Inter vivos trust – If you are over the age of 64 and live in a province with a high probate fee, consider establishing an inter vivos trust as part of your estate plan.
make a contribution for 2011 by December 31, 2010, and pay any applicable penalty.
Pension income –
Old Age Security (OAS) –
If you no longer receive OAS benefits because your income is too high, consider ways to average or reduce your income so that you can continue to receive this government pension.
If you receive pension income (e.g., from a registered pension plan, registered retirement savings plan or registered retirement income fund), consider allocating up to half of this income to your spouse or common-law partner.
Consider whether the allocation of pension income from a spouse or receipt of “eligible” dividends (subject to a 44% gross-up) will trigger an OAS clawback. Instead of receiving eligible dividends, consider receiving capital gains. Only 50% of the gain is included in income for OAS purposes.
Canada Pension Plan (CPP)/Quebec (QPP) – If you receive CPP or QPP payments, consider splitting that income with your spouse by requesting to share the CPP or QPP payments.
Your RRSP – If you turn 71 in 2010, you must wind up your RRSP by the end of the year. This means that you can:
contribute to your RRSP only until December 31, 2010;
contribute (before the normal March 1, 2011 deadline) to your spouse’s RRSP until the end of the year your spouse reaches age 71, if you have unused RRSP contribution room or earned income in the previous year;
Have $2,000 of pension income if you are age 65 or older so that you can claim the maximum pension credit.
Life income funds (LIFs) – If you own a LIF, be aware that:
in most jurisdictions the options for you to make withdrawals from a LIF have increased (e.g., if you face financial hardship, are age 55 or older, or have been a non-resident of Canada for 24 months); and
in Alberta, Manitoba, New Brunswick and Ontario, special unlocking rules give you access to a portion of your LIF in certain circumstances.
Your RRIF – If your RRIF investments declined in value and you think that the investments will rebound, consider an “in-kind” withdrawal (e.g., transfer to another investment account at your financial institution) to satisfy the RRIF’s minimum withdrawal requirements. Income tax must still be paid on the fair value of the withdrawal.
defer taxes on all or a portion of the amount in your RRSP by transferring the funds to a registered retirement income fund or a life income fund; and
Individuals and Businesses with International Connections
Foreign reporting requirements – Review your foreign holdings to determine if you have a reporting obligation. Individuals, corporations, trusts and partnerships that own specified foreign property with a total cost exceeding $100,000 at any time in the year are required to file form T1135. Taxpayers resident in Canada that own shares of a non-resident corporation that is a foreign affiliate must file an information return (Form T1134). Other forms may also be required.
Non-resident trusts (NRTs) and offshore investment funds – Be aware of proposed modifications to the NRT and offshore investment fund rules. 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.”
Sale of property by non-residents – Be aware that, commencing March 5, 2010, taxable Canadian property will exclude shares of corporations, and certain other interests, that do not derive their value (over a 60-month look-back period) principally from real or immovable property situated in Canada, Canadian resource property or timber resource property. As a result, if you are a non-resident and dispose of such property after March 4, 2010, you or your business will no longer be taxable nor subject to the Canadian clearance certificate requirements.
Electronic commerce – Ensure that your electronic presence in a foreign jurisdiction does not trigger an unexpected foreign tax bill.