Canada Revenue Agency

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Attribution under 75(2)

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Income attribution rules, generally speaking, operate so that income of one person (the actual recipient of the income) is attributed to and becomes income of another person (the transferor). Whether or not income which is subject to subsection 75(2) is first and foremost income of the trust itself can be significant for how the trust return is prepared and/or whether or not a liability for alternative minimum tax. When questioned,….

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

Inclusion of Life Insurance loan in Income

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In Neszt v. The Queen 2019 DTC 1105, the taxpayer held two life insurance policies with a life insurance company. He subsequently took personal loans against his life insurance policies. The amount of each such loan was greater than the adjusted cost base of each policy, (being the sum of premiums paid by the insured minus dividends declared and cost of insurance.) The life insurance company issued two T5 slips….

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Canada Revenue Agency, Insurance, Loans, Tax Issues, Uncategorized

The perils of home purchase loans

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Executors and personal representatives are tasked with making sure the deceased’s tax obligations are properly dealt with out of the deceased’s estate. An issue that may arise in the course of dealing with the obligations is how to deal with loans and advances from a private company. The Canada Revenue Agency (CRA) recently shared its view on the application of a tax rule to a home purchase loan from a private….

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Canada Revenue Agency, Estate Planning, Executors, Tax Issues

DEEMED TRUST: TAX DEBTS AND PROCEEDS OF INSURANCE

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In Canada (A.G.) v Nortip Development 2019 NLCA 34, a company fell behind in remitting payroll withholdings and related amounts for several periods over a two-year period to the Canada Revenue Agency (“CRA”). Around the same time, a property with a mortgage owned by the same company, was destroyed by fire. A portion of proceeds of insurance on that property (equal to the amount owed to the CRA) were claimed….

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Canada Revenue Agency, Property, Real Estate, Small Business, Tax Issues, Trusts, Uncategorized

AGREEMENT RECTIFICATION APPLIED FOR AND ALLOWED!

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Due in particular to the outcome of some recent court cases, many have feared that formal applications to rectify plans would receive a favorable hearing only in the event of obvious clerical errors in the documentation. However a recent court case in the Supreme Court of British Columbia demonstrated that rectification is possible in circumstances where a definite agreement has gone awry in its implementation. In Crean v. Canada, 2019….

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Business Succession Planning, Canada Revenue Agency, Contracts, Estate Planning, Investments, Small Business, Succession Planning, Tax Issues, Uncategorized

Changes to a Trust Agreement

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The Canada Revenue Agency recently responded to a ruling request as to whether or not a proposed amendment to a trust agreement could be so significant to cause a resettlement of the trust, or a disposition of a beneficiary’s interest in the trust Before the enactment of variation of trusts legislation, trustees were generally bound to administer the trust according to its terms.  Unless specifically allowed in the trust deed,….

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Canada Revenue Agency, Estate Administration, Executors, Tax Issues
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