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Robin MacKnight Robert Martini

BREAKFAST FOR BUSINESS. Robin MacKnight Robert Martini. 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

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Robin MacKnight Robert Martini

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  1. BREAKFAST FOR BUSINESS Robin MacKnight Robert Martini

  2. 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

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

  4. 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

  5. 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?

  6. Technical Amendments: Cost Base Policy • Rationale for these proposals? • Alternative method: • daylight loan • pay actual dividend • recapitalize • If same result, why introduce this rule?

  7. Technical Amendments: Loss of Status as Testamentary Trust • Anti-avoidance rule • Watch for trust debt and liabilities • Exceptions prevent loss of status

  8. Technical Amendments: Other • Too numerous to mention • Don’t assume they are inconsequential • Could affect your situation

  9. 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?

  10. Eligible Dividends – CRA Guidelines • CRA issued Guidelines on December 20, 2006 • Guidelines set out notification procedures • CRA position on: • non-residents • partial dividends

  11. 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?

  12. 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

  13. Ontario Bill 74 • One set of income tax rules? • still differences • transitional provisions • Taxation Act – combines ITA and CTA

  14. 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

  15. Recent Cases • RRSP strips – Nunn FCA • Trusts – Rose v. Rose • Piercing the corporate veil – Wildman v. Wildman

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