The CRA takes the position that, where a new individual becomes a trustee, a corporation controlled by the trust is controlled by a new group so that there will be an acquisition of control unless one of the exceptions in…
159(5) elections
An estate can file an election under subsection 159(5) of the Income Tax Act (Canada) using form T2075. The election permits the deferral of the payment of taxes owing as a result of the deemed disposition of property on death.…
Fraudulent conveyances and estate planning
CanLII Connects has posted a good article by Duncan J. Manson on fraudulent conveyances and estate planning. The article is BC-centric. Would the analysis be any different under Ontario law?
Estates and foreign affiliate dumping
The draft foreign affiliate dumping rules can create a deemed dividend to a non-resident discretionary beneficiary of the estate of an owner of a private Canco that holds shares in a foreign affiliate. Henry Shaw, “Foreign Affiliate Dumping and Estates…
Trusts need to watch out
The federal government has allocated significant additional funds to the CRA to permit it to enforce better compliance. The CRA has targeted family trusts (among other things). The CRA’s audit process for a trust involves accumulating documentation and information about…
Trust miscellania
Some points of interest from a recent CRA technical interpretation (2017-0683021I7, June 8, 2018) respecting a reorganization involving a trust with non-resident beneficiaries: The trustees of a trust purported to add a ULC as a beneficiary. The CRA, however, noted…
Dividends to a trust and Part VI.1 tax
Opco wishes to redeem low-low preference shares held by a family trust, which proposes to allocate the resulting deemed dividend to a beneficiaryco (Benco). Will Part VI.1 tax apply to Opco? If the preference shares are subject to a price…
Suspended losses and trust winding-up
Amanda Laren, in “Gap in Subsections 40(3.3) and (3.4) for Wound-Up Trust?” Canadian Tax Focus 9:2 (May 2019), notes that Subsections 40(3.3) and (3.4) stipulate whether the two parties remain affiliated after the transferor is dissolved or wound up, but only if…
212.1 look-through and trusts
Section 212.1 of the Income Tax Act (Canada) is an anti-avoidance rule that applies in circumstances similar to those for section 84.1. With section 212.1, however, only PUC (and not ACB) is relevant as far as the subject shares are…
Trust allocations gone awry
Unfortunately, taxpayers sometimes play fast and loose with the legalities surrounding family trusts. Sometimes trustees purport to make allocations of income from a trust to its beneficiaries. The beneficiaries treat the amounts allocated as income for the purposes of the Income Tax Act (Canada) (the “Act”). The allocated amounts, however, somehow end up in the hands of other individuals, often the parents of the beneficiaries in question. The parents are often also the trustees of the trust who made the allocations (fiduciary obligations be damned).