This article is written by Nicole Ewing, Principal, Wealth Planning Office, TD Wealth

Friends, I’ve got to call it straight, this has been a tough year. Mentally taxing, if you will. Perhaps they all are in their own way, but this one was particularly hard. Life was great, don’t get me wrong. But this tax and estate and wealth planning stuff was a battle.

Navigating bare trusts, joint accounts, vacant and underused property, capital gains inclusion rates, employee ownership trusts, alternative minimum tax, adjusted taxable income…what have I missed?

Post-mortem planning. Multiple periods in a calendar year. Changes to the principle of integration. Retirement plan immigration and foreign jurisdiction tax changes. New GAAR decisions. Mandatory disclosures and notifiable transactions. Even fundamental considerations of administrative and legislative responsibilities.

And then of course there were the practical decisions about who should bear the costs of navigating the new and unknown.

It’s a lot to stay aware of, let alone advise on.

And so please indulge me as I take the opportunity this forum provides to express great thanks and gratitude to this community – the tax and estate and wealth planning community – as we wind up the year.

A wee bit indulgent, perhaps, but I know I do so on behalf of so many of us who appreciate the opportunity to learn from and grow with and question and challenge and, ultimately, help each other figure this stuff out.

Even when we disagree, and sometimes passionately, about the rules and possibilities and how best to do what we do, there is a shared commitment among us. To seek to understand. And to get it right for our clients and communities. So my sincere thanks once again to those who share, those who engage, and those who keep showing up to do the hard work time and time again.

Speaking of hard work and sharing, let’s talk about ensuring powers of attorney and other documents are structured appropriately to allow for gifts to loved ones and charities. As year-end approaches this issue has popped up several times – substitute decision makers wanting to give holiday gifts to family members or to make tax-efficient charitable gifts from an incapable person’s property. These may be entirely appropriate objectives, but there are restrictions.

The rules vary depending on factors such as who the recipient of the gift would be, who the attorney is, what the incapable person has historically done, what assets and income are in play, what the documentation specifically allows, and in which province the grantor resides. For example, in Ontario the total value of charitable gifts may be restricted to 20% of the income of the property in the year even where the documentation includes instructions to make gifts[1]. In B.C., if the enduring power of attorney does not explicitly permit gifts, the prescribed limit on the total of all gifts, loans and charitable gifts made by an attorney in a year cannot be more than the lesser of 10% of taxable income for the previous year and $5,000.[2]

Helping substitute decision makers understand the limits of their authority is critical at this time of year. But additionally, guidance to grantors and advisors on what documentation should say to allow for the greatest flexibility, as well as how the nature of investments and the income earned thereon can impact gifting thresholds is essential. “Taxable income” is a defined term and is relevant for lots of reasons completely unrelated to a grantor’s gift-giving inclinations so cooperation and coordination among professionals is critical here. But that’s what we do best in this community, isn’t it.

[1] Substitute Decisions Act, 1992, S.O. 1992, c.30, section 37(4)(6)

[2] Power of Attorney Act, RSBC 1996, C 370 section 20(1)(c) and Power of Attorney Regulation, BC Reg 20/2011 section 3.