BUDGET 2014: Personal Tax Planning, Part 3

Treaty Shopping

Following recent consultations, the Government is proposing a domestic law that would impact benefits derived from treaty shopping, which would be denied if it is reasonable to conclude that one of the main purposes of the transaction (or series of transactions) was to obtain such benefit from a tax treaty (although a safe-harbour presumption will apply in certain situations where a person carries on an active business in a country with which Canada has a tax treaty).

Gift tax planningCharities and Non-profits 

Estate Planning Donations: The budget proposes that donations made by Will (and certain designated donations) will be deemed to be donations made by the estate, and may be claimed in the taxation year of the estate in which donation is made, an earlier taxation year of the estate or the last two taxation years of the deceased individual.

(Note – the donation must be made within 36 months following the death of the individual.  This will apply for 2016 and subsequent taxation years.)

Donations of Ecologically Sensitive Land: For donations of ecologically sensitive land, or easements, covenants and servitudes on such land made after February 10, 2014, the carry-forward period will be extended to ten years.

Donations of Certified Cultural Property: Gifts of certified cultural property acquired as part of a tax shelter gifting arrangement will no longer be measured at fair market value for the purpose of donation tax credits. Rather, the value of such a gift shall be limited to its cost amount to the donor. This restriction applies to gifts made after February 10, 2014.

Employer source deduction remittances

The Budget proposes to reduce the frequency of remittance of source deductions by certain employers.  Currently, the frequency of remittance of source deductions depends on the employer’s total average monthly withholding amount in preceding calendar years in respect of these source deductions.

Under the Budget proposals, the threshold level of average monthly withholdings for employers required to remit source deductions up to twice per month will be increased to $25,000 from $15,000, while the threshold for those employers required to remit up to four times per month will be increased to $100,000 from $50,000.  This measure will apply to amounts to be withheld after 2014.

Joint ventures

The Ministry of Finance intends to propose new joint venture election measures to simplify the GST/HST accounting obligations for joint venture activities.

The new measures, as well as associated anti-avoidance measures, will allow joint venture participants to make the joint venture election as long as the joint venture’s activities are exclusively commercial and the participants are engaged exclusively in commercial activities.

The Ministry of Finance notes that it will release related draft legislative proposals later in the year for comments.


Samantha Prasad LL.B.

The TaxLetter, MPL Communications Inc.
133 Richmond St.W., Toronto, ON, M5H 3M8. 1-800-804-8846

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