CANADA Law and Practice Contributed by: Ian Hull, Suzana Popovic-Montag and Nick Esterbauer, Hull & Hull LLP
ing in Ontario. As of 1 January 2025, a 10% NRST also applies to the purchase of residential properties in Toronto. In specific regions of British Columbia, including Van - couver, an NRST of 20% is payable. There is also a 10% non-resident deed transfer tax in Nova Scotia, increased from 5% as of 1 April 2025, which applies to residential properties if the purchaser does not move to the province within six months. As of 1 January 2023, non-citizens and non-residents may not purchase residential property within Cana - dian metropolitan areas until 1 January 2027, although there are exceptions for temporary residents, work permit holders, refugees, and non-Canadian spouses and common-law partners. The prohibition also does not apply to vacant land. Furthermore, the federal government enacted a 1% nationwide tax on vacant property owned by non-res - ident non-Canadians, which came into effect in June 2022. British Columbia also requires non-residents to pay a similar vacant home tax of 2%. 1.5 Stability of Tax Laws Income Tax The overarching tax legislation in Canada is the Income Tax Act, which has been in force since 1 January 1949. While the Income Tax Act appears to be permanent, the way Canadians are taxed tends to change incrementally each year as a result of changes to the law implemented through the federal budget and other bills. Common Practices to Limit Tax Payable on Death Practices to limit or altogether avoid triggering the payment of estate administration taxes are a com - mon feature of estate planning in Canada. Multiple wills In order to avoid the payment of probate fees on all assets being distributed in accordance with one’s estate plan, many clients will use multiple wills. Often, a primary last will addresses the distribution of real property and/or other assets for which a grant of probate is required, whereas a secondary last will addresses the distribution of all other assets of a per -
son’s estate. A tertiary last will may also be used to deal with a person’s corporate interests. The authority of an estate trustee named in multiple wills to distribute assets in accordance with a will not admitted to probate will typically be recognised if they have been issued a grant of probate in respect of one Another common mechanism for transferring assets without exposing an estate to probate fees is the use of joint ownership. Assets that are owned jointly will pass by right of survivorship to a surviving joint owner. When an estate plan includes joint ownership, it is important that the testator’s intention to provide ben - eficial ownership to the joint holder of the property is clearly expressed. If assets pass to the testator’s adult child by right of survivorship, those assets will be impressed with a resulting trust in favour of the estate under the common law, unless there is evidence of an intention to gift the beneficial interest in the property to the survivor. Beneficiary designations Beneficiary designations allow certain types of assets to “pass outside” of an estate to the intended benefi - ciary, without being distributed in accordance with a testamentary document that is admitted to probate and triggers estate administration tax. Life insurance policies, tax-free savings accounts and RRSPs are some of the assets that may be distributed using beneficiary designations. Tax benefits may be related to naming a married or common-law spouse as the designated beneficiary for a registered savings plan. 1.6 Transparency and Increased Global Reporting Canada is part of the growing list of countries that have entered into the Foreign Account Tax Compli - ance Act Intergovernmental Agreement (FATCA IGA), which is designed to increase disclosure by other gov - ernment revenue services to the US Internal Revenue Service (IRS). Currently, the FATCA IGA relieves the CRA from direct compliance with FATCA and instead requires domestic banks to report accounts with US indicia (such as American-born account holders or US of the other wills. Joint ownership
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