TOMPKINSights – Tompkins Insurance

Roll-over of life insurance to a child – it’s a thing!

For a primer on the ins and outs of the rollover for transfers of a life insurance policy to a child.

Post-mortem planning – Some updates

For an update on recent post-mortem planning items and a reminder that life insurance can fund tax liabilities arising in respect of owning private company shares on death.

Capital gains inclusion rate details – Thinking about the long term

The details of the capital gains inclusion rate increase are out. No big surprises. Think beyond June 25 and asses the long term impacts. Your clients might need more insurance.

The increased capital gains inclusion rate – Quantifying the hit

The proposed new capital gains inclusion rate will result in a difference of 8.56 percentage points. Is the actual impact 8.56% or is it 32%?

Alternative minimum tax – Where are we now?

Life insurance is a unique asset that has many favourable tax characteristics. In general, these characteristics are not in and of themselves a problem for AMT.

2024 Federal budget – Reflections on the increase to the capital gains inclusion rate through an insurance lens

By now you’ve read the 2024 Federal Budget summaries and digested some of the impacts. Here is what we think about the capital gains inclusion rate changes, looking through a distinctly insurance-focused lens.

Roll-out of life insurance policy from a trust – Undisturbed

Prior CRA commentary regarding the roll out to a capital beneficiary of life insurance at cost is undisturbed by recent commentary relating to the transfer of a life insurance policy as a dividend in-kind via a trust.

The new GAAR is already getting warmer

More good news from the CRA on the new GAAR. Common tax and estate planning transactions that were not GAAR-able before are not going to be GAAR-able now.

Post-mortem pipelines under the new GAAR are OK

The CRA has confirmed that it does not see post-mortem pipeline planning as a misuse or abuse under the new GAAR and will continue to issue favourable rulings. Life insurance in conjunction with post-mortem pipeline planning not only provides the…

Avoiding the 21-year rule? – Be notified

Certain tax planning to avoid the 21-year rule must be reported to the CRA and in their view, subject to GAAR. Consider using life insurance to solve for problems this planning is meant to address.

Employee Ownership Trusts – An unchartered option for sale of business in Canada

Proposed tax measures provide a framework for a new business succession planning option. Will Employee Ownership Trusts take hold in Canada as a viable sale of business option?

Holdco and Sisterco owners of life insurance with Opco as beneficiary results in shareholder and indirect benefits

In the case of Gestion M.-A. Roy Inc. et al, the Federal Court of Appeal affirmed the reasoning of the Tax Court to include the amount of premiums paid by Opco in respect of policies owned by Holdco and Sisterco…

Imperfect conduit – Transfer of a life insurance policy as a dividend-in-kind via a trust

Trusts are not perfect conduits. Dividends received in-kind by a connected corporation that is a beneficiary of a trust maintain their character as inter-corporate dividends but on the disposition of the property itself, differences in tax consequences come to light.…

Tax Legislation tabled – Some highlights

Bill C-59 implementing many measures from the 2023 Federal Budget is in progress. Here are our comments on some of the highlights.

Absurdly problematic – Life interest trusts and corporate-owned life insurance

The CRA has confirmed its prior comments that corporate-owned life insurance could taint a spousal trust and impact a rollover of capital property to the trust. Problematic? Yes. Absurd? Yes.

What does life insurance have to do with proposed intergenerational business transfers? – Lots

The business succession tsunami (See: Succession Tsunami: Preparing for a decade of small business transitions in Canada (cfib-fcei.ca) expected in the next decade in Canada should not come as a surprise. Demographic factors, growth in business values, and yes, even…

A new GAAR – Pretty chilly right now

On August 4, 2023, the Department of Finance released revised draft legislation (“the proposals”) that would amend the general anti-avoidance rule (GAAR) in the Income Tax Act (the Act). Given the very short comment period ending on September 8, it…

Looking back and looking forward

Over the past 30 years the acceptance and deployment of life insurance within estate and business succession planning has blossomed. In large part, we attribute this increased utilization to a greater understanding of the unique tax and legal attributes of…

ABOUT THE AUTHOR:

Florence Marino B.A., LL.B., TEP

Florence is a co-editor of the Canadian Taxation of Life Insurance, currently in its 12th edition and Editor-in-Chief of Insurance Planning, both published by Thomson Reuters. She is a member of the Canadian Tax Foundation, Society of Trust & Estate Practitioners and the Conference for Advanced Life Underwriting. Florence is a frequent speaker and author at these and many other organizations.

If you wish to reach Florence, please email florence@tompkinsinsurance.com