By Jennifer Smith, Ernst & Young LLP, Ottawa
In a clear and concise judgment, the Tax Court of Canada applied section 84.1 of the Income Tax Act (ITA) to a disposition of shares by the taxpayer, resulting in a taxable dividend of $400,000 instead of a capital gain eligible for the capital gains exemption. Although Justice Judith Woods agreed with the taxpayer’s counsel that section 84.1 is a “trap for the unwary” and appeared to have some sympathy for the taxpayer’s position, she nevertheless felt bound to apply the clear wording of the provision.
Read the full article »
I have now posted the newly released Superintendent’s Standards for surplus income for 2010. I have also updated the Sample Surplus Income Calculation with its downloadable Excel spreadsheet.
The Superintendent’s standards are derived from the Low Income Cutoffs (LICO) released by Statistics Canada. The Superintendent of Bankruptcy uses the before-tax LICO for urban areas with 500 000 people or more.The 2010 standards are updated by adding to the 2008 LICO the 2009 Consumer Price Index (CPI) of 0.26 percent, plus a 1.7 percent adjustment reflecting the 2010 CPI expectation. Because the actual and expected changes in CPI are currently so low, there has been very little change in this year’s standards.
The most frequent question asked on this site is, “How much is my surplus income requirement?” (Surplus income is the amount of monthly income that a bankrupt must share with his creditors during the period of bankruptcy.) I have now provided a sample calculation of surplus income, with a downloadable spreadsheet that can be modified for specific cases. See Surplus Income under the Bankruptcy Rules menu item above for more information.
We have published our version of the booklet, Dealing with Debt – A Consumer’s Guide, originally published by the Office of the Superintendent of Bankrupty, Industry Canada. We have also made available a Word version of the booklet that is suitable for customization by your firm for use with clients who face insolvency. If you need help with customizing the booklet or with producing a .pdf version, please contact us.
I’ve noticed that some practitioners hold outdated beliefs about bankrutpcy and insolvency. My first step in trying to change this is to provide details of new rules that came into force September 18, 2009.
