Transcript Slide 1
Robin MacKnight
Robert Martini
• November 9, 2006 Technical amendments
• October 16, 2006 Notice of Ways and
Means Motion – Eligible Dividends
• December 20, 2006 – CRA Guidelines on
Eligible Dividends
• Ontario Bill 74 – “Strengthening Business
Through a Simpler Tax System Act, 2006”
• Recent cases
Technical Amendments
November 9, 2006 technical amendments
(includes revised NRT and FIE rules)
What to watch for
Technical Amendments: Stock
Dividends
Proposed non-recognition of cost base
Dividends subject to s. 112 deduction not
included in ACB
Impact on stock dividend planning?
OBCA proposed amendments
but proposals could thwart use of stock
dividends in reorganizations
Technical Amendments: Safe
Income Strips
Similar to stock dividend issue
PUC increase/deemed dividend problem
cost base not increased
on deemed dividends
where contributed surplus converted to
PUC
Uncertainty?
What alternatives should be considered?
Technical Amendments: Cost Base
Policy
Rationale for these proposals?
Alternative method:
daylight loan
pay actual dividend
recapitalize
If same result, why introduce this rule?
Technical Amendments: Loss of
Status as Testamentary Trust
Anti-avoidance rule
Watch for trust debt and liabilities
Exceptions prevent loss of status
Technical Amendments: Other
Too numerous to mention
Don’t assume they are inconsequential
Could affect your situation
Eligible Dividends
October 16, 2006 revised NWMM
Some changes to opening GRIP
“full rate” taxable income and M&P
intercompany dividends
Uncertainty remains
dividend streaming?
Eligible Dividends – CRA
Guidelines
CRA issued Guidelines on December 20,
2006
Guidelines set out notification procedures
CRA position on:
non-residents
partial dividends
Eligible Dividends: Issues and
Considerations
Consider share reorganization
class for resident shareholders
class for non-resident shareholders
Investment income
can you restructure?
Goal – deferral plus eligible dividend
treatment
possible?
Ontario Bill 74
“Strengthening Business Through a
Simper Tax System Act, 2006”
Stated Benefits:
single tax form
single tax collector
one set of income tax rules
Ontario Bill 74
One set of income tax rules?
still differences
transitional provisions
Taxation Act – combines ITA and CTA
Recent Cases
Book-keeping error or retroactive tax
planning?
Irmen
9100-2402 Quebec Inc.
Gambling winnings not taxable
Leblanc 2006 TCC 680
Waivers – Honeywell 2007 FCA 22
De Facto directors – Hartrell
Recent Cases
RRSP strips – Nunn FCA
Trusts – Rose v. Rose
Piercing the corporate veil – Wildman v.
Wildman