Presentation to the Estate Planning Council of Abbotsford on October 16, 2013 by David Christian, a Tax Lawyer with Thorsteinssons LLP Vancouver.

1. PROPOSED CHANGES TO THE TAXATION OF
TESTAMENTARY TRUSTS
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2. CHANGES TO TESTAMENTARY TRUSTS: BACKGROUND
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June 3, 2013 Consultation Paper released by Department of
Finance
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Basic thrust – treat estates and testamentary trusts like inter
vivos trusts after three years
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Submissions requested
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Deadline for submissions is December 2, 2013
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“A consultation is not a poll. Please do not send multiple or
duplicate submissions.”
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3. CHANGES TO TESTAMENTARY TRUSTS:
BACKGROUND
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Testamentary and Grandfathered Inter Vivos Trusts
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Graduated Rates
Changes in Tax Rates 1972 - 2013
Why does the government want to do this?
The estates of most deceased Canadians are finalized and administered in a timely
fashion and without inappropriate tax planning. However, some taxpayers are
using estates and trusts to obtain unintended tax advantages. Eliminating the
tax benefits of graduated rate taxation for trusts and certain estates would
ensure increased fairness and neutrality in the federal income tax system. The
proposed measures would also address the potential growth in tax planning
involving existing rules and the associated impact on the tax base.
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4. CHANGES TO TESTAMENTARY TRUSTS
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What are the changes?
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Three Year Period
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Disabled Beneficiaries
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Certain Trusts for Minors
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Spousal Trusts
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5. RELATED RULES
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Installments
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Alternative Minimum Tax
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Taxation Year

Part XII.2 Tax
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Personal Trust Status
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Investment Tax Credits
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6. CHANGES TO TESTAMENTARY TRUSTS: TAX
ADMINISTRATION RULES
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Rules that extend the period:
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during which the Canada Revenue Agency (CRA) may refund an
overpayment of tax,
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for objecting to a tax assessment,
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for filing an agreement to transfer forgiven amounts under the debt
forgiveness rules, and
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during which, at the trust’s request, the CRA may reassess or make
determinations in respect of certain income tax liabilities.
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7. THE FUTURE
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What happens to existing estates?
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What is the process for change in the law?
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When is this proposed to occur?
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How does planning change?
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