SimpsonWigle Law LLP Tax News

Two unrelated individuals each own 50% of a corporation. If the daughter of one of them is an employee of the corporation, does she deal with it at arm’s length for the purposes of subsection 5(2) of the Employment Insurance Act (Canada)? 5119235 Manitoba Inc. v MNR, 2011 TCC 494, says she’s not if she and the corporate employer are “acting in concert”. Apparently they are acting in concert if the daughter works overtime and isn’t paid extra for it, or customers make complaints about her work, but the employer does little or nothing about it.

For the purposes of section 160 of the Income Tax Act, it does not matter whether the transferor or transferee knows that the transferor owes tax at the time of the transfer. What they intend to accomplish by making the transfer is irrelevant as well. In both cases, section 160 will apply, if its other conditions are satisfied. But what about the case where the transferor purports to transfer property to the transferee without her knowledge or consent. In Leclair v Canada, 2011 TCC 323 the court held that section 160 did not apply in those circumstances. Continue reading →

If you teach at a private school, and the school offers your children discounted tuition as part of your compensation package, what is the value of the benefit that must be included in your income for the purposes of the Income Tax Act? In Spence v. The Queen, 2010 TCC 455, the Tax Court felt bound to conclude that the benefit should be measured as the difference between the cost to the school of providing the education and the discounted tuition. The Federal Court of Appeal has overturned this decision on the basis that the value of the benefit—the amount to be included in the employee’s income for tax purposes—should be the fair market value of the benefit conferred less the tuition actually paid, where the fair market value is measured by what parents who aren’t teachers would pay to send their kids to the school. See Canada v. Spence, 2011 FCA 200.

When the patriarch or matriarch of a family decides to implement a freeze it is quite common for him or her to insist that the gift of the growth shares be excluded from net family property for the purposes of the Family Law Act (Ontario). Are such exclusions effective? McNamee v McNamee, 2011 ONCA 533, illustrates well why lawyers must emphasize to clients that the answer is still a definite “maybe”. Continue reading →