CANADA Law and Practice Contributed by: Ian Hull, Suzana Popovic-Montag and Nick Esterbauer, Hull & Hull LLP
remains an option for Canadian families who wish to limit the rate at which their income is taxed. Seniors remain capable of splitting eligible pension income with a spouse. After the age of 65, withdrawals from registered retirement income funds and life income funds represent eligible income for splitting. 9. Planning for Non-Traditional Families 9.1 Children While adoption is a matter of provincial jurisdiction, Canadian law recognises that adopted children have the same rights as biological children, and that bio - logical children do not have any priority over adopted siblings in respect of child support and/or entitlement to a share in a deceased parent’s estate on intestacy. When a child is adopted, their ties with the biological family are severed and they wholly become a mem - ber of the adoptive family. Adopted children have no rights with regard to the estates of biological parents, although biological parents may leave testamentary bequests to their adopted children. Similarly, children born outside of marriage do not have fewer rights relative to those who are born to married parents. The law, including the federal Child Support Guidelines, does not meaningfully distinguish between children who are natural, adopted or born Same-sex marriage has been recognised in Canada since July 2005, when the Civil Marriage Act, SC 2005, c 33 was introduced. Same-sex married spouses are afforded all of the same rights as heterosexual married spouses in respect of family and estate law. The rights of common-law spouses vary significant - ly by province and territory. While British Columbia, Alberta, Saskatchewan, Manitoba and the Northwest Territories permit common-law partners to assert rights in respect of family property, other provinces and territories do not. As such, it may be advisable for common-law couples to enter cohabitation agree - ments to protect their interests in assets accumulated during the relationship, and to ensure that compre - inside/outside of marriage. 9.2 Same-Sex Marriage
hensive estate plans are in place to benefit a surviving spouse after death.
10. Charitable Planning 10.1 Charitable Giving
Making charitable donations can provide both the charitable cause and the taxpayer with considerable benefits. The recipient of the donation must be a reg - istered charity in order to receive the desired tax sav - ings. Federal tax credits of 15% are received for the first CAD200 of a donation, and 29% is typically received for the value of the donation above CAD200. If an indi - vidual earns taxable income in excess of CAD246,752, a 33% tax credit may apply in respect of the amount of the donation in excess of CAD200 and up to the extent of the donor’s taxable income exceeding CAD246,752. For these reasons, it may be more advantageous to carry forward donations to receive higher tax credits on the funds exceeding the initial CAD200, particularly if the donor’s taxable income is greater than CAD246,752. Donations may also be eli - gible for a provincial or territorial tax credit. Gifting Capital Property Donations to charities need not necessarily consist only of cash. Capital property is another class of asset that many charities will accept, and it may be associ - ated with further tax advantages compared with gifts of funds. When gifting capital property that has increased in val - ue since its acquisition, the taxpayer can receive a tax credit for the full market value of the property without having to pay tax on the related capital gain. By way of example, if stocks or mutual funds are donated to a registered charity, no tax is payable on the increase in value. 10.2 Common Charitable Structures Gifts Pursuant to a Last Will and Testament Naming a charity as a residuary beneficiary of an estate may complicate the administration thereof. In Ontario, for example, legal proceedings involving a registered charity may necessitate the involvement of
95
CHAMBERS.COM
Powered by FlippingBook