by Marc Weisman of Torkin Manes LLP

When a taxpayer dies, tax laws dictate that the taxpayer is deemed to have disposed of all his/her capital property at fair market value. This will trigger capital gains (and recaptured depreciation), which are subject to income tax. (Capital property includes shares of private and public companies and real estate.)

However, if the taxpayer leaves the capital property to a spouse (which includes a common-law partner) or a “qualifying spousal trust” in a Will, any accrued capital gains (and recaptured depreciation) on the property will be realized on the death of the surviving spouse or when the spousal trust sells the property. This might provide a significant tax deferral.

What is a “qualifying spousal trust”?

by Stevan Novoselac, John Sorensen and Michelle McBride of Gowling Lafleur Henderson LLP

In a recent decision of the Ontario Superior Court, Lemberg v. Perris,¹ Eric and Valerie Lemberg successfully sued their loyal accountant, Michael Perris (“Perris“), for breach of fiduciary duty.  Over the course of their almost twenty-year relationship, Perris provided tax and accounting advice to the Lembergs and performed their tax compliance work.

Perris advised the Lembergs to engage in a so-called “art-flip” tax reduction scheme.  The Lembergs accepted Perris’ advice and enjoyed their large tax savings.  However, they were reassessed by the Canada Revenue Agency (“CRA“) to disallow all of the benefits they received.  Subsequently, the Lembergs learned that Perris had received a “secret commission”

The WeirFoulds Trusts & Estates Practice invites you to a seminar designed specifically for accountants whose practice includes trust & estate issues.

Date

Tuesday, November 23, 2010

Details

Ivey ING Direct Leadership Centre, Legacy Room
130 King Street West, The Exchange Tower (King Street and York Street), Toronto
9:00 a.m. to 11:30 a.m. (Breakfast will be provided)

Chair: John O’Sullivan

Topics of Discussion:

• Terminal Returns – Some Special Issues for Estates. Maralyne A. Monteith
• Estates and Trusts – Some Essentials for Accountants. Lori M. Duffy
• Should Accountants Prepare Estate Accounts? Clare E. Burns
• Rectifications Applications: Undoing Unintended Tax Consequences. John O’Sullivan
• Trusts and Trustees: Some Tips on Risk Management. John B. A. Wilkinson

RSVP by November 19, 2010 to Shaila Pirani at 416.365.6536 or events@weirfoulds.com

By Colleen McMullin of Gowling Lafleur Henderson LLP

Under the Canada-U.S. Income Tax Convention (the “Treaty”), a corporation resident in the United States may be taxed in Canada where its activities give rise to a “permanent establishment”.  

If a U.S. corporation is deemed to have a permanent establishment in Canada, the U.S. corporation will be subject to Canadian tax return filing obligations and will be required to pay tax to the Canada Revenue Agency (“CRA”) on business profits attributable to that permanent establishment.

A permanent establishment is generally defined to include either a fixed place of business (e.g. an office, branch, place of management, factory, etc.) or a dependent agent who habitually exercises the authority to conclude contracts on behalf of the U.S. corporation.  Furthermore, a recent addition (effective January 1, 2010) to the Treaty provides that a U.S. corporation may be deemed to have a Canadian permanent establishment if it either:

by Kent Blumberg

Not every client is your ideal client.  In fact, some clients are downright toxic.  They sap your energy, undermine your brand, waste your time, keep you too busy to take on better clients, send your staff running for the hills and send you running for the Valium.  In spite of the revenue toxic clients may bring in, I can think of at least nine reasons to fire them.

1. The client acts unethically, or demands unethical behavior on your part.  All we have, in the end, is our reputation – with others and with ourselves.  When we act out of alignment with our values and ethics, or support those who do so, we are out of integrity. When we are out of integrity, we are less effective and more stressed.
2. You don’t like the client.  This one doesn’t show up on most lists like this, but it’s crucial to me.  One of the advantages of owning my own business is that I can choose with whom I will do business.  I don’t have to work with a jerk if I don’t want to.  Why give up that hard-won freedom?  Why spend time with a client I don’t like?