The following is based on the text published in Tax Topics 2713 (September 10, 2024). Question 1 – Spousal Trusts A spousal trust that receives a contribution of capital after the death of the spouse-beneficiary remains a spousal trust, but…
C-208 caution
Allan Lanthier has written about how C-208 provides opportunities for abusive surplus stripping that tax professionals have only dreamed about. He has updated his post, however, to point out that the Federal Court of Appeal’s recent decision in R v…
C-208
Bill C-208, the version that received Royal Assent, is short and sweet and obviously not drafted by the persons at Justice who normally draft tax bills. See, eg, new subparagraph 84.1(2.3)(a)(iii). “Operation”? That’s an odd word choice. I’m not aware…
Planning like it’s the 1990s again
The CRA has reversed a long-standing (and questionable) position on whether a deemed dividend arising under paragraph 84.1(1)(b) of the Income Tax Act (Canada) gives rise to a dividend refund in the purchaser corporation. The CRA apparently now accepts that…
Avoiding 84.1(2.1)
Jin Wen and Michelle Dickinson, “Are Shares Tainted Forever Under Subsection 84.1(2.1)?”, 8:4 Cdn Tax Focus (Nov 2018), discusses the rule in subsection 84(2.1), which grinds PUC as if a vendor had claimed the capital gain exemption but never does,…
Accommodation party
The Federal Court of Appeal has affirmed the Tax Court’s finding that an employee-controlled buyco acted as an “accommodation party” that allowed a key shareholder to use the capital gain exemption to strip out corporate surplus. As a result, section…