Robin MacKnight

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BREAKFAST FOR BUSINESS

• Robin MacKnight
• Robert Martini

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Buried in the Fine Print

• 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

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Technical Amendments

• November 9, 2006 technical amendments (includes
  revised NRT and FIE rules)
• What to watch for

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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

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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?

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Technical Amendments Cost Base Policy

• Rationale for these proposals?
• Alternative method
• daylight loan
• pay actual dividend
• recapitalize
• If same result, why introduce this rule?

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Technical Amendments Loss of Status as
Testamentary Trust

• Anti-avoidance rule
• Watch for trust debt and liabilities
• Exceptions prevent loss of status

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Technical Amendments Other

• Too numerous to mention
• Dont assume they are inconsequential
• Could affect your situation

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Eligible Dividends

• October 16, 2006 revised NWMM
• Some changes to opening GRIP
• full rate taxable income and MP
• intercompany dividends
• Uncertainty remains
• dividend streaming?

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Eligible Dividends CRA Guidelines

• CRA issued Guidelines on December 20, 2006
• Guidelines set out notification procedures
• CRA position on
• non-residents
• partial dividends

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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?

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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

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Ontario Bill 74

• One set of income tax rules?
• still differences
• transitional provisions
• Taxation Act combines ITA and CTA

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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

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Recent Cases

• RRSP strips Nunn FCA
• Trusts Rose v. Rose
• Piercing the corporate veil Wildman v. Wildman

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