Part VI.1 – Loukidelis PC

Dividends to a trust and Part VI.1 tax

Opco wishes to redeem low-low preference shares held by a family trust, which proposes to allocate the resulting deemed dividend to a beneficiaryco (Benco). Will Part VI.1 tax apply to Opco? If the preference shares are subject to a price…

TPSs and PACs

The CRA has previously stated that a deemed dividend arising on the redemption of a taxable preferred share (TPS) for a “specified amount” will not be an excluded dividend for the purposes of Part VI.1 of the Income Tax Act…

Contributions to a testamentary trust

Contributions to an estate or testamentary trust (in this article, an “estate” for short) by anyone other than the testator can vitiate the estate’s status as such. See paragraph 108(1) “testamentary trust” (b) of the Income Tax Act (Canada). Such…

Corporation attribution

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…

Association and trusts

The authors provide a helpful overview of the various rules that apply for the purposes of determining whether two corporations are associated where a trust is a shareholder of one or both of the corporations. Paragraph 256(1.2)(b) groups. A relevant…

Over-contribution penalty hell

A taxpayer over-contributes to his TFSA, and then the investments in the TFSA become worthless so that he cannot withdraw the excess. Is the taxpayer entitled to relief from the over-contribution penalty? The Federal Court recently held that the CRA…

No more shortcuts for excess CDA elections

The CRA has “retired” the shortcut method for excess CDA elections. It is now necessary to wait for the Part III assessment and then file an election under subsection 184(3) of the Income Tax Act (Canada) in respect of the…

Category: Part VI.1