Submitted by narmstrong on Sun, 01/15/2023 - 21:23
the rule against accumulations can be problematic for lifetime benefit trusts
Under the rule against accumulations in Ontario (and other provinces), any trust income after a specified period (“surplus income”) may not be...
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Principal Issues: Whether a trust established for a dependent mentally-infirm child under a will in a jurisdiction where the rule against accumulation is in force can qualify as an LBT?
Reasons: A trust can qualify as an LBT if the dependent mentally-infirm child is the person legally entitled to the income of the trust after the accumulations period.
Submitted by narmstrong on Mon, 01/23/2023 - 03:52
lump sum RRSP payments to a New Zealand resident are subject to Part XIII tax at a 25% rate
Regarding the Canadian withholding tax rate applicable to lump sum payments from a Canadian registered retirement savings plan (“RRSP”) to a...
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Principales Questions: What is the Canadian withholding tax rate applicable to lump sum RRSP payments to a resident of New Zealand.
Position Adoptée: 25% Canadian withholding tax with no reduced rate pursuant to the Canada-New Zealand Income Tax Convention.
Raisons: The 15% reduced tax rate, pursuant to Article 17 of the current Canada-New Zealand Income Tax Convention (signed on May 3, 2012 and effective August 1, 2015), only applies to periodic pension payments.
employer payments made directly to the insurer rather than through the trustee are acceptable
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Principal Issues: 1) Whether a trust that arranges for the provision of designated employee benefits but is not funded directly by employer contributions may qualify as an employee life and health trust? 2) Whether such employer contributions are deductible irrespective of whether the trust is an employee life and health trust?
Position: 1) Yes, provided that the trust satisfies all of the requirements outlined in paragraph 144.1(2) of the Income Tax Act. 2) Yes.
Reasons: 1) The administration of arrangements for benefit payments is an activity performed in furtherance of the object of providing designated employee benefits. Further the ELHT rules do not explicitly require that an employer make contributions to the trust to fund designated employee benefits. 2) Depending on the circumstances, contributions made by an employer to fund designated employee benefits are deductible pursuant to paragraph 18(1)(a) or under subsection 144.1(4) of the Act.
