March 28, 2017
It is a long standing practice for self employed persons with a small business corporation to “sprinkle” income within that corporation amongst family members. This is normally done by issuing difference classes of the corporation shares to each spouse, particularly where the corporation’s business is the source of family income. The spouse who is not involved in the day to day operations is given a class of shares in recognition of their contribution to the family while the other spouse works within the corporate structure. By setting up a corporation in this manner, the business income can be attributed to either spouse depending on their circumstances at the time of distribution of that income. Normally, this would be accomplished through a declaration of dividends by the corporation on shares held by one spouse or the other.
On March 22, 2017, the Federal Budget indicated that this was a practice which would be examined and which could, in the future, be eliminated. Such tax planning processes are generally considered vital to retirement planning for self employed individuals. If you currently have your small business ownership structured in this manner, we would urge you to pay close attention to deliberations by the Government on this issue in the coming weeks.
UPDATE: According to draft rules released in December 2017, the type of corporation, the age of the shareholder, the involvement of the shareholder in the business, the voting rights and percentage of ownership of the shareholder can determine whether the sprinkling of dividends is available.
In addition to these new rules, as a result of the Federal Government Budget 2018, the amount of passive income within a Canadian Controlled Private Corporation (CCPC) could limit the available small business deduction. Additional to this, the amount of passive income eligible for the small business tax rate will also be reduced. The dividend tax credit received from eligible vs non-eligible dividends is to be revised such that a CCPC will only receive a refundable dividend tax on hand (known as a RDTOH) refund only when the dividend declared is non-eligible.
On October 3, 2016, the Federal Government announced new rules that will require you to report the sale of your personal residence on your income tax return commencing with the filing of the 2016 return. This is a departure from past practice where the sale of a personal residence did not require reporting. There is still no requirement to pay capital gains tax on the sale of a personal residence however if you fail to report it, the penalties can be rather steep. The transfer of a personal residence without an actual sale (such as changing it from your home to a rental property or business property) will also need to be reported.
June 26, 2014
We are often asked if will “kits” (or the boxed wills that you can purchase from a stationary store) are valid and the answer is yes provided they are completed in the manner required by the <em>Wills Act</em>, RSNB 1973, c. W-9.
The difficulty is that most people have no idea what the law requires and therefore many of the wills completed with these types of kits are done incorrectly. One example is that a beneficiary generally cannot be a witness to a will and there are specific rules about how a will is signed and witnessed that must be followed. If these rules are not followed, the result is that these wills are not valid and the person dies intestate, without any of their wishes being followed after their death. Often times, the intention in purchasing one of these kits is to save money, but if there is a problem in the way it has been completed there are often much more expensive problems to deal with in the end.
A simple will is not expensive. A lawyer can give you specific legal advice that is particular to your individual needs, and you can rest assured that your last wishes will be followed after your death. Any of our lawyers would be pleased to meet with you to discuss your will and any other of your estate planning needs.
Given the unprecedented length and cold weather that this winter has brought us, many people may be struggling to pay their heating bills. The Province provides some assistance by way of an emergency fuel benefit of up to $550.
Examples of emergency situations (taken from the government website):
• a high heating bill due to the cold, which means that you are not able to pay your rent or mortgage;
• having to choose between feeding your family and paying your winter heating bill; or
• an illness resulting in unexpected high medical costs, which have made it hard to pay your heating bill.
If you’re encountering difficulty paying your heating bill this winter, you can find more information, including how the payment is calculated, on the Province’s website by clicking here
Given March Break is here and many people are planning getaways to warmer locations, it seemed opportune to highlight some of the difficulties that separated parents may have in obtaining passports for their children.
The Canadian Passport Order outlines when parents with children under 16 years old can apply for passports on behalf of their children. Specifically, when parents are separated, the passport may only be issued to the custodial parent. If the parents have joint custody, they must cooperate in obtaining the passport for their child. Generally, the signatures of both parents must be provided on the passport application.
Trouble can occur when there is little cooperation between joint custodial parents or when, for any number of reasons, one parent cannot be located in time to obtain his or her consent for the passport prior to travel. Making the issue more complicated is the Passport Canada requirement that if the non-custodial parent has a specific right of access, he or she must also sign the child’s passport application. Passport Canada requires that you provide all Court orders, agreements or other documents relating to custody and access of a child. Click here to be taken to Passport Canada’s website dealing with Passports for children.
Each situation is very specific on the terms of any agreement or order. If you encounter difficulties in obtaining a passport for your child, our lawyers are able to assist you and can deal with these matters on short notice if necessary. Please do not hesitate to contact one of our family law lawyers should you need assistance on this or any other family law issue.
February 25, 2014
It is that time of year again. The Province of New Brunswick will soon release property tax assessments for 2016. Although generally you ought to receive a paper copy in the mail, you can also check your Tax Bill through this link:
Reviewing your Tax Bill can help you determine if your property is over or under-valued. If you have purchased a new home over the past year or there has been a change of ownership for your home (even between spouses), you should also make sure that you review your Tax Bill to ensure that you are still receiving the Residential Tax Credit.
If you have any questions about your property tax assessment or your property more generally, we would encourage you to contact one of our property lawyers to discuss matters further.
December 30, 2013
Clients often consult with us on whether being in a common-law relationship for a certain length of time means that they have the same rights and obligations as married persons. This is a common misconception as, in fact, particularly when it comes to property, there can be significant differences in the way the law applies to married people and the way it applies to common-law partners. For example, the Marital Property Act in New Brunswick governs the division of property between married persons but it does not apply to common-law spouses, no matter how long they cohabitate.
A common-law spouse who is seeking an interest in property held by the other spouse when their relationship breaks down must demonstrate that the other spouse has been unjustly enriched. He or she must prove they contributed to the acquisition, maintenance, or improvement of the respective property in some manner. The contribution might be financial or might be by way of contributions made toward the upkeep of the parties’ home or childcare.
Differing levels of contribution will therefore result in a different level of entitlement to a share in the property that is in the name of the other party. Some of the factors that will be considered include the length of the relationship and the roles that the parties’ assumed during the relationship. The final conclusion with regards to entitlement will therefore vary in each case.
Our family law lawyers can help you at the beginning of your common-law relationship to create a document to pre-determine ownership upon the breakdown of the relationship. We can also assist in determining the rights and obligations specific to your situation upon the breakdown of your common-law relationship.
You may be having renovations done on your home for which you are being charged Harmonized Sales Tax (HST). You may want to ensure that the person who is collecting HST is actually registered with the Canada Revenue Agency to do so before you pay the bill. The link below will take you to the Canada Revenue Agency’s database of HST registrants and allow you to search and confirm that you should be paying HST to that service provider.
Canada Revenue Agency’s database:
If you have any questions or this or other issues relating to your home, our lawyers can assist you in many ways. Please do not hesitate to contact our office should you have any questions or concerns.