Neal Armstrong alerts us to a nasty trap. Suppose Opco pays a dividend to a trust-shareholder, which immediately distributes an amount to Holdco, a beneficiary of the trust. Suppose that the trust then sells its shares of Opco, before the…
Dividend caps
I like dividend caps on fixed-value shares. I’ve complained before about the odour emanating from shares that are entitled to unlimited dividends but that are redeemable and retractable for a fixed amount. The CRA seems to smell something too, in technical interpretation 2016-0626781E5.
Estates vs Trusts Coda
As a coda to my article on “trusts vs estates”, I offer the following from Chow and Pryor, Taxation of Trusts and Estates (Toronto: Carswell, 2016) at 9.2.2(c)(ii): The residue is not ascertained until the debts and other liabilities of…
US grantor trust
Neal Armstrong notes that the CRA continues to maintain that a US grantor trust is not a bare trust for Canadian tax purposes. See his summary of the CRA response to question 10 at the 2016 STEP conference.
Onus and penalties
VD fees
Are VD fees (voluntary disclosure fees) deductible? The CRA takes the position that, in general, professional fees incurred in respect of a VD are not deductible unless they were incurred in respect of a business. Per 2016-0625731C6, when the CRA…
Partnership Losses
Natasha Reid and David Davies, “Tiered Partnership Losses” Tax for the Owner-Manager 16:2 (April 2016), comments on Green v R, 2016 TCC 10. The Tax Court chose not to follow a long-standing CRA position on tiered partnership losses. The CRA…
Property vs business income
From Philip Friedlan and Adam Friedlan, “When Does the Operation of a Rental Property Become a Business?” Tax for the Owner-Manager 16:2 (April 2016): , which was decided under the informal procedure rules and has…
Crystallizing and estate planning
Is it always a good idea to take full advantage of the capital gain exemption (CGE) by crystallizing? Assume Ms X crystallizes her Opco shares, but Opco morphs into an investment holding company by the time of her death. In…
Estates vs Trusts
The following article appeared in the most recent edition of The Hamilton Law Association Journal.
What is the difference between an estate and a trust? And why does it matter for tax purposes?