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Acquisition of US real estate

Apologies in advance … this is lengthy and a little technical but it’s a complex topic! Notwithstanding the recent weakening of the Canadian dollar, the decline in the value of US real estate may still present some attractive buying opportunities for Canadians.

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.


Merry Christmas

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

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 controversial initiative, the implementation of the legislation has been delayed numerous times and the Draft Legislation has been released, each time with substantial amendments, no less than six times.  Although the Draft Legislation continues to have an effective date of January 1, 2007, it would seem that the likelihood of these proposals being proclaimed as law has significantly diminished.


Thaw transactions

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.


Tax planning in uncertain times

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 ….


Charitable tax shelters

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).


Subsection 256(9) – Timing problem with capital gains deduction

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.


Our first anniversary!

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, etc.) has become such a specialized area that it is difficult to do all services well. Accordingly, we sensed that clients desired high end specialized income tax advice – especially at the private client level (given that such clients tend to have a hard time finding specialized tax advice).


Real estate inventory – Capital gains vs. income

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.


Election call

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?


US tax changes

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 that in Canada where the primary tax basis is that of residency.


Small change to the eligible dividend rules

On July 14, 2008, The Department of Finance released a package of proposals to amend the Income Tax Act for various measures. Included in the package was a small amendment that proposes to tinker with the eligible dividend rules.

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