I delivered a paper last week at the Hamilton Law Association‘s trusts and estates update. My paper focused on tax issues, of course. The session was very well attended, with well over 100 members of the local bar present.
Dividend Caps
Sometimes we receive instructions for incorporation that include a request to create shares with a fixed redemption amount and a right to receive unlimited dividends. We generally advise against creating such shares, especially if they are to be used in a freeze, because we are concerned that the fair market value of such a share will not be equal to its redemption amount, especially if the share will be held by a controlling shareholder.
Corporations as Beneficiaries
It is often quite useful to have Holdco own shares of Opco through a trust rather than directly. In general, the other beneficiaries of the trust can still claim the capital gain exemption in respect of a disposition of the shares of Opco, and keeping the redundant assets of Opco to a minimum while deferring tax at the individual shareholder level can be as simple as paying a dividend from Opco that is allocated to Holdco as a beneficiary of the trust.
Executors’ fees again
An executor who receives fees for acting as such must include the fees in income, usually as income from an office (employment income). Can this result be avoided if the fees are called a “legacy” in the will that provides for their payment? Not according to Messier v. The Queen, 2008 TCC 349.
Executors’ fees
For quite some time now, the CRA has taken the position that (to quote the Employers’ Guide – Payroll Deductions and Remittances ):
Fees paid to executors or liquidators and administrators are either income from office or employment or business income, depending on whether the executor or administrator acts in this capacity in the regular course of business.
Subsection 75(2)
The following article on subsection 75(2) of the Income Tax Act (Canada) appeared in the latest edition of the Hamilton Law Association Law Journal.
Testamentary Trusts
The following article on testamentary trusts appeared in the latest edition of the Hamilton Law Association Law Journal.