Offshore investment funds – If you invest through offshore funds, be aware that the previously announced foreign investment entity (FIE) proposals have been essentially eliminated. The enacted rules for offshore investment funds property will continue to apply, with some modifications, for taxation years ending after March 4, 2010. A taxpayer that filed under the FIE proposals for previous years can either have those years reassessed or be entitled to a deduction in the current year for the income previously included. See our Tax Memos “August 27, 2010 Draft Legislation Implements 2010 Budget Proposals and Other Previously Announced Measures” and “2010 Federal Budget: Focus on Fairness.”
Transactions involving trusts –
If you were or will be involved in transfers to or from trusts, contact your PwC adviser for an evaluation of the tax implications. The transfers may trigger a taxable event.
If the trust has non-resident beneficiaries, contact your PwC adviser to assess the tax implications. The existence of a non-resident beneficiary may trigger Canadian and foreign taxes.
Be careful if making a loan to or incurring debts on behalf of a testamentary trust. This could cause the trust to lose that status.
If the trust’s twenty-first anniversary occurs in 2011, consider planning to avoid the deemed disposition of assets at fair market value on the twenty-first anniversary of the trust.
Non-resident trusts (NRTs) – Be aware that the draft NRT rules, which generally are effective for taxation years ending after 2006, have been refined. A trust subject to the draft rules would be considered resident for Canadian income tax purposes if it has a Canadian contributor or a resident beneficiary. See our Tax Memos “August 27, 2010 Draft Legislation Implements 2010 Budget Proposals and Other Previously Announced Measures” and “2010 Federal Budget: Focus on Fairness.”
Foreign accrual property income (FAPI) – If you or your corporation holds 10% or more of the shares of a foreign company, be aware of draft legislation released on December 18, 2009, and further modified on August 27, 2010, that may significantly change the FAPI tax regime. See our Tax Memo “August 27, 2010 Draft Legislation Implements 2010 Budget Proposals and Other Previously Announced Measures.”
Home buyers’ incentives – If you are a first-time home buyer:
withdraw tax-free up to $25,000 from your RRSP, under the Home Buyers’ Plan to acquire a home (also applies to a spousal RRSP); and
claim the First-Time Home Buyers’ Tax Credit (maximum credit is $750) if you purchased a qualifying home to be used as your principal place of residence.
Property tax –
To challenge your property tax bill, you must appeal the property value assessment, which generally is mailed early in the year. Filing deadlines vary by province, are compulsory and usually fall before the property tax bill is mailed.
If you reside in Ontario, be aware that all property owners received a property assessment notice in 2008 based on the property’s value as of January 1, 2008. A property owner will not receive a new assessment notice unless the assessment has changed. This notice will be used to calculate property taxes for the 2009 to 2012 tax years. To challenge your 2008 residential property assessment (used for the 2011 tax bill), you must file a “Request for Reconsideration” with the assessment agency by March 31, 2011. If you are not satisfied with the agency’s response, you can file an appeal within 90 days of the date of the response. On appeal, the onus is on the assessment agency to prove that the assessed value is correct.
Provincial tax incentives – Ensure you benefit from provincial tax incentives and changes to these incentives. For example, determine whether you qualify for:
British Columbia mining flow-through share tax credit – extended to December 31, 2013.
Nova Scotia equity tax credit – maximum annual claim will increase to $17,500 (from $15,000), commencing 2010 and the program is extended to February 29, 2012.
Nova Scotia labour-sponsored venture capital tax credit – extended to February 29, 2012.