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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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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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Kenneth Keung quoted in Investment Executive article titled “Window closing on family business transfers using Bill C-208”, published on October 10, 2023.

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Kim G C Moody is quoted in the Tax Notes article titled “Canada’s Supreme Court Upholds GAAR Application in Deans Knight”, May 30, 2023

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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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A landmark new decision on how the residency of a trust is determined

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

This blog deals with a landmark new Tax Court decision released last week.  Given its importance, we spill a lot more ink than our usual blog entries.  Accordingly, be warned that this entry is lengthy.

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Tax Evasion – The United States and the UBS affair: An update

Following our August 25, 2009 blog regarding the US’s efforts to gather information from UBS about American account holders who may have been hiding assets and evading US taxes, the Internal Revenue Service (IRS) last week indicated that it is setting up an elite division to handle audits of wealthy Americans suspected of offshore tax evasion. The newly created office will be within its Large and Mid-Size Business division, indicating the IRS wishes to have the audits handled by those with experience in dealing with tax treaties and cross-border business structures. As another blogger recently noted, this should encourage those who may have US information reporting requirements to seek advice and consider a voluntary disclosure to the IRS.  The IRS’s voluntary disclosure program for reporting previously unreported offshore accounts ends September 23, 2009.

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Classic rock, Regulation 105 withholding requirements and other musings

For those of you who know me, you’ll know that I personally live our firm’s branding material … I’m passionate about tax! Outside of work, people who know me also know that my taste in music is wide ranging.  I’m passionate about music in general and have a soft spot for “classic rock”, with one of my favorite bands being AC/DC.  This weekend, I had the pleasure of travelling to Vancouver with my two oldest children to attend their concert.  It was great!  A little loud … but great nonetheless!

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***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.

***CLICK FOR ALL NEWS***

Kenneth Keung quoted in Investment Executive article titled “Window closing on family business transfers using Bill C-208”, published on October 10, 2023.

***CLICK FOR ALL NEWS***

Kim G C Moody is quoted in the Tax Notes article titled “Canada’s Supreme Court Upholds GAAR Application in Deans Knight”, May 30, 2023