Estate planning is critical to effectively preserve wealth and pass it on to the next generation. We think out of the box. Where engaged to develop an estate plan, we:
Using software we have developed, we can model the estate plan and monitor it year by year, adjusting it for changing financial circumstances, changing family, financial, and personal objectives and changes in tax laws.
Many entrepreneurs who have built successful companies are concerned about business succession as they get older. They often want to see the family business passed to the next generation, but believe this cannot be done without paying significant capital gains tax. We can reduce the tax with advance planning.
We assist with business succession planning by
Once the plan is in place, we can monitor it year by year and adjust the plan for changing circumstances, personal objectives, and changing tax laws.
We have a variety of techniques for setting up income-splitting arrangements using trusts. These include structures where investment income and capital gains are realized by family members who have little or no income, and multiplying access to the capital gains exemption.
A trust can have a variety of other uses such as asset protection, maintaining control over assets, income splitting, multiple capital gains exemptions and estate planning.
Recent changes to corporate tax rates have changed the rules of thumb followed for decades on how to remunerate owner-managers. The ability to defer tax by leaving funds in a corporation, rather than take a bonus or a dividend is very enticing. Yet, this must be balanced against the cash needs of the family and other matters (such as making an RRSP contribution).
An overall evaluation of how to remunerate an owner-manager and family is complex and multi-dimensional. We take a broad approach, looking at multiple factors such as corporate and personal tax rates, bonuses v. dividends, AMT, income splitting, RRSP contributions, the capital gains exemption, etc.
We provide a financial planning service to enable people to determine their expected level of income and the related tax liability in retirement. We develop financial models based upon expected rates of return and can advise, in general terms, on investment strategies as well as on the use of life insurance.
For high net worth individuals, we may also consider certain non-resident strategies and retirement arrangements, which may include trust arrangements. We frequently advise on the tax consequences of retiring in the United States and other countries.
In carrying out this work, we typically consult with investment advisers and insurance representatives to assist us in numerical modelling.
This work is done on a fee-for-service basis.
The preparation of tax returns for a deceased taxpayer and trust returns for an estate are specialized services within the specialized field of tax. Numerous elections and tax-planning opportunities are available, and an experienced tax professional can bring about substantial tax savings. Having written or co-authored two books on these topics, we can truly claim to be experts in this field.
We handle all of the tax aspects of a deceased taxpayer filing and related tax matters for the estate, including
We can also develop or review estate planning for the family.
The area of trusts and estates practice is a complex one, with many opportunities for tax planning. These opportunities include
We can also prepare or review tax returns that involve complex trust situations. Having authored two books on this subject, we are the professionals that other professionals often turn to in complex situations or just for a second opinion.
Our firm helps clients with tax issues connected with separation and divorce. Some examples of the issues we address include:
As well we review any proposed property division and assist with a valuation analysis. We are also very experienced in working with legal counsel on all aspects of negotiation and completion of legal agreements.
Certain international tax strategies can be effective for high net worth families, especially if they have non-resident members. However, to the uninitiated, the offshore world is complex, confusing, and fraught with difficulties. The Canadian tax legislation in the international area is extremely complicated. In addition, it can be difficult to find reliable people in foreign jurisdictions to assist with tax-planning structures.
Our extensive experience in implementing international structures, our contacts through the Society of Trust and Estate Practitioners (STEP), and our other connections uniquely qualify us to implement an international tax plan for an international family.
In advising high net worth clients, the scope for international tax planning very much depends on individual circumstances.
We frequently develop tax-planning strategies for high net worth families. We attempt to minimize their current taxes and develop a long-term strategic tax plan that will minimize their taxes on and after retirement. In some cases, the plan may involve a non-resident aspect, an estate freeze, or the use of trusts. The plan may also focus on investment strategies, retirement plans, and creative uses of insurance.
We design and implement executive compensation programs. This entails advising on the optimal forms of compensation, taxable and non-taxable benefits, tax-effective retirement plans, stock option programs, and insurance and disability plans.
We have written extensively on stock options and share ownership programs, and can assist with tax-reporting issues.
We have also designed and implemented carried interest arrangements, where executives participate directly in certain businesses. Using these plans, executives can obtain capital gains tax treatment (taxed at half rates) instead of regular salary or bonuses. We often include family trusts within these plans to maximize the benefits of income splitting. Sometimes the capital gains exemption can be used within the plan to obtain tax-free capital gains.
Canada offers tax exemptions and incentives for new immigrants. We are experienced in advising new immigrants on how to take maximum advantage of these. We closely coordinate this tax planning with professional advisers in the immigrant’s country of origin.
Specifically, in tackling such an assignment we
Sometimes valuations are required in this type of work. If so, we can supply valuation reports in a format that is acceptable to Canadian tax authorities.
Executives coming to Canada find the Canadian tax system confusing and complex, full of reporting forms, deadlines and paperwork. This combined with high tax rates can be challenging at best and demoralizing at worst.
We can assist in a variety of ways.
Prior to coming to Canada, we can do a preliminary assessment of the executive’s tax position. At the same time, we will address tax planning ideas and consider various planning strategies. These may include:
We can also advise on executive compensation and moving reimbursements as well as tax equalization policies. Through our international contacts, we can coordinate tax planning in the executive’s home country and assist with tax filings. We will prepare all required Canadian tax filings, and handle correspondence with the tax authorities.
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Jul 12, 2019
The use of creative international structures by multinational corporations to transfer a significant portion of their global profits to low tax jurisdictions led the Organisation of Economic Co-operation and Development (“OECD”) to undertake the Base Erosion and Profit Shifting (“BEPS”) study. The study concluded with 15 proposed initiatives, one of which is to address potentially abusive use of tax treaties between countries to shift profits.
Jun 27, 2019
The Income tax act contains a number of anti-avoidance provisions. Subsection 55(2) apples to convert some intercorporate actual or deemed dividends into capital gains or proceeds of disposition, respectively..
This provision was created when capital gains tax rates were higher than dividends. The intent of the section is to allow companies to move their tax paid retained earnings (“Safe Income”) out of, say, an operating company to a holding company, tax free since intercorporate dividends of this nature are often tax free. There is no further tax paid until the amounts are paid out as dividends to a shareholder who is a “natural person” where the amounts are taxed as eligible or “ineligible” dividends.
Feb 26, 2019
A Canadian corporation’s first fiscal year can end up to 53 weeks after the date of incorporation. Once the fiscal period has been chosen, it cannot be changed, unless by operation of law, without the permission of the Canada Revenue Agency (“CRA”).
