Small Business Taxes

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

Reporting the Sale of a Personal Residence

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.

Will “Kits”

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 Wills Act, 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.

2016 Property Tax Assessments

Sold HomeIt 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:

Property Assessment Information

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.

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HST Registrant Database

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. Continue reading

Rights and Obligations of Common-Law Spouses

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.
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The material on our website is intended to provide general legal information only. Links to third-party websites are provided for convenience only and we do not guarantee the completeness or accuracy of the information provided by those websites. Do not, under any circumstances, rely on information found on our website as legal advice. Legal matters are often complicated and unique to each individual situation. For assistance with your specific legal problem or enquiry please contact one of our knowledgeable lawyers, any of whom will be pleased to assist you.