Federal Budget Commentary for 2016

New info you may be interested in for the 2016 year.

Take a look at our latest publication for related information on:

1. Theme: Economic Growth, Job Creation, Strong Middle Class
2. Building and Spending for Growth
3. Key Budget Measures for Business
4. Key Personal Measures & Measures That Were NOT Introduced
5. Business Income Tax Measures
6. International
7. Personal Tax Measures
8. Sales and Excise Tax Measures 

Plus more
Please follow this link to get the scoop: McIntyre_Associates_2016_Federal_Budget_Commentary
Please note that you will need a PDF viewer. You can get one free here. Adobe PDF Reader
Office Location
McIntyre and Associates Professional Corporation
200 - 900 Morrison Drive
Ottawa, ON.
K2H 8K7
General Enquiries: 613-726-7788
Fax: 613-729-4477
Or visit our contact page here.

Ontario Budget Commentary for 2016

New info you may be interested in for the 2016 year.

Take a look at our latest publication for related information on:

1. Personal income tax, and simplification of personal income tax
2. Tuition and education tax credits
3. Children's activity tax credits
4. Healthy home renovation tax credits
5. Split income tax
6. Corporate income tax
7. Research and development tax credits
8. Apprenticeship training tax credits
9. Workplace safety insurance premiums
10. Alcohol and tobacco tax
11. Underground economy
12. Tackling climate change
13. Ontario retirement pension plan
14. Property tax

Plus more

Please follow this link to get the scoop: McIntyre_Associates_2016_Ontario_Budget_Commentary

Please note that you will need a PDF viewer. You can get one free here. Adobe PDF Reader


Office Location
McIntyre and Associates Professional Corporation
200 - 900 Moriison Drive
Ottawa, ON.
K2H 8K7

General Enquiries: 613-726-7788
Fax: 613-729-4477
Or visit our contact page here.

Creating a Digital Will

Creating your digital will could keep your investments from being held.  Some experts estimate that banks could be holding up to 7 Billion dollars of unclaimed assets across the country. Learn More... 

Visit us online: McIntyre and Associates
Or call us: (613) 726-7788

U.S. Estate Tax Exposure

What may come as a surprise to many Canadians is that they could be liable for U.S. estate tax. The estate tax is based on fair market value of the property owned at the time of death and the tax is assessed on U.S. situs assets. These assets include real property located in the U.S. as well as shares of U.S corporations, either private or public.

If an individual’s U.S. situs assets are more than 60,000 USD then there’s a requirement to file the estate tax return with the IRS. There are various exemptions available, such as a credit that shields the first 5,340,000 of worldwide assets (in 2014, this amount is adjusted for inflation) which means that there’s not necessarily a tax liability however it does not remove the obligation to file the return. This is of particular importance if as a result of death there will be a transfer of title on real estate or if there are investment assets with a U.S. company. To distribute the assets in accordance with the will, the financial institution or lawyer will ask for a transfer certificate. This is a certificate issued by the IRS which shows that the Estate has complied with all the requirements and has no outstanding obligations thus allowing for the transfer to take place.

There are numerous complexities depending on the individual’s circumstances and cannot be covered in general terms. It is important that the estate tax is not forgotten and is appropriately considered when the purchase of assets is planned. Failure to consider this tax could result in a substantial tax liability that could otherwise be mitigated or avoided altogether.

Questions?

General Enquiries: 613-726-7788

Fax: 613-729-4477
general@mcintyreca.com

McIntyre & Associates Professional Corporation

200 – 900 Morrison Drive

Ottawa, ON

K2H 8K7 

Principal Residence

One of the tax rules that most taxpayers are aware of, though not necessarily in detail, is that there’s an exemption from tax on a gain from a sale of the house they live in. If an individual (or family) owns one house that they live in then the rules are fairly straight forward however complications arise as soon as there’s some deviations in the scenario. What the rules actually state is that the exemption is available for a housing unit that the individual or family unit ordinarily inhabits. This means that there’s a limit of one dwelling per family on which the exemption can be claimed. The designation of the exemption is done for each year that the property is owned. For example, the family owns a house for 10 years and a cottage for 5 years. The exemption is first assigned to the house as that’s the only property owned for the first five years and then a decision has to be made whether the house or the cottage gets the exemption for the 5 years that both properties are owned at the same time.

When there’s only one property then the situation is fairly simply however as soon as another property is introduced then there’s potential for a tax liability. It’s best to review all of the properties and their potential gains prior to making any elections.

Questions?

General Enquiries: 613-726-7788

Fax: 613-729-4477
general@mcintyreca.com

McIntyre & Associates Professional Corporation

200 – 900 Morrison Drive

Ottawa, ON

K2H 8K7 

Principal Residence – Rental property

A common scenario is that when an individual (or family) moves to a new house, the old house is rented out rather than sold. What happens in that case is called a “change in use”, the old house changed its purpose from being used as a principal residence to a rent income producing property. This change in use triggers a deemed disposition and a gain is calculated between the original purchase price and the fair market value at the time of the change of use. The property could fall under the principal residence exemption so no actual tax is paid on the deemed disposition. If the rental property is sold 2 years later then the gain is calculated between the sales price and the fair market value of the property at the time of the change in use. There’s an election available which allows the property to still be designated a principal residence for up to 4 years following the change in use, provided that no deduction is taken for amortization when calculating the rental income from the property. Filing this election means that the new house or the old house (up to 4 years) can be used as a principal residence and is eligible for the exemption.

There’s also the possibility that the opposite happens. An individual (or family) move into a housing property which was previously rented out. In this scenario, there’s a deemed disposition for the property. There’s an election available which could defer the gain on the change in use until the property is ultimately disposed of.

There are a number of factors to consider when making the decision to designate one property over another as a principal residence. Things like potential gain in the future, current tax liability and the length of time the property has been owned or will be owned are all factors which could significantly impact the decision.

Questions?

General Enquiries: 613-726-7788

Fax: 613-729-4477
general@mcintyreca.com

McIntyre & Associates Professional Corporation

200 – 900 Morrison Drive

Ottawa, ON

K2H 8K7 

Alter Ego Trusts

An alter ego trust is an inter vivos created after 1999 by a settlor who was 65 years of age or older at the time the trust was created. A key property of this type of trust is that the settlor is the only one entitled to receive any income or capital distributions from the trust during his or her lifetime. It is only upon death of the settlor that the property passes to a beneficiary. This type of trust is typically used to avoid probate fees (which are charged at 1.5% on assets over $50,000 in Ontario) since the trust assets do not formally pass into the estate.

However there are some drawbacks to using this type of trust. The alter ego trust cannot use the capital gains exemption available in respect of qualifying property such as small business company shares. In addition, any losses within the trust can only be used to offset the gains of the trust and do not attribute back to the individual. In the year of death, capital losses can be used to offset non-capital gains in the year of death or the preceding year. Depending on the makeup of the investments, this could be a substantial benefit which may be unavailable. The alter ego trust does not form part of the Estate and therefore the assets cannot be used to form a testamentary trust. This is a type of trust that forms on death of a taxpayer and unlike an inter vivos trust, has the benefit of the marginal tax rates that apply to individuals. The potential savings are up to $17,000 per year however recently CRA has been discussing limiting the access to the marginal tax rates for a period of 36 months from the date of death.

Provided that the most common use of the alter ego trust is to avoid probate fees, the trust will typically have more than $500 of income and therefore would be subject to the annual filings requirement. Ensure that review both the benefits and the drawbacks to this type of arrangement to ensure that it meets your needs.

Questions?

General Enquiries: 613-726-7788

Fax: 613-729-4477

general@mcintyreca.com

McIntyre & Associates Professional Corporation

200 – 900 Morrison Drive

Ottawa, ON

K2H 8K7