICES Professional corporations Is incorporating your professional practice right for you? Bola Wealth Management
More informationTax Letter CAPITAL GAINS EXEMPTION AND PROPOSED CHANGES. Example
Marc Brazeau CPA, CA, Partner Tax Letter Monthly Newsletter October 2017 CAPITAL GAINS EXEMPTION AND PROPOSED CHANGES The capital gains exemption allows Canadian resident individuals to earn tax-free capital
More informationNew Income Sprinkling Rules What You Need to Know
New Income Sprinkling Rules What You Need to Know Government Releases Updated New Measures to Restrict Income Sprinkling Toronto, ON December 13, 2017 Presented by: Iqbal Khan, CPA, CA, MAcc, Principal
More informationTAX NEWSLETTER. October 2017
TAX NEWSLETTER October 2017 CAPITAL GAINS EXEMPTION AND PROPOSED CHANGES EMPLOYEE LOANS (INCLUDING RECENT CHANGES TO HOME RELOCATION LOANS) TAXATION OF DIVIDENDS TRANSFERS OF PROPERTY TO TRUSTS AROUND
More informationUnderstanding Personal Holding Companies
BMO Nesbitt Burns Understanding Personal Holding Companies Many individuals hold investment portfolios in a personal holding company. It`s important for these investors to understand the various tax implications
More information2016 Federal Budget Federal Budget March 22, RBC Wealth Management Services
RBC Wealth Management Services 2016 Federal Budget 2016 Federal Budget March 22, 2016 A summary of the key tax measures that may have a direct impact on you Federal Minister of Finance, Bill Morneau, delivered
More informationApril 21, 2015 CPA CANADA FEDERAL BUDGET COMMENTARY
April 21, 2015 CPA CANADA FEDERAL BUDGET COMMENTARY TABLE OF CONTENTS BUSINESS INCOME TAX MEASURES... 4 Reduced Small Business Tax Rate... 4 Dividend Tax Credit (DTC) Adjustment for Non-eligible Dividends...
More informationOctober 2017 Tax Newsletter
FRUITMAN KATES LLP CHARTERED PROFESSIONAL ACCOUNTANTS 1055 EGLINTON AVENUE WEST TORONTO, ONTARIO M6C 2C9 TEL: 416.920.3434 FAX: 416.920.7799 www.fruitman.ca Email: info@fruitman.ca October 2017 Tax Newsletter
More informationSUCCESSION PLANNING AND THE FAMILY FARM
SUCCESSION PLANNING AND THE FAMILY FARM SPONSORED BY: SCOTIA PRIVATE CLIENT GROUP SCOTIABANK, WINKLER Presented by: Larry H. Frostiak, FCA, CFP, TEP Thursday, April 7, 2011 Succession Planning and The
More informationINCORPORATING YOUR BUSINESS
INCORPORATING YOUR BUSINESS If you carry on a business, there are many tax planning opportunities which become available to you by simply incorporating. By transferring your business to a corporation,
More informationTax Planning for Business Owners:
Tax Planning for Business Owners: 2017-18 If you make your daily bread in the business world as a self-employed person or corporate business owner, you have many opportunities to consider when it comes
More informationFEDERAL BUDGET A balanced-budget, low-tax plan for Richardson GMP: Trusted. Canadian. Independent. Tax & Estate Planning
FEDERAL BUDGET 2015 INSIGHTS FROM OUR TAX & ESTATE PLANNING PROFESSIONALS A balanced-budget, low-tax plan for 2015 The Conservative Government has announced that it has fulfilled its promises and that
More informationMay 2018 CCPC PASSIVE INVESTMENT INCOME PROPOSALS THE INCOME ATTRIBUTION RULES ADOPTION TAX CREDIT PRESCRIBED INTEREST RATES AROUND THE COURTS
TAX LETTER May 2018 CCPC PASSIVE INVESTMENT INCOME PROPOSALS THE INCOME ATTRIBUTION RULES ADOPTION TAX CREDIT PRESCRIBED INTEREST RATES AROUND THE COURTS CCPC PASSIVE INVESTMENT INCOME PROPOSALS Overview
More informationThe TOSI Rules What s new?
The TOSI Rules What s new? Règles relatives au fractionnement du revenu Quoi de neuf? November 16, 2018 Katherine Borsellino, LL.B, J.D., LL.M (Fisc.) Emilie Champagne-Couillard, LL.B, D.E.S.S. (Fisc.)
More informationSubsection 55(2) is an anti-avoidance rule intended to prevent the inappropriate reduction of a capital gain by way of the payment of a deductible
1 2 Subsection 55(2) is an anti-avoidance rule intended to prevent the inappropriate reduction of a capital gain by way of the payment of a deductible intercorporate dividend. This provision generally
More informationINCORPORATING YOUR FARM BUSINESS
INCORPORATING YOUR FARM BUSINESS If you carry on a farm business, and have significant income, transferring the farm business to a corporation may provide some benefits as there are tax planning opportunities
More information2015 Federal Budget Federal Budget s Tax Measures. RBC Wealth Management Services
RBC Wealth Management Services 2015 Federal Budget 2015 Federal Budget s Tax Measures A summary of the key tax measures that may have a direct impact on you. Federal Minister of Finance Joe Oliver delivered
More informationTAX NEWSLETTER. July 2015 THE INCOME ATTRIBUTION RULES INTER-CORPORATE DIVIDENDS SUPERFICIAL LOSSES AROUND THE COURTS
TAX NEWSLETTER July 2015 THE INCOME ATTRIBUTION RULES INTER-CORPORATE DIVIDENDS SUPERFICIAL LOSSES AROUND THE COURTS THE INCOME ATTRIBUTION RULES Income splitting among family members can be beneficial
More informationToronto Young Practitioners Group
Family Transactions Biggest issue for young practitioners is communication explaining difficult concepts in meaningful terms. 3 Robin MacKnight Family Transactions Biggest issues in estate planning: Expectations
More informationTOSI FOR ADULTS. CRA Presentation to CPA Canada
TOSI FOR ADULTS CRA Presentation to CPA Canada AGENDA Legislative History Basics of old Section 120.4 Overview of Amendments to Section 120.4 New Exclusions from TOSI: Safe Harbours & Other Excluded Amounts
More informationUNDERSTANDING TRUSTS CONTENTS. What is a trust?
UNDERSTANDING TRUSTS Trusts are a powerful tool for tax and financial planning. The usefulness of a trust is based on the fact that a trustee can hold property on behalf a single beneficiary, or a group
More informationIn assessing the benefits of incorporation the following four items represent the most significant tax benefits of incorporation:
Tax Implications of Using a Corporation This summary is intended to provide a general overview of the significant Canadian tax implications of using a corporation to carry on business. Given that the commercial
More informationINCORPORATING YOUR BUSINESS
INCORPORATING YOUR BUSINESS If you carry on a business, there are many tax planning opportunities which become available to you by simply incorporating. By transferring your business to a corporation,
More informationINCORPORATING YOUR PROFESSIONAL PRACTICE
INCORPORATING YOUR PROFESSIONAL PRACTICE REFERENCE GUIDE Most provinces and professional associations in Canada now permit professionals such as doctors, dentists, lawyers, and accountants to carry on
More informationFederal Budget Tightens Tax Rules for Small Businesses and Passive Income Do You Know What To Expect? Kim G C Moody FCA, TEP Noreen Irvine CMC
Federal Budget Tightens Tax Rules for Small Businesses and Passive Income Do You Know What To Expect? Kim G C Moody FCA, TEP Noreen Irvine CMC March 3, 2018 The Landscape from July 18, 2017 to October
More informationDIVIDEND REGIME FAIZAL VALLI, CA 1
POST-MORTEM AND SHAREHOLDER AGREEMENT CONSIDERATIONS IN LIGHT OF THE ELIGIBLE Introduction DIVIDEND REGIME FAIZAL VALLI, CA 1 The purpose of this paper is to demonstrate the complexities of allocating
More informationRecent Developments in Corporate Taxation. Greg Bell, KPMG Chris Jerome, EY 7 June Ottawa
Recent Developments in Corporate Taxation Greg Bell, KPMG Chris Jerome, EY 7 June 2017 - Ottawa 2017 Agenda Budget overview Business income tax measures Personal income tax measures 2016 CTF Annual Conference
More informationPersonal Income Tax Measures
Finance Minister Joe Oliver delivered the Government s 2015 Federal Budget ( Budget 2015 ) today, in advance of the expected fall federal election. The Budget anticipates a deficit of $2.0 billion for
More information2018 Proposed Tax Changes. Holm Raiche Oberg Chartered Professional Accountants P.C. Ltd.
2018 Proposed Tax Changes Holm Raiche Oberg Chartered Professional Accountants P.C. Ltd. Introduction Who am I? I am not tiny! Came from truck drivers Dad told me to sit in a different chair NOT POLITICALLY
More informationDealing with Private Company Shares at Death Post-Mortem and Insurance Planning
Dealing with Private Company Shares at Death Post-Mortem and Insurance Planning Introduction This Tax Topic deals with post-mortem tax planning for an individual who owns private company shares. The overall
More informationReference Guide ESTATE FREEZES
Reference Guide ESTATE FREEZES The estate freeze is a strategy used by many Canadian business owners to help accomplish estate-planning, business succession and asset protection objectives. This reference
More informationUPDATE. October Did You Know
TAX UPDATE Did You Know Davidson & Company LLP will be hosting the second seminar of the Back to School Seminar Series on November 1st at the Four Seasons Hotel: 2017 IFRS Update & Current Issues. Register
More informationWe are writing to provide our comments on the July 18, 2017 consultation paper entitled Tax Planning Using Private Corporations.
Deloitte LLP Bay Adelaide Centre, East Tower 22 Adelaide Street West Suite 200 Toronto ON M5H 0A9 Canada Tel: 416-643-8753 Fax: 416-601-6703 www.deloitte.ca The Honourable William F. Morneau Minister of
More informationINCOME ATTRIBUTION RULES AND GIFTING - PLANNING CONSIDERATIONS
INCOME ATTRIBUTION RULES AND GIFTING - PLANNING CONSIDERATIONS This issue of the Legal Business Report provides current information to the clients of Alpert Law Firm on estate planning, including the income
More informationTax & estate planning update. Agenda. GOLOMBEK January Jamie Golombek - Managing Director, Tax & Estate Planning
Tax & estate planning update Jamie Golombek - Managing Director, Tax & Estate Planning Ottawa Estate Planning Council January 6, 2016 Agenda 1 1. Canadian tax update for individuals 2. Canadian tax update
More informationFor 2016 and subsequent taxation years, various post mortem tax planning strategies will only be available to a Graduated Rate Estate ( GRE ).
1 2 For 2016 and subsequent taxation years, various post mortem tax planning strategies will only be available to a Graduated Rate Estate ( GRE ). Therefore it is essential that planning is undertaken
More information2015 FEDERAL BUDGET SUMMARY
2015 FEDERAL BUDGET SUMMARY April 21, 2015 TABLE OF CONTENTS PERSONAL INCOME TAX MEASURES...2 TAX-FREE SAVINGS ACCOUNT...2 HOME ACCESSIBILITY TAX CREDIT...2 Eligible Individuals...2 Eligible Dwellings...2
More informationI. INCOME SPRINKLING. October 2, 2017
October 2, 2017 Mr. Brian Ernewein General Director, Legislation Tax Policy Branch Department of Finance Canada 90 Elgin Street Ottawa ON K1A 0G5 Dear Sir or Madam: Re: Consultation on July 18, 2017 Tax
More informationDavid Sung. President
WELCOME David Sung President Agenda Introduction and Background Tax Reform: The Details Planning Options Case Study Q & A These changes won t just affect the wealthy as the government has implied. they
More informationINDEX. Segregated funds, Structured pre-1990 contracts, settlements deferred annuities, accrual taxation rules,
INDEX 21-year deemed disposition rule, 328 329 Crummey trust and, 353 A Accounting for life insurance, 224 226 Accounting standards, 71 72 Accrual reporting annuities, 431 433 keyperson insurance strategy
More informationTAX LETTER. January 2016
TAX LETTER January 2016 DRAFT LEGISLATION FOR 2016 TAX CHANGES FINANCE PROPOSES CHANGES TO RULES GOVERNING SPOUSAL AND SIMILAR TRUSTS TAX-FREE TRANSFERS OF PROPERTY TO YOUR CORPORATION CAPITAL DIVIDENDS
More informationCONTENTS VOLUME II VOLUME I. The detailed contents of both Volume I and II follow. The textbook is published in two Volumes:
CONTENTS The textbook is published in two Volumes: Volume I = Chapters 1 to 10 Volume II = Chapters 11 to 21 Chapter I Chapter II 1 Introduction To Federal Taxation In Canada 11 Taxable Income and Tax
More informationCONTENTS VOLUME II VOLUME I. The detailed contents of both Volume I and II follow. The textbook is published in two Volumes:
CONTENTS The textbook is published in two Volumes: Volume I = Chapters 1 to 10 Volume II = Chapters 11 to 21 Chapter I Chapter II 1 Introduction To Federal Taxation In Canada 11 Taxable Income and Tax
More informationWhat do the new July 18, 2017 Canadian Private Corporation Tax Proposals Mean for You?
What do the new July 18, 2017 Canadian Private Corporation Tax Proposals Mean for You? Kim G C Moody FCA, TEP October 20, 2017 Moodys Gartner Tax Law LLP, 2017, Registration #1143148 with the Canadian
More informationCPA Canada Federal Budget Commentary 2016
CPA Canada Federal Budget Commentary 2016 1 CPA CANADA FEDERAL BUDGET COMMENTARY 2016 THEME: ECONOMIC GROWTH, JOB CREATION, STRONG MIDDLE CLASS When the new government said last year that it would return
More information2016 Edition Tax Tips for Investors
BMO Financial Group April 2016 2016 Edition Tax Tips for Investors Knowing how the tax rules affect your investments is essential to maximize your after-tax return. Keeping up to date on changes to the
More informationTAX, RETIREMENT & ESTATE PLANNING SERVICES. Registered Education Savings Plans (RESPs) THE FACTS
TAX, RETIREMENT & ESTATE PLANNING SERVICES Registered Education Savings Plans (RESPs) THE FACTS A Registered Education Savings Plan (RESP) is a tax-assisted plan that can help save money for post-secondary
More informationLooking back to 2011 and FORWARD TO 2012
December 2011 YEAR-END TAX PLANNER 2011/2012 IN THIS ISSUE Federal Highlights 1 Provincial Highlights 1 Entrepreneurs 1 Personal Tax Matters 2 United States Matters 5 International Matters 5 Key Tax Dates
More informationINCOME SPRINKLING PANEL
Tax Planning Using Private Corporations - July 18, 2017: Analysis and Discussion with Finance Ottawa, ON INCOME SPRINKLING PANEL Speakers: Albert Baker (moderator), David Christian, Michael Wolfson, Rachel
More information2018 FEDERAL BUDGET SUMMARY. February 27
2018 FEDERAL BUDGET SUMMARY February 27 TABLE OF CONTENTS Introduction Personal Income Tax Measures Business Income Tax Measures International Taxation Sales and Excise Tax Measures Proposed Consultations
More informationRECENT DEVELOPMENTS IN ESTATE PLANNING: THE ALBERTA ADVANTAGE WHEN USING TRUSTS INTRODUCTION
RECENT DEVELOPMENTS IN ESTATE PLANNING: THE ALBERTA ADVANTAGE WHEN USING TRUSTS Martin J. Rochwerg* INTRODUCTION Canadian federal income tax is levied at progressive rates. As income increases, so does
More informationWhat do the new July 18, 2017 Canadian Private Corporation Tax Proposals Mean for You?
What do the new July 18, 2017 Canadian Private Corporation Tax Proposals Mean for You? Kim G C Moody FCA, TEP Greg Gartner CA, MBA, LLB, QC Kenneth Keung CA, CPA (CO, USA), TEP, CFP, MTAX, LLB Bert Boulet
More informationINDEX. pro-rating, 11
INDEX A grandfathered policies, 11, 12, 13 21-year deemed disposition rule, keyperson insurance strategy and, 301 302 205, 207, 208 Crummey trust and, 325 pro-rating, 11 Accounting for life insurance,
More informationTax Planning Using Private Corporations
Tax Planning Using Private Corporations Submission by Grant Thornton LLP October 2, 2017 Contents Summary Letter... 3 Part I: Income Sprinkling... 6 Part II: Converting a Private Corporation s Regular
More informationStrong Leadership: A Balanced-Budget, Low-Tax Plan for Jobs, Growth and Security
Strong Leadership: A Balanced-Budget, Low-Tax Plan for Jobs, Growth and Security HIGHLIGHTS Deficit of $2 billion for 2014-15 Projected surplus of $1.4 billion for 2015-16 Small business tax rate reduced
More informationPurpose: Kingston Advocacy for Small Business ( KASB ) Response to July 18 th, 2017 Proposed Tax Reforms Open Submission
Dear Honourable Minister of Finance, William Morneau Mr. Brian Ernewein, Department of Finance Mr. Justin To, Department of Finance Honourable Minister of Small Business and Tourism, Bardish Chagger Kingston
More informationOwner-Manager Remuneration Update
Owner-Manager Remuneration Update Don Desaulniers and Kevin Stienstra Grant Thornton LLP Toronto Presentation Overview Summary of rate changes Ontario integration Salary vs Dividend planning Remuneration
More informationREFERENCE GUIDE Tax Planning For The Transfer Of Your Family Farm During Your Lifetime
REFERENCE GUIDE Tax Planning For The Transfer Of Your Family Farm During Your Lifetime Although this material has been compiled from sources believed to be reliable, we cannot guarantee its accuracy or
More informationRecent Tax Developments Impacting Insurance Planning
Recent Tax Developments Impacting Toronto, LL.B, CLU, TEP Overview Exempt Test Update New Charitable Gifting Legislation Trust Legislation LIA Grandfathering CRA Update Life insurance in spousal trusts
More informationManaging Your Personal Taxes. A Canadian Perspective
2012 13 Managing Your Personal Taxes A Canadian Perspective Opportunities abound. We can help guide you in the right direction. Foreword 31 August 2012 If there s one thing everyone can agree on, it s
More informationPARSONS PROFESSIONAL CORPORATION
PARSONS PROFESSIONAL CORPORATION Chartered Professional Accountants 245 Yorkland Blvd., Suite 100 Toronto, Ontario M2J 4W9 Tel: (416) 204-7560 Fax: (416) 490-8275 TAX LETTER October 2018 ALLOWABLE BUSINESS
More informationCONTENTS VOLUME II VOLUME I. The detailed contents of both Volume I and II follow. The textbook is published in two Volumes:
CONTENTS The textbook is published in two Volumes: Volume I = Chapters 1 to 10 Volume II = Chapters 11 to 21 Chapter I Chapter II 1 To Federal Taxation In Canada 11 Taxable Income and Tax Payable For Individuals
More informationIn his personal life, Les enjoys outdoor activities, traveling with his wife and daughter and the occasional glass of fine wine!
TAX UPDATE Did You Know Les, our Senior Tax Partner, joined Davidson & Company LLP in 2005. He has extensive experience in business, individual, estate and tax planning. Les always says, When you take
More informationTax Traps to Remember Joan E. Jung, Partner Minden Gross LLP Michael A. Goldberg, Partner Minden Gross LLP Samantha A. Prasad, Partner Minden Gross
Tax Traps to Remember Joan E. Jung, Partner Minden Gross LLP Michael A. Goldberg, Partner Minden Gross LLP Samantha A. Prasad, Partner Minden Gross LLP Matthew Getzler, Associate Minden Gross LLP Ryan
More informationA discussion of corporate-owned life insurance
A discussion of corporate-owned life insurance Persons who seek their livelihood in business are often motivated by a need to place their fate in their own hands. Of course, the desire to make money for
More information2018 FEDERAL BUDGET HIGHLIGHTS What Professionals and Business Owners Need to Know
2018 FEDERAL BUDGET HIGHLIGHTS What Professionals and Business Owners Need to Know February 28 2018 Contents Corporate Tax Rates... 1 Passive Investment Income... 2 Business Limit Reductions... 2 Refundability
More information