With higher interests, corporate attribution (ITA 74.4(2)) becomes more of a concern. The rule doesn’t apply to a small business corporation, however. The attributed amount is also reduced by dividends or interest paid to the transferor in respect of the…
Attribution in action
Suppose that A and B are spouses, that they purchase a cottage together for $400,000 and that A contributes $100,000 toward the satisfaction of that purchase price. The balance is financed, with A and B paying the principal and interest…
Corporate attribution tips
The authors summarize some methods for avoiding or mitigating corporate attribution: The corporate attribution rules do not apply where the transferee is a small business corporation. The transferor could consider effecting a freeze using a stock dividend. (But will the…
Prescribed rate loan
In response to question 11 at the 2020 Canadian Tax Foundation Roundtable, the CRA said that a prescribed rate loan could be refinanced at a lower rate by selling property acquired with the first loan, repay the first loan and…
Corporate attribution
Manu Kakkar, Alex Ghani and Boris Volvofsky, in “Corporate Attribution: Refreeze May Cause Unsolvable Corporate Attribution Problem” 18:3 Tax for the Owner-Manager (July, 2018), argue that a refreeze at a lower value does not reduce the outstanding amount for the…
Clever planning
The Tax Court continues to be unimpressed by clever planning. Brian Arnold thinks that the current generation of tax judges is much more willing to apply the GAAR or other anti-avoidance rules to planning that reduces tax. Mady v R, 2017 TCC 112, is another case that supports his thesis.