Reporting requirements for trusts:
For 2021 and subsequent tax years, additional information will be required
on trust tax returns (for both domestic and non-resident trusts).
Specifically, disclosure is to be made for all trustees, beneficiaries, and
settlors (including anyone who is able to exert control over trustee
decisions in relation to allocations of trust income or capital, such as a
Protector). Certain trusts are excluded, including graduated rate estates,
qualified disability trusts, non-profit trusts, and registered charities or
trusts that are less than three months old or that generally hold less than
$50,000 worth in assets throughout the year.
New penalties will be introduced for failure to file a T3 with such
information ($25 a day, with a minimum of $100 and a maximum of $2,500
fine). If the failure to file was made knowingly or due to gross
negligence, there is an additional penalty of 5% of the maximum fair market
value of the property held (with a minimum penalty of $2,500).
Although no changes were announced to personal tax rates, the following tax
credits were announced:
* Medical expense tax credit:
the list of eligible expenses has been expanded to include a variety of
expenses relating to service animals for patients with severe mental
impairment (e.g., PTSD).
* Mineral exploration credit: This credit will be extended to
flow-through share agreements entered into on or before March 31, 2019
(this was scheduled to expire on March 31, 2018).
Canada Workers Benefit:
This enhances the current Working Income Tax Benefit, which is intended to
improve work incentives for low-income Canadians for the 2019 year and
onwards. The maximum benefit will be increased by $170, to $1,355 for
individuals without dependents, and to $2,335 for families. Additionally,
the disability supplement will be increased to $700 for 2019. The benefit
will be reduced for single individuals with income in excess of $12,820 and
families with income over $17,025 (and fully eliminated for income at
$24,111 for individuals and $36,483 for families). The benefit can be
determined even when not specifically claimed.
Registered Disability Savings Plan (RDSP):
Currently, there is a temporary measure to permit certain family members
(parents, spouses, or common-law partners) to be the planholder of an RDSP.
This is set to expire at the end of 2018. The budget has extended this
measure to the end of 2023, and if a qualifying member becomes a planholder
before then, they can remain as the planholder after 2023.
Foreign-born status Indians residing legally in Canada (who are neither
Canadian citizens nor permanent residents) will be allowed to be
retroactively eligible for the Canada Child Tax Benefit (from 2005 to June
30, 2016). This benefit was replaced by the Canada Child Benefit introduced
in 2016 (for which such persons were eligible). The budget also gives the
federal government the right to share taxpayer information relating to this
benefit with the provinces and territories as of July 1, 2018.
Currently, upon the revocation of the registration of a charity (whether
voluntary or not), a 100% revocation tax is applied to the charity based on
the total net value of its assets (which can be reduced by the making of
qualifying expenditures). Under the budget, transfers of properties to
municipalities will not be qualifying expenditures, subject to case-by-case
Additionally, donations to a university outside of Canada can be eligible
for a charitable donation credit, even if the university is not listed in
the Income Tax Regulations. Both measures became effective on Feb. 27.
Corporate tax changes.
Samantha Prasad, LL.B., is a Partner with Toronto law firm
Minden Gross LLP, a Meritas Law Firm Worldwide affiliate, and specializes in corporate,
estate, and international tax planning. She writes frequently on tax
issues, and is the co-author of
Tax and Family Business Succession Planning, 3rd Edition. She is also co-editor of various
Wolters Kluwer Ltd. tax publications. Portions of this article first appeared in The TaxLetter, © 2018 by
MPL Communications Ltd. Used with permission.
© 2018 by Fund Library. All rights reserved. Reproduction in whole or in
part by any means without prior written permission is prohibited.
The foregoing is for general information purposes only and is the opinion
of the writer. This information is not intended to provide specific
personalized advice including, without limitation, investment, financial,
legal, accounting or tax advice.