Posts by Nicholas dePencier Wright

CRA Increasing Global Enforcement

Taxform, cc Flickr craigstoronto, modified, https://creativecommons.org/licenses/by/2.0/

We live in a world of rootless capital, where finance flows readily across borders. Many businesses operate internationally with resulting assets held in multiple jurisdictions. These intricate, globe-straddling financial portfolios have been the bane of tax authorities, tasked with monitoring and enforcing tax liabilities on assets held abroad. Blind spots – jurisdictions that the authorities…

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Restrictions on Political Activities for Charities Struck Down

Canadian tax law, cc Flickr Rebecca Siegel, modified, https://creativecommons.org/licenses/by/2.0/

Canadian Charities take note: a fundamental shift has occurred in how the Canada Revenue Agency regulates political activities, one that may significantly change the way that charities engaged in non-partisan political activities structure themselves and operate. Though punctuated by the Trudeau government’s recent decision to drop its appeal against a 2018 court ruling that struck…

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Ontario Offering Memorandum Exemption a Win-Win

Toonie, cc Flickr Carol VanHook, modified, https://creativecommons.org/licenses/by-sa/2.0/

One of the most significant regulatory developments of the past few years regards changes to offering memorandum exceptions, and every Canadian business owner and investor should be aware of how these new rules work.   In 2016, a set of new amendments from provincial securities regulators came into force. They introduced an offering memorandum prospectus…

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Estate Freezes

Deer

Estate freezes are used by family business owners to facilitate the transfer of a business from one generation to the next while taking advantage of available tax deductions and incentives. They are generally structured to minimize capital gains tax and probate fees and to take advantage of dividend sprinkling to income split among family members,…

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S.85 Tax Exempt Transfer to a Corp

Cherry blossoms

Section 85 of the Income Tax Act is a commonly used provision that permits the tax exempt transfer of property to a corporation. This paper provides an overview of the application of the section covering key topics including the general rules of section 85, eligible property, consideration or “boot,” anti-abuse rules, requisite filings and other…

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NAFTA Domestic Tax as Trade Subsidy

Mexican Farmer

This paper argues that North American Free Trade Agreement (NAFTA) renegotiation and amendment should be used to define and restrict domestic tax provisions improperly used as indirect trade subsidies or tariffs. In doing so the Canadian foreign affiliate rules and the proposed US border adjustment tax are examined. Download the full paper here: Nick Wright…

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Canada-Barbados Tax Treaty

Barbados Beach

This paper explains how to use the Canada-Barbados Tax Treaty to avoid Canadian tax on international business income. Download the full paper here: Nick Wright Canada Barbados Tax Treaty Controversy & Reform 161228 This article and the contents herein are for informational purposes only and do not constitute legal advice. Readers are advised to seek…

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US Real Estate Tax Issues

Bee

This paper provides an overview of relevant tax considerations when a Canadian resident is purchasing US real estate and discusses different ways to structure a purchase to minimize tax exposure. Download the full paper here: Nick Wright Tax Considerations when Purchasing American Real Estate 160906 This article and the contents herein are for informational purposes…

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Using a Family Trust in Business

Blue Bird in Tree

The discretionary family trust is a tool used by some business owners to reduce tax liability and increase flexibility in the family economic unit by facilitating tax-favourable distribution of funds, business succession and estate planning. Using a discretionary family trust to hold shares in a private company can have significant tax and planning benefits. This…

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Business Sale Tax Considerations

Pink Flower

The purchase and sale of a private incorporated company in Canada raises a variety of important tax considerations. This paper provides an overview and analysis of such considerations and argues that the clear public policy objective of promoting small business in Canada using provisions of the Income Tax Act has been undermined by an unnecessarily…

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Marijuana Businesses in Canada

Cannabis Plant

On June 24, 2015, prompted by both the federal government’s pledge to legalize possession of marijuana for recreational purposes, and the growing number of marijuana-related businesses in the city, Vancouver became the first city in Canada to create by-laws regulating marijuana-related businesses. Marijuana businesses in Ontario have become more common but are currently unregulated at…

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Share Sale or Corporate Redemption?

Cherries on Branch

Frequently when restructuring a closely held private corporation shareholders must decide whether to transfer shares from one shareholder to another with a share purchase and sale or to have the corporation redeem (i.e. buy back) the shares from the shareholder, resulting in a reduction in the total number of issued and outstanding shares and increased…

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CRA Voluntary Disclosure Program

Cardinal in Early Spring

The Canada Revenue Agency’s Voluntary Disclosure Program promotes voluntary compliance with Canada’s tax laws by encouraging taxpayers to come forward and correct deficiencies in their tax filings on a penalty exempt basis. This paper provides an overview of the existing Voluntary Disclosure Program, analyses the programs current use and argues in favour of amendments to…

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The Due Diligence Defence

Chain Lock

What is due diligence and why is it important? “Due diligence” is a context-specific determination referring to the level of judgment, care, prudence, determination, and activity with which a person would reasonably be expected to act. In business dealings, establishing due diligence – that you, as either an officer or a director of the corporation…

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How to Set up a Co-operative

Muskoka Lake

A cooperative or “co-op” refers to an incorporated business organization owned by members sharing common needs or goals. Incorporation presents a number of advantages to its members, namely the co-op’s separate legal existence, limited liability for the members, and general agreement to basic principles on how the organization will operate.

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The Decline of the Successful Tax Shelter

Sunflower

This essay reviews the Income Tax Act (Canada) (the “Act”) tax shelter provisions and provides an overview of relevant issues to demonstrate that despite criticisms that the provisions and Canada Revenue Agency (“CRA”) enforcement are overreaching, it has been successful in prohibiting, preventing and reassessing participants in aggressive tax shelter programs. It argues that issues…

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Buying or Selling a Business? Read This

Daisies

There are two main ways to buy or sell an incorporated business: buying and selling its assets or buying and selling its shares. An asset purchase and sale consists of selling the corporation’s tangible (e.g. inventory and equipment) and intangible (e.g. goodwill and intellectual property) assets. Buyers often prefer asset sale transactions because business liabilities…

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How to Register a Charity

Wild Ferns

In common usage, the word ‘charity’ is often used to refer to any not-for-profit organization. However, legally, registered charities and non-registered not-for-profit organizations are treated differently for tax purposes in important ways. While not-for-profits are generally exempt from income tax, registered charities have broader tax exemptions including the ability to issue charitable tax receipts to…

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Income Tax General Anti-Avoidance Rule

Pasture

This paper provides an overview of the Canadian General Anti-Avoidance Rule (“GAAR”) including its history, legislative intent, implementation, resulting policy issues and judicial treatment. It argues that GAAR is vague, contrary to the doctrine of legal certainty and grants broad discretion to the government bodies tasked with its review and enforcement. While judicial treatment of…

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Shareholder Agreements: A Primer

Cabbage

What is a shareholder agreement? A shareholder agreement is an agreement between the shareholders of a corporation establishing the rights of the company’s shareholders as well as the management of the corporation. Why is it important to have a shareholder agreement? The shareholder agreement is intended to ensure that shareholders are treated fairly and that…

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Professional Incorporation in Ontario

Beach Pebbles

What is professional incorporation? Professional incorporation allows regulated professionals to offer their professional services (as well as any related or ancillary services) while enjoying many of the tax (deferring tax, small business exemptions, etc.) and non-tax advantages available to other incorporated self-employed individuals. Who qualifies as a ‘regulated professional’? The professions eligible for professional incorporation…

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Why to Register your Copyrights

Cocoon Tree

What is a copyright? S. 3 of the Copyright Act explains that ‘copyright’ refers to the sole right to produce or reproduce a work or a substantial part of it in any form. It encompasses the right to perform the work, or publish the work, if the work is unpublished. Copyright covers original works including…

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Protecting Your IP Checklist

Checklist Pen

If you’re ready to protect your Intellectual Property, use this checklist to ensure you’re taking all the necessary steps to secure your copyrights and trademarks. If you are still unsure about the reasons to trademark or copyright your IP make sure to read the previous articles, 5 Reasons to Trademark Your Business Name & Logo…

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5 Reasons to Trademark Your Logo

Forest Path

In Canada, trademarks may be registered or unregistered. Trademark registration is governed by the federal Trade-Marks Act. The Trade-Marks Act establishes a regime under which applicants apply to have their trademarks registered into the Register of Trademarks, the record of all formally applied for and registered trademarks in Canada. There are many reasons why registering…

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Transitioning Your Ontario Not-For-Profit

Field

The Ontario Not-for-Profit Corporations Act, 2010, SO 2010, c 15 (“ONCA”)[1] is expected to come into force after 2015[2], at a yet to be determined date. Every not-for-profit (“NFP”) incorporated under an act of the Ontario legislature, including the current Ontario Corporations Act (“CA”) should ensure compliance with the new legislation. NFPs are corporations without…

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Transitioning Your Federal Not-For-Profit

Coffee

The Canada Not-for-profit Corporations Act, SC 2009, c 23 (“NFP Act”) came into force October 17, 2011 and replaces Part II of the Canada Corporations Act, RSC 1970, c C-32 (“CCA”). To avoid dissolution, all federally incorporated not-for-profits (“NFPs”) will have to transition to the NFP Act prior to October 17, 2014. Until this transition…

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Raising Money for your Corporation

Hawthorn Berries

Prior to reading this article see the previous articles on How to Organize your Ontario Business and on How to Incorporate in Ontario. Once a corporation has been incorporated and organized, entrepreneurs that cannot fund things on their own often turn their minds to how to finance the company. Broadly speaking a corporation can procure…

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Structuring your Equity Offering

Morning Jog

Prior to reading this article see the previous articles on How to Organize your Ontario Business, How to Incorporate in Ontario and Raising Money for your Corporation. When setting up a new corporation and/or preparing for an initial equity offering one important consideration is the share structure that will be used for the company. One…

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How to Organize your Ontario Business

Forest Floor

Business owners often have questions about how to organize their business and whether or not it is appropriate for them to incorporate. An understanding of the different ways a business can be structured is necessary to decide what is appropriate for your business and its needs. In Ontario a business can be organized in one…

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How to Incorporate in Ontario

Queens Park

If you aren’t sure if incorporation is appropriate for your business, read ‘How to Organize your Business in Ontario’. A corporation is a separate legal entity set up for the purpose of carrying on business. It limits the liability of the business owners and can be used to defer and reduce taxable income. A corporation…

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