Baker Tilly Canada

Intergenerational business transfers – estate planners beware

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In an article written on January 10, 2023 by the Canadian Federation of Independent Business (CFIB),over $2 trillion in business assets could change hands within the next decade as over three-quarters (76 per cent) of small business owners are planning to exit their business. Unfortunately, as the article points out, only one in ten business owners have a formal business succession plan in place. With the proposed amended intergenerational business transfer….

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Business Succession Planning

Intergenerational business transfers

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Since the introduction of the draft legislation for intergenerational business transfers (IBT) on March 28, 2023, the National tax services team at Baker Tilly Canada has reviewed the IBT rules in detail.  For a convenient summary of the proposed IBT rules, please refer to the following document prepared by the team – Genuine intergenerational transfers – comparison of the rules.  The objective of this blog is to provide an analysis….

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Business Succession Planning, Estate Planning, Succession Planning

Genuine intergenerational transfers

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For many years, non-arm’s length intergenerational transfers of corporate businesses were treated inequitably under the Income Tax Act (ITA).  A transfer of a corporate business between non-arm’s length parties[1] resulted in dividend treatment to the vendor instead of capital gains treatment, precluding the ability to claim the capital gains deduction.  With the inability to claim the capital gains deduction and the loss of the preferential tax treatment for capital gains,….

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Succession Planning

Private foundations & private company shares

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Philanthropic individuals that own their wealth in a private company may want to set-up a charitable legacy by donating some of their shares or debt to a private foundation. Although this sounds like a great idea, caution needs to be exercised. Donations of private company shares or debt to a private foundation may not result in a charitable donation tax credit under the Income Tax Act (ITA) due to the….

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Charitable Giving, Philanthropy/Charitable Giving, Tax Issues

Flipped property – estates beware

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Executors generally liquidate the assets of an estate in a timely manner following an individual’s death. This may include the disposition of the deceased’s primary residence, cottage or rental property (herein referred to as a “housing unit”). An estate may realize a gain on a housing unit if it is sold at a price higher than its fair market value on the date the individual died.  Prior to 2023, the….

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Estate Administration, Executors, Real Estate, Tax Issues, Trusts

Trust and estates beware of the new Underused Housing Tax

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The recently enacted Underused Housing Tax Act[i] (UHTA) applies a one per cent tax on the ownership of vacant or underused housing in Canada. Per the Canada Revenue Agency’s (CRA) published notification[ii] on Jan 17, 2023, “the vast majority of Canadian owners of residential property are excluded owners and, therefore, do not have any obligations and liabilities under the UHTA. However, the underused housing tax is payable by certain Canadian….

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Canada Revenue Agency, Estate Administration, Estate Planning, Tax Issues, Trustee
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