Moodys LLP Tax Advisors Blog

GST on Investment Management Fees

kmoody@moodystax.com — Mon, 06 Jul 2009 16:07:32 +0100

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

The Federal Court of Appeal decision in Canadian Medical Protective Assn. v. R. released April 16, 2009 deals with the GST status of investment management fees.

Certain preliminary comments are in order to refresh the minds of those who do not routinely deal with the Excise Tax Act ("ETA"). Pursuant to section 165 of the ETA, the recipient of a "taxable supply" is liable to pay GST in respect of the supply. A taxable supply i [...]

Recent GAAR Decision - Collins

kmoody@moodystax.com — Mon, 29 Jun 2009 15:33:13 +0100

By Marissa L Halil LLB, BCL

A new case on the General Anti-Avoidance Rule ("GAAR"), Collins & Aikman Products Co. v. The Queen ("Collins"), was released by the Tax Court of Canada on June 3, 2009. The issue in Collins was whether the GAAR should apply to a reorganization which increased the paid-up capital ("PUC") of shares.

The reorganization was as follows: Products (a US resident company) sold its shares in CAHL (a company resident in a non-treaty country) to [...]

New Chair of STEP Canada

kmoody@moodystax.com — Thu, 25 Jun 2009 20:52:59 +0100

Well, I arrived home this week after attending The Society of Trust and Estate Practitioners' ("STEP") 11th National Conference. The conference contained many leading edge technical topics that dealt with tax and estate planning for the private client. Membership in STEP, for me personally, has proved to be invaluable over the years given the tremendous worldwide membership that STEP has and the depth of knowledge of such members.

STEP Canada was founded in 1998 and has almo [...]

Tax Conferences

kmoody@moodystax.com — Thu, 28 May 2009 13:46:45 +0100

Well ... 'tis the season for professional development and education. Every year, around this time, the professional tax conference season begins in earnest. I had the pleasure of recently co-chairing the Canadian Tax Foundation Prairie Provinces Tax Conference which was held in Calgary on May 25 and 26, 2009. What an outstanding group of tax professionals that gathered to listen to prominent speakers on relevant current tax topics.

For example, since the Supreme Court of Cana [...]

Eligible Dividends - Methods of Notification by Corporations other than Public Corporations

kmoody@moodystax.com — Thu, 07 May 2009 13:39:50 +0100

As many readers know, "eligible dividends" received by Canadian resident individuals are taxed preferentially as compared to non-eligible dividends. First introduced in 2006, the legislation dealing with eligible dividends is complex and detailed.

An "eligible dividend" is defined in subsection 89(1) of the Income Tax Act (the "Act") as a "taxable dividend" that was: (i) paid by a corporation resident in Canada after 2005 and designated as an "eligible dividend" pursuant [...]

Prevost Car Inc. v. The Queen

kmoody@moodystax.com — Wed, 18 Mar 2009 19:29:09 +0100

By Nicolas Baas, LL.B., LL.M. (Tax)

On May 12, 2008 we posted a blog entry commenting on the Tax Court decision of Prevost Car Inc. v. The Queen TCC 231. On February 26, 2009 the Federal Court of Appeal released its appeal decision in this case.The FCA endorsed the Tax Court's decision in its entirety. The facts of this case are straightforward and can be found in our May 12, 2008 blog.

As in the Tax Court, the issue before the FCA was the interpretation of the term "benefic [...]

Opportunities in Challenging Economic Times

kmoody@moodystax.com — Wed, 11 Mar 2009 20:43:11 +0100

Notwithstanding that financial markets and the economy continue to take a beating, there are significant tax planning opportunities that have not existed for quite some time.

Freeze

In a typical estate freeze, the common shareholder of a private corporation, "Opco", (Mr. A) exchanges his common shares for redeemable, retractable preferred shares. This reorganization of capital would generally be carried out on a tax deferred basis under section 86 of the Act (or other tax [...]

Federal Budget - January 27, 2009 - Income Tax Measures

kmoody@moodystax.com — Wed, 28 Jan 2009 14:53:36 +0100

Well, Canadian taxpayers got a grab bag of tax goodies in the Federal Budget (the "Budget"). Here are the highlights:

1. Personal Income Tax Measures

a) Basic Personal Amount

For 2009, the basic personal amount will be increased from $9,600 in 2008 to $10,320 and be indexed to inflation in subsequent taxation years.

b) Personal Income Tax Brackets

The acquisition of US real estate by a Canadian resident not only has Canadian tax implications, but may also create US income, gift and estate tax consequences.

The purchase, sale, or rental of U [...]

Merry Christmas

kmoody@moodystax.com — Mon, 22 Dec 2008 20:00:00 +0100

Merry Christmas and Best Wishes for the New Year!

What a year! I certainly don't recall a year as volatile and wild as the one that 2008 provided us. Overall, I would have to characterize it as a great year. How can you not when you are alive to breathe in the wonderful air, enjoy your family and friends, experience the natural beauty of our surroundings and enjoy our freedom. While 2008 also provided its share of volatility and financial tragedies, it also had many success stories. [...]

Non-Resident Trust and Foreign Investment Entity Legislation: Update

kmoody@moodystax.com — Mon, 15 Dec 2008 08:00:00 +0100

By Paul R. LeBreux, LLB, LLM, TEP (friend of Moodys LLP and principal of Global Tax Law Professional Corporation)

It has been almost 10 years to the day that Canada's then Minister of Finance proposed new tax measures aimed at overhauling the method for taxing "non-resident trusts" and "foreign investment entities". These new tax measures were said to be needed to combat what the government had long perceived as an abuse of the Canadian tax system. Since the introduction of the [...]

Thaw Transactions

kmoody@moodystax.com — Fri, 05 Dec 2008 08:00:00 +0100

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

As a follow-up to our November 24, 2008 blog entry regarding tax planning during uncertain times, another tool that should be considered is the so-called estate "thaw" or "refreeze." As discussed in the November 24, 2008 entry, a freeze is a powerful succession planning tool. It could possibly be made even more potent by refreezing in these uncertain times.

Those business owners, who have planned ahead and opted for an estate fre [...]

Tax Planning in Uncertain Times

kmoody@moodystax.com — Mon, 24 Nov 2008 08:00:00 +0100

Wow! What a bizarre time we have been living through recently. The stock markets have been extremely volatile. Bank failures. Large business failures. The price of oil has come down by two-thirds. Real estate values have declined. What next? If I only had the answer ....

It is during these tough economic times that it is tempting to put all tax planning on hold. However, this can provide an opportune time - never a better time - to tax effectively plan your affair [...]

Charitable Tax Shelters

kmoody@moodystax.com — Mon, 27 Oct 2008 08:00:00 +0100

Well, 'tis the Season! We are fast approaching December 31st, which is the end of the taxation year for all individuals and most trusts. Accordingly, much last minute tax planning will occur in order to ensure effective tax management. One of the most common tax planning techniques is to look at charitable donations (with gifts needing to be made on or prior to December 31, 2008 in order to be used as tax credits for individuals and most trusts for the 2008 taxation year).

Mos [...]

Subsection 256(9) - Timing Problem with Capital Gains Deduction

kmoody@moodystax.com — Wed, 22 Oct 2008 00:00:00 +0100

A very common tax savings is the capital gains deduction that can, subject to various conditions, be utilized upon the realization of a capital gain on the disposition of qualified small business corporation shares. The deduction can shelter up to a lifetime maximum of $750,000 of capital gains. However, very careful planning must be done in most cases in order to ensure that the deduction can be utilized.

One trap is subsection 256(9) of the Income Tax Act. This short provision sta [...]

Our First Anniversary!

kmoody@moodystax.com — Wed, 01 Oct 2008 00:00:00 +0100

My, how time flies! A year ago, Moodys LLP Tax Advisors opened its doors with great expectations and hoping to start the tax world on fire. Well, it certainly has been an interesting year!

The objective of opening Moodys LLP Tax Advisors was simple: to focus on what we do best – tax advisory services – and delegate the rest to other more qualified advisors. The Income Tax Act and related matters (such as cross-border advisory services, estate planning, investment advisory services [...]

Real Estate Inventory - Capital Gains vs. Income

kmoody@moodystax.com — Mon, 15 Sep 2008 00:00:00 +0100

Our July 9, 2008 blog entry on Capital Gains vs. Income highlighted the challenges that taxpayers face when dealing with dispositions of property and the tax treatment thereof. One of the more difficult issues in this area is whether or not a disposition of real estate property could be considered to be on account of income.

To the extent that real estate is considered to be inventory and not capital property, then such properties may not be transferred on a tax deferred basis to a [...]

Election Call

kmoody@moodystax.com — Tue, 09 Sep 2008 00:00:00 +0100

As many readers know, Stephen Harper and the Conservatives asked the Governor General to dissolve Parliament on September 7, 2008 and a Federal Election was called for October 14, 2008. While the pundits and the media will be working overtime for the next 34 days, what does this mean for income tax purposes?

There were a number of income tax bills before the House of Commons and the Senate. One bill in particular, Bill C-10, Income Tax Amendments Act, was before the Senate prior t [...]

US Tax Changes

kmoody@moodystax.com — Tue, 22 Jul 2008 00:00:00 +0100

As most readers know, Canada’s system of taxation is one that will tax based upon residency. To the extent that you are a resident of Canada, you will generally pay Canadian income tax on your worldwide sources of income. To the extent that you are a non-resident of Canada, only certain types of income (such as Canadian source income or dispositions of taxable Canadian property) will be subject to Canadian income tax. Most of the countries in the world have a similar system of taxation as [...]