The method you choose could make things easier, or it could lead to problems such as disagreements among beneficiaries. Should you make a note separate from your Will to deal with personal or sentimental items? Understanding how the law views such documents will help you decide.

In today’s 2023 Federal Budget, the government announced legislative changes to the new rules commonly known as “Bill C-208”, to address some potential gaps or loopholes.

A typical scenario in which AMT may apply is where a farmer sells land, realizes significant capital gains and uses their $1,000,000 lifetime capital gains exemption.

It may seem like the benefits of planning a Family Trust, or perhaps the value of your existing Family Trust, have been completely cancelled. But that isn’t the case. One tax benefit of using a Family Trust is still very much available, and in the right situation it can provide the biggest tax win of all.

One important tool in your farm succession toolbox is transferring land to your children on a “farm rollover” basis, either during life or at death. It’s pretty simple. But should you make two or more of your children co-owners of one parcel of land? How does this affect their future tax exposure?

If the person you appoint as your Attorney (your representative) under a Power of Attorney (POA) has a corporation of their own, their status as your Attorney can cause their corporation to be “associated” with your corporation, whether or not your Attorney has begun to act under the POA. This may reduce access to the low tax rate that applies to business income under the $500,000 “small business limit”.

A recent statement from CRA regarding “phantom income” shows how important it is to cover seemingly obscure tax issues when drafting a Family Trust. Including this Trust provision could save you a great deal of tax when the “21-year rule” takes effect.

In administering an estate that holds private corporation shares, a “pipeline” strategy can be used to limit the tax on the shares to the relatively low capital gains rate, instead of the higher dividend tax rate. But certain tax rules, and the CRA’s interpretations of the rules, try to stick the estate with a higher dividend tax rate. If it’s done incorrectly, the tax result may be punitive.

Federal Budget 2022 has a couple of things relevant to family owned businesses and farms. One is an expansion of access to the low “small business deduction” tax rate on business and farm income of private corporations. Another is the announcement of a consultation process with Canadians before changes to the new “Bill C-208” rules (which are already law) are implemented.

Adding your spouse as a shareholder of your corporation and splitting dividend income could save you tax. But is this still allowed under the rules regarding “tax on split income” (“TOSI”)?

Reviewing the tax results of your plan is necessary to ensure that the distribution is exactly as intended.

A carefully drafted trust in your Will brings the farm rollover back even if you’ve been renting the land out for years.

Planning for Family Farm Corporation shares - Getting the Will and trust drafting right allows a tax deferral and eliminates a “double tax” problem.

Clearing up some common misconceptions about joint ownership and tax.

Tax changes will eliminate an unfair tax burden that has frustrated family business and farm succession plans for many years.

To get the credit, special attention to planning and drafting the spouse trust is required.

The 21st anniversary of your Family Trust may bring you a massive tax bill. Here’s how you can avoid the problem.

Restructuring may be necessary in order to transfer shares to a child using the farm “rollover”.

The $1,000,000 capital gains exemption can be used to extract tax free cash from your farm corporation.

A re-freeze helps by reducing your share values after a decline. Shouldn’t it also reduce punitive “corporate attribution” income?