Did you know… Less than half of Canadians have a will?

STATISTICS ON WILLS

A January 23, 2018 Advisor.ca article (Half of Canadians don’t have a will: report) cites an Angus Reid Institute report which indicates 51% of Canadians have no will, and only 35% have one that is up to date. Quebec and British Columbia lead the provinces, with 58% and 54% of residents respectively having wills. Less than 50% of residents of all other provinces have wills. This report is also discussed in a January 23, 2018 CTV News article (Majority of Canadians don’t have a will: poll).

For further information see Video Tax News Monthly Tax Update Newsletter, Issue No. 443

Section 55 - CRA is providing Rulings on whether they believe the purpose test is offended.

SECTION 55 – RULINGS ON THE PURPOSE TEST

In a December 5, 2017 Technical Interpretation (2017-0723491C6, Ton-That, Marc), CRA reiterated that while they do not usually issue Advance Income Tax Rulings in primarily factual determinations, they will consider issuing a favourable ruling under Subsection 55(2) where circumstances support the absence of one of the purposesdescribed in Paragraph 55(2.1)(b). CRA also reiterated a comment from 2016 which stated that other than rulings on loss consolidations, they have not been deluged by requests for rulings on this topic.

For further information see Video Tax News Monthly Tax Update Newsletter, Issue No. 442

Life in the Tax Lane - December 2018

This FREE 10-minute video for Canadian Tax Professionals includes rapid-fire discussion of select recent developments in the wonderful world of Canadian tax presented by the Video Tax News Team. 

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Interest Deductibility - Return of capital may impact the deductibility of interest on funds borrowed to finance an investment.

INTEREST DEDUCTIBILITY – RETURN OF CAPITAL

In an April 20, 2018 Tax Court of Canada case (Van Steenis vs. H.M.Q., 2017-3305(IT)I), at issue was whether the taxpayer could deduct interest incurred in 2013, 2014 and 2015 related to $300,000 borrowed in 2007 to purchase mutual funds. From 2007-2015, the taxpayer received a return of capital from the funds, totalling $196,850 over the period. The taxpayer used some proceeds to reduce the loan principal, but the majority was used for personal purposes.

Taxpayer loses
To deduct interest paid on borrowed money used for the purpose of gaining or producing income from property(Paragraph 20(1)(c)):

  • the amount must be paid or payable in the year;

  • the amount must be paid under a legal obligation;

  • the borrowed money must be used for earning non-exempt income from a business or property; and

  • the amount must be reasonable.

The Court examined the third criterion noting that there must be a sufficient direct link between the borrowed money and the current use of the money to gain or produce income from property. As much of the returned capitalwas used for personal purposes, there was no longer a direct link to the income earning purpose. The Court dismissed the appeal and upheld CRA’s denial of interest expense.

For further information see Video Tax News Monthly Tax Update Newsletter, Issue No. 442

Charitable Donation Receipts - Effective March 31, 2019, charities must include the new CRA website on all donation receipts.

DONATION RECEIPTS – NEW INFORMATION REQUIRED

Effective March 31, 2019charities and qualified donees must include the new website address of CRA, www.canada.ca/charities-giving on all donation receipts. This follows the move to the official www.canada.ca website. For all other items required to be included on a donation receipt, see https://www.canada.ca/en/revenue-agency/services/charities-giving/charities/operating-a-registered-charity/issuing-receipts.html.

For further information see Video Tax News Monthly Tax Update Newsletter, Issue No. 442