CANADA Law and Practice Contributed by: Ian Hull, Suzana Popovic-Montag and Nick Esterbauer, Hull & Hull LLP
dollar bank accounts) to the CRA, which thereafter forwards relevant information to the IRS. Canada has also adopted the OECD’s Common Reporting Standard (CRS) to combat cross-border tax evasion as Part XIX of the Income Tax Act. Hold - ers of accounts with Canadian financial institutions (including corporations) can be required to certify or clarify their residence status for tax purposes and/or produce related documents. Combined with the Mul - tilateral Competent Authority Agreement on Automatic Exchange of Financial Account Information (signed in 2015), the CRS facilitates the exchange of account information with other tax jurisdictions. Canada will adopt the OECD’s Crypto-Asset Report - ing Framework by 2026. This Framework requires crypto-asset service providers to provide mandatory annual reporting related to crypto-asset transactions and customers. In November 2023, legislation was passed that requires the creation of a federal beneficial ownership registry in Canada, applicable to federal corporations. The intent of the registry is to increase transparency and deter financial crimes. Most provinces and ter - ritories already have their own beneficial ownership transparency regimes in place, except Alberta, the Northwest Territories and Nunavut. 2. Succession 2.1 Cultural Considerations in Succession Planning Canada has a range of family structures, including common-law relationships, marriages involving sec - ond spouses (due to either death or divorce), and lone-parent families. Canada’s population is also ageing. As baby boomers die, the largest transition of wealth from one genera - tion to the next is anticipated. However, given that Canadians are also living longer, additional funding for personal care may be needed, resulting in less dis - posable income being available to gift to loved ones.
Technology is prominent in Canada. Individuals of all ages are accumulating digital assets, which should not be neglected when creating or amending estate plans (see 2.7 Transfer of Assets: Digital Assets ). 2.2 International Planning Estate planning should include consideration of where beneficiaries are located and whether benefit - ting foreign beneficiaries with interests in a Canadian estate will expose them, or the estate itself, to taxa - tion or other liabilities that will not apply to bequests to Canadian residents. Each jurisdiction has its own rules relating to estates and the treatment of testa - mentary and inter vivos gifts; just because a transac - tion or corporate interest does not trigger taxation in Canada does not mean that it will be exempt from taxation in another jurisdiction. By way of example, if a testamentary gift is made to an individual living in a region where inheritance tax is payable, it may be While most Canadian jurisdictions recognise testa - mentary freedom, testators’ legal and moral obliga - tions may restrain their right to benefit whomever they choose after death. Moral obligations typically take a backseat to legal obligations. An example of a legal obligation that may restrict tes - tamentary freedom is the requirement for testators to provide for their surviving married spouses upon death. Provincial legislation operates to provide a sur - viving spouse with the opportunity to claim their share of their combined family property, even if there is a will purporting to do otherwise. subject to inheritance tax there. 2.3 Forced Heirship Laws Legislation in British Columbia also recognises the rights of adult children to inherit the assets of their parents’ estates, in the absence of a valid and rational reason not to do so, requiring the courts to consider evidence regarding the reasons for not benefitting family members. Courts are also authorised to make an order varying the distribution of an estate on this basis. In Ontario and other provinces, adult children have no right to benefit from their parents’ estates, although children who are disinherited may be able to seek
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