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Insight on what’s happening in the world of tax, law and accounting so you can stay ahead.

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Kenneth Keung is quoted in the Investment Executive article titled “How should trusts flow out capital gains to beneficiaries in 2024?”, July 5, 2024.

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Kim G C Moody, Kenneth Keung, and Christopher Ellett are quoted in the Investment Executive article titled “When is the latest clients can sell assets prior to June 25?”, published on May 17, 2024.

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Alexander Marino recently appeared on the Global Investment Voice Podcast to discuss the benefits of renouncing US citizenship on March 14, 2024.

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Alexander Marino guested on the Snowbirds US Expats Radio Podcast about the benefits of renouncing your US citizenship on January 17, 2024.

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Kenneth Keung and Evan Crocker are quoted in Investment Executive article titled “CRAʼs 10% interest rate on overdue tax raises risks“, published on November 13, 2023.

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Personal use assets owned by a corporation

As mentioned in our blog of September 29, 2009, one of the most common errors that we identify during our review of private corporations is the corporate ownership of personal use assets.  The shareholders of the corporation will often believe that it is tax efficient to purchase assets inside the corporation that would otherwise involve the withdrawal of funds from the corporation to purchase such assets (which would be a taxable withdrawal).  Unfortunately, the tax consequence of the acquisition of personal use property by a corporation is not pretty.  We often see vacation homes, automobiles, boats, art collections, etc. owned by the corporation.  Certainly the most common examples we see are vacation property and in some unusual cases the primary residence of the shareholder(s).

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Amendments to Alberta professional corporations – Bill 53

By Nicolas F. Baass  LL.B., LL.M. (Tax) and Kim G C Moody  CA, TEP

Good news for Alberta professionals who are regulated by the Health Professionls Act (doctors/dentists/chiropractors/optometrists), Legal Profession Act (lawyers), Medical Profession Act and Regulated Accounting Profession Act (accountants).  On October 26, 2009 Bill 53Professional Corporations Statutes Amendment Act, 2009 passed first reading in the Alberta Legislative Assembly.  This Bill, if enacted, will have some significant repercussions on how professionals set up their business affairs in order to minimize income taxes. 

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Quebec’s take on fighting aggressive tax planning

By Nicolas F. Baass  LL.B., LL.M. (Tax)

Why would we be writing a blog on future legislative amendments to the Quebec Taxation Act when we are Alberta tax advisors and most of our clients are in Western Canada? We believe the new Quebec proposals that are the subject of this blog may have national significance if the federal or provincial governments ever follow suit. Over the years, Quebec has been the subject of certain aggressive tax planning. It appears that Quebec has been seething over these aggressive transactions ever since and has finally come out with a heavy handed proverbial slap to the taxpayer’s face. On January 30, 2009 the Quebec Minister of Finance released a working paper entitled “Aggressive Tax Planning”. The purpose of the paper was to expose what the Quebec Minister of Finance considered to be aggressive tax planning (“ATP”) and actions being contemplated to curb ATP. Interested persons were asked to provide their comments on the Minister’s proposed actions up until April 1, 2009. The result of this consultation process was announced on October 15, 2009 with an information bulletin laying out Quebec’s initiative to combat ATP. While some of these measures are not as far reaching as feared, some of them have quite an impact on how tax planning advisory services may be provided in Quebec. The following is a summary of some of the more important legislation to be enacted:

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2nd anniversary, new blogsite and private corporations and the use of management fees

Tomorrow marks the second anniversary of the establishment of Moodys LLP Tax Advisors!  While the last year has certainly provided economic challenges for our clients, we are extremely pleased with the services, clients and growth that our firm has had.  A special thank you to the Moodys’ teammates and Shea Nerland Calnan LLP (our fantastic legal partner).  A special thank you also to all of our great service providers.  Moodys has some exciting new plans and service offerings that we will share with you soon!

For those of you who enjoy reading our blogs, we are pleased to announce our new blogsite at www.taxandestateplanning.com which hosts all of our blogs and has a link to a whole host of other interesting blogs.  We encourage you to visit this website.

As a tax specialist firm, we work with many private corporations and their accounting and legal advisors. We see a lot of opportunities for planning and take great pleasure in working with the fabulous advisors that serve our clients. 

Unfortunately, however, we often come across plans that could perhaps have been better thought out. One of the common strategies that we trip across is the use of “management fees” to reduce income of one corporation and increase the income of another corporation. Often times the payor corporation and the recipient corporation have different taxation year ends and therefore the plan is a loose attempt to try and get an income tax deferral.  In some cases, advisors will recommend the use of a disassociated “Management Co” (owned by a related person) to receive management fees in an attempt to multiply access to the small business deduction (with the result being lower income tax rates on retained profits).  There are a host of income tax issues that need to be considered with the use of management fees between related corporations. For example, are the management fees legitimate, are they reasonable, were they incurred for the purpose of earning from a business or property, are the management fees earned over the course of the year (and, if so, is the resulting deferral eliminated or reduced) and are GST issues  properly considered? 

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Barbados spousal trusts – Tax avoidance

By Marissa L. Halil  LLB BCL

Once again, be warned that this blog is lengthier than usual given the importance of this topic.  Antle v. The Queen 2009 TCC 465 is an interesting new case released on September 18, 2009.  It involved the use of a Barbados Spousal Trust to avoid Canadian capital gains tax on the sale of shares.  In Antle, the taxpayer husband rolled shares with inherent gains to a Barbados Spousal Trust.  The Barbados Trust sold the shares to the beneficiary wife, who then sold them to a third party purchaser.  The sale proceeds from the third party purchaser were used by the beneficiary wife to pay off the Trust.  The Trust made a tax-free distribution to the beneficiary wife.  The Trust was then immediately dissolved.  The result was no tax was payable, either in Canada or Barbados (Barbados does not impose tax on capital gains, which is where the gain arose).  Justice Miller, writing for the Tax Court of Canada, found that the Barbados Spousal Trust was not validly constituted and, even if it had been, GAAR would apply to deny any tax benefits to the taxpayer husband.

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Changes in non-profit corporate law

By Nicolas F. Baass  LL.B., LL.M. (Tax)

According to government statistics there are approximately 161,000 not-for-profit organizations in Canada, of which 19,000 are federally incorporated.  Up until now these non-profit corporations were predominantly incorporated pursuant to Part II of the Canadian Corporations Act (“CCA”).1   The CCA is largely unchanged from the date of its enactment in 1917, and as such it is cumbersome and lacks adequate provisions for corporate governance and other provisions which one would expect to find in an act regulating corporations in Canada.  Bill C-4, the Canada Not-for-Profit Corporations Act (“NPCA”), provides for an overhaul of non-profit corporate law with the phased repeal of the CCA and the continuance of CCA non-profit corporations into NPCA not-for-profit corporations.

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***CLICK FOR ALL NEWS***

Kenneth Keung is quoted in the Investment Executive article titled “How should trusts flow out capital gains to beneficiaries in 2024?”, July 5, 2024.

***CLICK FOR ALL NEWS***

Kim G C Moody, Kenneth Keung, and Christopher Ellett are quoted in the Investment Executive article titled “When is the latest clients can sell assets prior to June 25?”, published on May 17, 2024.

***CLICK FOR ALL NEWS***

Alexander Marino recently appeared on the Global Investment Voice Podcast to discuss the benefits of renouncing US citizenship on March 14, 2024.

***CLICK FOR ALL NEWS***

Alexander Marino guested on the Snowbirds US Expats Radio Podcast about the benefits of renouncing your US citizenship on January 17, 2024.

***CLICK FOR ALL NEWS***

Kenneth Keung and Evan Crocker are quoted in Investment Executive article titled “CRAʼs 10% interest rate on overdue tax raises risks“, published on November 13, 2023.