Under the Auspices of the Quebec Order of Chartered Professional Accountants, I am pleased to provide a copy of the 2018-2019 Québec Budget Summary / 2018-2019 Résumé du budget du Québec I will also place a link on the Tax Links Page, and they will remain there, along with future federal and Quebec budget summaries for future reference.
Under the Auspices of the Order of Chartered Professional Accountants of Canada, I am pleased to provide a copy of the 2018 Federal Budget Summary / 2018 Résumé du budget fédéral. I will also place a link on the Tax Links Page, and it will remain there, along with past federal and Quebec budget summaries for future reference.
The federal government has quickly made good on its promise to release revised draft legislation with respect to its “income sprinkling” proposals.
The government’s objective in releasing this legislation now is to ensure that it takes effect for 2018 as originally envisioned.
The centerpiece of the proposals is the idea that the Tax on Split Income (“TOSI”) will be applied to adults in addition to minor children. The original proposals were heavily criticized as being extremely complex and unwieldy. The Minister of Finance has reworked the rules and they are now extremely complex and unwieldy; however, they are a bit narrower in scope, offering some more objective exceptions. The Canada Revenue Agency has concurrently published a guide on how they will apply the rules.
Extension of TOSI application to adults
If none of the exceptions applies, TOSI rules will be extended to all taxpayers over the age of 17 with respect to certain income (mainly dividends) from a “related business”. Generally, a business is a related business if an individual who is related to the taxpayer is either actively engaged in the business or owns more than 10 per cent of the equity in the corporation that carries on the business.
Extension of TOSI to capital gains
TOSI will apply to taxable capital gains on dispositions of property where the income from that property would be TOSI.
Now let’s explore the main exceptions to TOSI treatment. As we can see, there are different exceptions available to different age groups:
“Excluded Business” – all adults
There will be no TOSI treatment where an adult individual is “regularly and continuously” working in the business. This is a subjective test, but if the taxpayer can show an average of 20 hours of activity per week, he is deemed to qualify for this exclusion. The exclusion applies if the work qualifies in the year or in any five previous years (not necessarily consecutively).
“Excluded Shares” – 25 or older
The TOSI will not apply to a taxpayer aged 25 or older who directly owns shares representing at least 10 per cent of votes and value of the company. The company must not be a professional corporation or earn more than 90% of its income from the provision of services. As transitional relief, taxpayers have until the end of 2018 to reorganize their corporate shareholdings to fit within these rules.
General reasonableness test – 25 or older
For taxpayers aged 25 or older there is a general “reasonableness” test that could apply to income received. TOSI will not apply to amounts paid if they are reasonable in the circumstances based on a number of factors including work performed, capital contributed or risks assumed in respect of a related business.
General prescribed rate of return – 18-24 years
For taxpayers aged 18-24, there is a general prescribed rate of return test that could apply. That is, TOSI will not apply to an amount equal to a prescribed rate (currently 1%) that would be allowed as a return on capital contributed to the company.
Retirement income splitting
The TOSI will not apply to income received by the spouse of a contributing individual where the contributing individual has reached the age of 65 years.
Capital gains exclusions
The TOSI will not apply to taxable capital gains realized on death, or on the disposition of property to the extent that the gains would otherwise qualify for the enhanced capital gains exemption. This is true regardless of whether the exemption is actually claimed.
The TOSI exemptions will carry over to property inherited by a taxpayer to the extent that the deceased qualified for the exemptions. In other words, the heir will step into the shoes of the deceased for the purposes of the rules.
The new rules are not in effect for 2017. Accordingly, these next few days may offer the opportunity for one final dividend payment to take advantage of income splitting benefits before they disappear.
In the next year, current corporate structures should be reviewed to determine if the TOSI will apply to future dividends paid. Any reorganization required to fit within the “excluded shares” exemption must be completed before the end of 2018. If shares are currently held through a family trust, consider distributing to the beneficiaries.
For taxpayers who work in the business, time records may be recommended to ensure evidence that they meet the 20-hour per week threshold.
As most readers are aware, the federal government’s small business July 18 tax proposals created an enormous backlash, with many groups and individuals, including yours truly making submissions to voice their concern. It appears the government heard the outcry as it has softened its stance to varying degrees on its new proposals. Here is a summary of how things now stand:
The original proposals would extend the Tax on Split Income (“TOSI”) to dividends received by adults, unless they can show that the dividends are reasonable in light of their labour and/or capital contributions to the business.
The response by the tax and business communities focused mainly on the uncertainty of what might be considered “reasonable” and how this might translate into an acceptable dividend.
The finance minister has announced that it intends to move forward with the income sprinkling proposals. It intends to ensure that the rules will not impact businesses to the extent there are clear and meaningful contributions by family members. It will introduce reasonableness tests for adults in two categories – those aged 18-24 and those aged 25 and older. Adults will be asked to demonstrate their contribution to the business based on four basic principles:
- Labour contributions
- Capital or equity contributions
- Financial risk, such as co-signing a loan, and/or
- Past contributions of labour, capital or risks
While no new draft legislation has been released, the government states that the concerns surrounding uncertainty have been heard and they will simplify the proposed measures and reduce the compliance burden. Stay tuned to see what the specific legislation will contain.
Multiplication of the Capital Gains Exemption (“CGE”)
The original proposals would have disallowed the lifetime capital gains exemption on the sale of Qualified Small Business Shares and Qualified Farming Property as follows:
- Elimination of CGE for minor children
- Imposing TOSI reasonableness tests on availability of the CGE
- Elimination of CGE for property held in a trust
After review, the government has backed off on all of the above proposals and will not be going forward with any of them.
Converting Income into Capital Gains
These proposals were designed to curtail what the government perceived as abusive “surplus stripping”. It would have extended the rules in section 84.1, to any non-arm’s length sale of shares to a corporation. It would also have applied dividend treatment to any such sale, even where tax had already been paid on a previous capital gain on the same shares.
These proposals would have eliminated the “pipeline” strategy, widely used to limit the incidence of taxes on the death of an individual shareholder to a single capital gain in the hands of the deceased. It would have greatly increased the chances of gains on private company shares being taxed twice.
Thanks to the concerns expressed by the tax and business communities, the government has backed off completely on these proposals and will not be going forward with them.
This is great news for those who still have reservations about the legitimacy of implementing the Pipeline strategy on the death of a private company shareholder as the government specifically mentioned that it was responding to concerns about taxation on death.
Holding Passive Investments
The initial proposals addressed concerns that shareholders of private corporations are able to defer the ultimate taxation on their savings, thereby creating a larger pool of capital to be invested for retirement. This is an advantage that a shareholder of a private corporation enjoys compared to a person without a company and is to be eliminated.
After consulting with the public, the government, while not abandoning the proposals, has agreed to relax them.
First, any capital already in existence will not be affected by the new rules. They will not apply retroactively to existing retained earnings.
Second, there will be a base amount of $50,000 of passive income that a corporation may earn each year while still not having the rules apply. This is the equivalent of $1 million of capital invested at a 5% rate of return. Any income above that amount will not benefit from the tax deferral.
There is still no draft legislation to indicate exactly which mechanism will put in place. The new year should bring new announcements and more details in this important area.
Yesterday, I published Part 1 of my letter to Bill Morneau, addressing the general tone of the presentation of the federal government’s July 18 proposals to reform the taxation of private corporations. In today’s Tax Issue, Part 2 of my submission, dealing with the specific proposals themselves, and offering some suggestions for improvement, and in some cases, abandonment.
Part 2 – The Proposals – Suggestions for Improvement
Having aired my general concerns with the sweeping nature and tone of the Proposals, my experience as a tax professional leads me to acknowledge that there are, within the Proposals, certain areas that should, in all fairness be addressed. In this section I will review the four areas covered by the Proposals and offer my suggestions for improvement where warranted.
The sprinkling of dividends among family members and other shareholders is a legal right sanctioned by the Supreme Court of Canada in the decision of McLurg v. Canada. Since that time, incorporated business owners have often structured their affairs to multiply low marginal income tax rates by issuing shares to family members, often minor children, even new born babies. The ability to use minor children in this manner was eliminated in 2000 with the introduction of the tax on split income (“TOSI”).
The Proposals now seek to extend these TOSI rules even further, to spouses and adult children. They have introduced legislation that will create an inordinate amount of complexity and uncertainty into the system.
First of all, the sprinkling of income with a spouse should not be disallowed. Often, a business is a family endeavour and a spouse offers support in many ways. Further, there are many instances, such as pension income splitting, where the distribution of family income among spouses is specifically allowed. I would recommend that the proposals with regard to spouses be abandoned.
Secondly, the sprinkling of dividend income to adult children is beneficial generally only to the extent that the child is not otherwise employed. In other words, the real benefit accrues during the time the child is still in school and not earning a salary. If it offensive to sprinkle income with adult children, then I would suggest that the TOSI simply be extended to an age where the most benefit is being attained, i.e., to age 25. After that, the benefits are virtually non-existent, unless the child is, in fact, involved in the business full time.
On the other hand, if the government is intent on introducing another reasonableness test with respect to dividend income paid to children, then they should amend the TOSI rules for minor children as well, since even a 15-year-old child, for example, can work in the business in the summertime and after school.
The proposals with regard to Capital Contributions should be abandoned. The fact is anyone who starts a small business through incorporation will normally capitalize the company with a nominal amount of share capital. No dividend paid on a common share of a small business corporation would meet the proposed reasonableness test in this regard, and it simply introduces more complexity into the law.
Lifetime Capital Gains Exemption
I have been involved in the structuring of many corporations where minor children are issued shares for the purposes of multiplying the capital gains exemption. My feeling is that the parent is using for his or her own purpose, without consent, a benefit that belongs to the child that he or she may wish to access in the future. I therefore agree that the participation of minor children in the ownership of a small business corporation for the purpose of multiplying the capital gains exemption should be curtailed.
With respect to family members over the age of 18, my feeling is that if they are legally allowed to contract, they should be allowed to own shares of a corporation, and as such, make their own decisions as to whether or not to claim the capital gains exemption on the sale of their shares. For spouses and children over the age of 18, therefore, I disagree with any restrictions on the use of the capital gains exemption on qualifying shares. These proposals should be abandoned.
Holding Passive Investments
The deferral of income within the corporate structure has been a staple of small business since the 1930’s. It is correctly considered to be the “nest egg” that a business owner can rely upon for retirement. If we add up the pros and cons of small business owners vs. Rich CEO’s as I did earlier, this item is perhaps the biggest reward that a small business owner can look forward to at the end of his or her career. While the Rich CEO can enjoy a large severance package and a generous pension upon retirement, the small business owner can rely on the accumulated investments in a holding company. The income from these investments is taxed at the highest marginal rate, so there is currently no income tax advantage to earning investment income through a holding company.
The idea that the government would attack accumulated wealth within a small business corporation and undermine a lifetime of labour by its owner seems excessive and cruel.
In my view, these proposals should be abandoned.
Converting Income into Capital Gains
Currently, the rules in section 84.1 address the issue of surplus stripping. Furthermore, the avoidance transaction that the Proposals are trying to address in this area has essentially been settled in cases such as Macdonald v. Canada. The CRA has successfully applied the General Anti-Avoidance Rule to curtail abusive transactions in this regard. Due to the CRA’s success in the courts in attacking these transactions, I would not recommend them to any of my clients. I therefore see no need to introduce legislation that would not only target abusive transactions, but would also deny capital gains treatment in cases where bona fide share sales were made. The Proposals make no allowances for the possible transfer of a business from a parent to a child or a sale between siblings. In fact, the Quebec government has recently gone in the reverse direction, introducing legislation that facilitates business transfers to the next generation.
Furthermore, these proposals will subject estates to double and in some cases triple taxation. Upon the death of an individual, there is a deemed disposition of shares at fair market value. The estate pays capital gains tax. When the company then liquidates its assets for distribution, there is a second tax that must be paid on the accrued increase in the value of investments within the company. Finally, upon distribution of the corporate assets to the heirs, a third dividend tax is levied. This is clearly unfair.
There is only one mechanism currently in place within the law that directly relieves this burden. Subsection 164(6) allows for an election to be made to offset the capital gains tax on death, but only where the company is dissolved within one year from the date of death. The administration of an estate can run much longer than one year. The government has acknowledged this with its newest laws regarding Graduated Rate Estates (“GRE”), which have a life of 36 months.
The Proposals will eliminate the ability of estates to implement what is commonly referred to as the “Pipeline” plan, which involves capitalising the cost base of shares that were taxed on death. In my opinion, the Pipeline is not an unfair advantage. The capital gain triggered on the death of an individual is clearly not a voluntary tax outcome. It is an automatic tax triggered by virtue of the law. The government seems not to be satisfied with this tax, and by denying the ability to plan to limit their taxes to this involuntary event, wishes to force a second and more onerous tax on the estate. Again this seems cruel and unfair.
My recommendation is that the anti-avoidance provision contained in the Proposals be abandoned and that the “Pipeline” transaction be expressly sanctioned by the CRA.
Failing this, at the very least, the election under subsection 164(6) should be made available to an estate for as long as it remains a GRE. Further, the designation currently allowed in certain circumstances under paragraph 88(1)(d) should be extended to corporations that have been liquidated in favour of a GRE. This would limit the tax burden on an estate to one incidence of tax, albeit the result of a forced transaction yielding a higher tax burden.
As predicted, the Minister of Finance, Bill Morneau started a firestorm in July with his proposals to reform the small business corporations tax system. I have added my voice to the concerns of my colleagues and clients in a letter to the minister. Due its length, I will reproduce it here in two parts. Part 1, deals with the general tone and sweeping nature of the proposals. In Part 2, to be published tomorrow, I address the specific proposals themselves, offering suggestions for improvement.
Part 1 – Overall Tone and Targeting of Incorporated Small Businesses
I am troubled, as are many of my clients and colleagues, by the language used in the Minister’s letter introducing the proposals. He states that the government is taking steps to “close loopholes that are only available to some – often the very wealthy or the highest income earners – at the expense of others.” He goes on to state that “There is evidence that some may be using corporate structures to avoid paying their fair share, rather than to invest in their business and maintain their competitive advantage.”
This language is disturbing. The Income Tax Act sitting on my desk at this moment weighs in at 2484 pages of charging provisions, income inclusions, allowable deductions, tax rates, formulas, incentives, penalties and anti-avoidance rules. The rules used by everyday small business owners in carrying on their day-to-day businesses, which you have characterized as “loopholes” have been entrenched in the law since its inception. They were addressed in the Carter Commission report in 1966. They have been sanctioned and approved in numerous decisions of the Supreme Court of Canada. For you to suggest that incorporated small business owners are using “loopholes” to “avoid paying their fair share” “at the expense of others” seems unfair. With respect, it appears that you are using this kind of inflammatory language to bolster your popularity among what you perceive as your political base of support, at the expense of hard working and honest tax-paying Canadian small business owners.
Furthermore, for you to suggest that small business owners should be using their accumulated earnings to “invest in their business and maintain their competitive advantage” is presumptive and unwarranted. The business decisions made by owners of small enterprises are not the concern of the government. While the tax system currently does provide incentives for certain types of investment behaviour, the suggestion that a business owner who chooses to invest his hard-earned money for his retirement rather than risk it in further business investment is going beyond your purview. Indeed, even the Supreme Court of Canada, in the Case of Stewart v. Canada refused to allow the government to interfere with a taxpayer’s business decisions, regardless of whether they generated profits or losses.
While it may be true that there are certain ways in which taxpayers who conduct their businesses through corporations have the potential to enjoy certain advantages from a tax point of view, there are many factors and moving parts in making the decision to incorporate. Furthermore, there are many extraneous factors that affect incorporated businesses which should be taken into account when comparing the tax status of an incorporated business with that of an employed individual. It appears that these factors have been totally ignored by your government, which is why the only conclusion that many taxpayers, myself included can reach, is that that these proposals are a clear attack on a specific segment of the taxpaying public, designed to increase the government’s political capital with so-called “average Canadians”.
Here are some of the factors that I refer to:
A taxpayer who makes the decision to go into business takes risks with their lives that cannot be measured in dollars and cents. They often leave the security of a job for an uncertain future. If the rewards of success are diminished, as they surely would be under the Proposals, the incentive to leave a job and risk starting a business endeavour is reduced.
The Proposals are a clear attack on small business owners. While it is true that the tax benefits of incorporation don’t really kick in unless the business earns, as a general rule of thumb, more than $150,000 of profit, the Proposals are singling out business owners as being so-called “wealthy Canadians”. Firstly, the use of the buzzword “wealthy” was clearly intentional and has its obvious negative connotations in a political context. Secondly, small business owners are not the only taxpayers who earn higher than average incomes. The government does not address the advantages enjoyed by salaried individuals. And let’s not compare small business owners earning over $150,000 with the average salaried employee who makes $50,000. Let’s compare them with employed individuals who make over $150,000 per year. Let’s call them “Rich CEO’s”, for lack of a less inflammatory term. Rich CEO’s, in general are able to enjoy the following benefits:
- No risk to personal capital
- Stock option benefits
- Company-funded private registered pension plan
- Paid vacation time
- Paid maternity/paternity leave
- Employment insurance
- Severance package upon termination
- Low-interest housing loans
- Health insurance benefits
- Life insurance benefits
- Automobile benefits
- Entertainment expense accounts
- Reimbursements for travel expenses
- Reimbursement of relocation expenses
- Golf club membership
- Prizes and corporate scholarships
- Christmas bonuses
- Performance bonuses
None of the above seems to have been affected by the Proposals.
On the other hand, a small business owner enjoys none of the above Rich CEO perks. On the contrary, he or she makes the following sacrifices when becoming involved in a business endeavour:
- Risk of capital – often life’s savings
- Risk of start-up losses
- Risk of business failure
- Risk of personal bankruptcy
- Risk of legal attack from clients and suppliers
- Risk of audit by CRA and/or Revenu Quebec
- Incurring personal debt, often mortgaging their homes
- Entering into lease obligations
- Requirement to keep bookkeeping records and file corporate returns
- Payroll obligations
- GST/HST/QST obligations
- Employer portion of CPP/EI/Health care
- Personal liability for deductions at source
- Personal liability for GST/HST/QST payments
- Unstructured and unlimited working hours
- Need for family involvement
None of the above risks are taken by Rich CEO’s and again, none of these factors is mentioned in the Poposals.
I personally offer my services to both incorporated business owners and Rich CEO’s. I would like to offer an example of a comparison of the annual accounting and legal fees involved in incorporating and maintaining a small business with those incurred by a Rich CEO.
Incorporated Business Rich CEO
Initial Incorporation fees $ 2,500
Annual bookkeeping fees 10,000
Annual legal fees 2,000
Annual external accounting fees 15,000
Annual registration fees 107
Annual personal tax preparation 1,500 1,500
Total fees $ 31,100 $1,500
As you can see, the increased costs faced by a business owner simply to comply with existing tax laws and legal obligations makes the Proposals that much more difficult to digest.
In conclusion, the Proposals seem to me to be a clear attack on a large sector of the population that the average middle class Canadian – your constituency, would not have a problem hurting, especially given that you have characterized them as wealthy Canadians taking advantage of tax loopholes. This is clearly not the case, and the Proposals in general are prejudicial and unfair.
If you’ve just returned from vacation and wondering what’s new in the tax world, you’d better sit down and take a pill. On July 18, finance minister Bill Morneau rolled out the federal government’s proposals designed to “close loopholes and deal with tax planning strategies that involve the use of private corporations”. In short, Finance is proposing to tax an axe to many of the tax strategies that have been available to small business owners and professionals up until now.
The proposals are complex, comprehensive and wide-ranging, covering the following main areas of tax planning:
- Income sprinkling
- Multiplication of the capital gains exemption
- Converting a private corporation’s regular income into capital gains
- Holding investments inside a private corporation
This strategy involves the splitting of income to take advantage of lower marginal tax rates available to family members. Many rules have been put in place over the years to curtail this practice. Most notably, the tax on split income (TOSI), or “kiddie tax” applies the highest marginal tax rates to certain dividends paid to minor children.
With the new proposals, the TOSI will no longer be limited to minor children. Complex new rules will apply the TOSI to dividends paid to adult individuals unless such dividends are reasonable in light of that individual’s labour contributions and/or capital contributions to the corporation.
The TOSI will also be expanded to apply to capital gains on property, the income from which was subject to the TOSI. Further, it will also apply (for individuals under age 25) to “compound income” that was previously subject to attribution rules or the TOSI.
These proposals are scheduled to apply to for the 2018 and later years.
Multiplication of the capital gains exemption
A capital gains exemption (CGE) of up to $800,000 (indexed) is currently available to any individual on the sale of qualifying shares of a private company. Issuing shares to family members, either directly or through a trust, is a common way to multiply this tax benefit.
The finance minister has proposed a three-pronged approach that will eliminate the multiplication of the CGE:
Age limit: The CGE will no longer be available to individuals where the gain occurs in any year before the individual reaches the age of 18 years.
Reasonableness test: In essence, this rule will deny the CGE on any gain on the sale of shares if the gain from those shares is subject to the TOSI measures described above.
Trusts: With exceptions for spouse or alter ego trusts the GCE will no longer be available on any gain on a share that is held by a family trust.
These proposals will apply to dispositions after 2017. However, there will be transitional rules that will allow an elected deemed disposition at any time in 2018. The fair market value of the shares would have to be determined, and the qualification criteria for the CGE will be treated as being satisfied if they are met at any time in the preceding 12 months.
Converting a private corporation’s regular income into capital gains
Normally, a distribution of a corporation’s retained earnings is considered a dividend and taxed as such. The top rate on dividends is approximately 44%. Strategies have been used with varying degrees of success to arrange for dividends to be transmogrified into capital gains, which are taxed at 25%. This involves the utilization of the high cost base on shares that have been acquired through a non-arm’s length transaction that had previously triggered a capital gain. Current rules are in place to curtail such “surplus stripping” in limited circumstances. Section 84.1 effectively forces a return to dividend treatment where the capital gains exemption was claimed on the previous capital gain.
The government proposes to extend these rules to any situation where a non-arm’s length transaction involved even a fully taxable capital gain. This proposal is meant to address what has become known as the “pipeline” transaction.
The pipeline has been used extensively in recent years as a post-mortem planning tool to avoid double-taxation where the capital is deemed to occur on the death of a corporate shareholder. Unless the current proposals are altered, the pipeline strategy will no longer be available to an estate.
These proposals will take effect for all dispositions that occur after July 18, 2017. There will be no room for transitional planning.
Holding investments inside a private corporation
One of the long-standing advantages of incorporation is the tax deferral that comes with lower rates on business income. Once the retained income has accumulated over time, the company will have a larger amount available for investment. This has been a great contributor to the retirement of many small business owners. However, it is an advantage that salaried persons or those who don’t incorporate cannot access. Accordingly, the government proposes to eliminate it.
Of all the proposals announced, this is the only one that is not fully developed with draft legislation. The Minister has included some suggested strategies to deal with the issue, each one complex in its own right, and generally altering the system of integration currently in place by eliminating the effect of the corporate tax deferral for future passive investment.
The Minister acknowledges that there currently exists a significant amount of capital invested within private corporations, and it is not his intent to affect these holdings. Any new rules will have effect on a going-forward basis.
These proposals are subject to a consultation period which will end on October 2, 2017. Interested parties should write to the Minister of Finance with any concerns before that date. I suspect that it will be an interesting and eventful autumn for the tax community.
What happens when a transaction is undertaken that is planned to be tax-free, but due to an unforeseen error in the execution of the plan, it is subsequently discovered that tax is payable? Until recently, if all else failed, one option was to apply to the courts to allow for “rectification”. That is, since the parties to the transaction originally based their actions on the assumption that the plan was tax-effective, ask the courts to allow them to “redo” the deal correctly to restore its original tax-free intent.
Rectification is essentially not a tax concept. It generally applies where parties to a transaction discover that the legal documents that apply do not accurately represent the agreement or intent of the parties at the time. When both parties agree, the courts are inclined to grant relief and allow for a retroactive correction of the legal documents.
Back in 2000, in the case of Juliar, rectification was granted in a tax context to correct what was essentially an error on the part of the tax planners. Simply put, Mr. and Mrs. Juliar transferred shares to a holding company on the assumption that the shares had a high adjusted cost base (ACB) and no rollover provision was made. When it was subsequently discovered that the ACB was indeed low, they applied to the court for rectification, asking to convert a taxable sale to a rollover under section 85 of the Income Tax Act. The court agreed.
Since then, the case of Juliar has been cited often in cases where mistakes in legalities have created undesired tax results. However, in the recent decisions of Jean Coutu and Fairmont, the Supreme Court has overturned Juliar and has put an end to the idea that rectification can be used as a tool to correct errors in tax planning and its execution.
The court in Fairmont stated:
“…rectification is not equity’s version of a mulligan. Courts rectify instruments which do not correctly record agreements. Courts do not “rectify” agreements where their faithful recording in an instrument has led to an undesirable or otherwise unexpected outcome.”
Juliar was expressly overturned on the basis that the decision resulted in “impermissible retroactive tax planning”.
There is a famous decision (Shell Canada) that stands for the idea that a taxpayer is taxed on the way it arranges its affairs, rather than how it could have arranged its affairs. This concept is often referred to when a legal transaction is executed poorly, resulting in unintended tax consequences. These new decisions are in line with this concept, and they take away a weapon of last resort for taxpayers and their advisors.
Under the Auspices of the Quebec Order of Chartered Professional Accountants, I am pleased to provide a copy of the2017-2018 Québec Budget Summary/ 2017-2018-Résumé du budget du Québec. I will also place a link on the Tax Links Page, and they will remain there, along with future federal and Quebec budget summaries for future reference.
Under the Auspices of the Order of Chartered Professional Accountants of Canada, I am pleased to provide a summary of 2017 Federal budget summary/ 2017 Résumé du budget fédéral. I will also place a link on the Tax Links Page, and it will remain there, along with past federal and Quebec budget summaries for future reference.