Changes to the Taxation of Estates and Testamentary Trusts · Changes to the Taxation of Estates...
Transcript of Changes to the Taxation of Estates and Testamentary Trusts · Changes to the Taxation of Estates...
Changes to the Taxation of Estates and Testamentary Trusts
Post Mortem Planning for Private Corporation Shares – Page 7Whose Mistake? Part II – Page 11
2 STEPInside•FEBRUARY2015•VOLUME14NO.1
STEP Inside
EDITORIALBOARD
Christine Van Cauwenberghe, ChairKaty Basi
Bernadette Dietrich Paul FesterygaElena Hoffstein
Joyce Lee Barbara Novek
Shamim PanchbhayaMarina Panourgias
Corina Weigl
STEP Inside is published three times a year by the Society of Trust and Estate Practitioners (Canada), an organization of individuals from the legal, accounting, corporate trust and related professions who are involved, at a specialist level, with the planning, creation, manage-ment of and accounting for trusts and estates, executorship administration and relatedtaxes.STEPCanadahasbranchesintheAtlanticregion,Montreal.Ottawa,Toronto, Winnipeg, Edmonton, Calgary, andVancouver;andtwonewlyformedchaptersinLondonandSouthwesternOntarioandtheOkanaganValley.
ArticlesappearinginSTEP Inside do not necessarily represent the policies of STEPCanadaandreadersshouldseekthe advice of a suitably qualified profes-sionalbeforetakinganyactioninreli-ance upon the information contained in thispublication.
Allenquiries,commentsandcorrespon-dence may be directed to:
STEP CanadaOneRichmondStreetWest,
Suite700Toronto,ON,M5H3W4
www.step.ca
Tel416-491-4949 Fax416-491-9499
Copyright©2015SocietyofTrustandEstate Practitioners (Canada)
ISSN:14960737
Poor Process and Problematic Legislation Go Hand In Hand
TheproposedfederaltaxlegislationdatedAugust29,2014,whichwas
subsequentlytabledasBillC-43(theproposals),willsignificantlychange
therulesregardingthetaxationoftrusts.Theseproposalswillcreatediffi-
cult practical problems, including those that arise in the context of second
marriages.Whilewerecommendthatprofessionaladviserspaycloseatten-
tiontothemanydiscussionsabouttheproposalsthatwilltakeplaceinthe
comingmonths,wefocusourcommentaryhereontheconsultativeprocess.
Consultation concerning policy and technical matters is the cornerstone
oftheCanadianself-assessmenttaxationsystem.Arguably,agovernment’s
failure to support appropriate consultation is tantamount to taxation with-
outrepresentation.Realrepresentationonsignificantandcomplicated
technicalmatterscannotemanatefromthepoliticalprocessalone;itmust
alsoarisefromtheworkofgroupswithspecializedtaxexpertise.Thesocial
contractmandatesthattheDepartmentofFinanceconsidersubmissions
fromqualifiedexperts.
Inamere30days,STEPCanada(throughtheeffortsofacommittee
chaired by Pamela Cross) and other organizations (including the Joint Com-
mitteeonTaxationoftheCanadianBarAssociationandtheCharteredPro-
fessionalAccountantsofCanada)providedthoughtfulandexpertanalysisof
theproposals.Giventhetechnicalproblemsthattheproposalswillcreate,
somepractitionersandcommentatorshavesuggestedthatboththe30-day
timeframeandthedepartment’sresponsetosubmissionswereinadequate.
Thedepartment’sresponse,thoughperhapsinadequate,mayhave
beenaffectedbytimingandadministrativeconcerns.A60-to-90-day
period has been suggested as the minimum time frame for useful con-
sultation: brief enough to focus attention but lengthy enough to allow for
technicaladjustmentsbythedepartment.Aspractitioners,weknowthat
thedraftingoflegislationrequiresdetailedandthoughtfulconsideration.
The implications of particular turns of phrase, whether emanating from
theDepartmentofFinanceorfromindustry,arenotalwaysimmediately
apparent.(Asaresultoftheconsultativeprocess,sometechnicaladjust-
ments to the foreign affiliate dumping rules were adopted, and other mat-
terswereaddressed,ifnotentirelysatisfactorily,inthetechnicalnotes.)
The substantive corrections that we have suggested will be as valid a
year from now as they are today, and we hope that the considerable efforts
expended during the consultative process, both by the department and by
industry,willeventuallyleadtotheappropriateamendments.Ourother
hope,however,isthattheDepartmentofFinanceandindustryhavenow
become aware of the need for a more meaningful time frame for consulta-
tion.Clearly,30daysisnotenough.Bothtaxpayersandthedepartment
deservea60-to-90-dayconsultativeperiod,duringwhichlastingbenefits
canbeproducedforallconcerned.
PaMELa CroSS, TEP
Partner, Borden Ladner Gervais LLP;
Secretary, STEP Canada; Member,
STEP Ottawa
PauL TayLor, TEP
Associate, Borden Ladner Gervais LLP;
Member, STEP Ottawa
OnDecember17,2014,Bill
C-43receivedroyalassent,
ushering in a new era of estate
planning with proposed changes to the
IncomeTaxAct.Ingeneral,testament-
ary trusts will be subject to flat top
rate taxation at the highest marginal
rate, rather than at graduated rates,
asiscurrentlythecase.However,the
legislative amendments were intro-
duced with a number of unexpected
and previously unannounced meas-
ures that will have a significant impact
on post mortem planning that relates
to private company shares, charitable
donations made on death, planning for
beneficiaries with disabilities, and very
common planning using life interest
trusts (spousal trusts, alter ego trusts,
joint spousal trusts, and joint common-
lawpartnertrusts).Thekeyfeatures
of the new rules, which will apply as
ofJanuary1,2016,aresummarized
below.
Taxation of Testamentary TrustsBeginninginthe2016taxationyear,
existing and future testamentary
trusts, other than graduated rate
estates(GREs),whicharediscussed
below, will be subject to the same
rules that currently apply to inter vivos
trusts.Insummary,thefollowingbene-
fits will no longer be available to testa-
mentarytrusts,unlesstheyareGREs:
1. Ability to use graduated tax rates.
Testamentary trusts will be sub-
ject to the highest federal tax rate,
whichiscurrently29percent.The
provinces will probably align their
tax legislation accordingly, result-
ing in an effective combined tax
ratethatapproaches50percent
inmanyprovinces.Qualifieddis-
abilitytrusts(QDTs),whichare
discussed below, will continue to
be able to use graduated rates to a
certainextent.
2. Exemption from remitting tax instal-
ments.
3. Exemption from alternative mini-
mum tax.
4. Ability to allocate investment tax
credits to beneficiaries.
5. Ability to have a non-calendar year-
end.
6. Extended period for filing a notice
of objection to a tax assessment.
Testamentary trusts will be
required to file a notice of objec-
tionwithin90daysofreceiving
thenoticeofassessment.
7. Relief from the application of the
stop-loss rules. This relief allows
forcertainlosscarrybackpost
mortem planning to avoid double
taxationwhenthedeceased’s
assets include private company
shares.
8. Increased flexibility in claiming tax
credits associated with charitable
donations on death.
Existing testamentary trusts
thatdonotqualifyasGREswill
have a deemed year-end on
December31,2015,whichmay
result in two fiscal periods in
2015.Forplanningpurposes,
it may be advisable to trigger
incomeorgainsin2015tomake
use of the last year in which grad-
uatedrateswillbeavailable.
Graduated rate EstatesGREsmaycontinuetoobtainthebene-
fits, described above, that are currently
availabletoalltestamentarytrusts.A
GREisdefinedasanestatethatarose
on and as a consequence of the death
of an individual if:
1. nomorethan36monthshave
passed since the date of death,
STEPInside•FEBRUARY2015•VOLUME14NO.1 3
Changes to the Taxation of Estates, Testamentary Trusts and Life Interest Trusts
As long anticipated, testamentary trusts will generally be subject to flat top rate taxation
at the highest marginal rate, rather than at graduated rates as is currently the case.
2. the estate is a testamentary trust
undertheIncomeTaxAct,
3. the estate designates itself as
aGREinitsfirsttaxreturnthat
endsafter2015(itisunclear
whether late designations will be
permitted),
4. no other estate designates itself
asaGREofthedeceasedindi-
vidual, and
5. thedeceasedindividual’ssocial
insurancenumberisprovided.
OnlyanestatecanqualifyasaGRE.
Generally speaking,adeceased’s
estate exists during the period of time
in which the executor deals with the
deceased’sassetsbeforedistribut-
ing them to beneficiaries (or to trusts
establishedunderthedeceased’swill).
It appears that neither a testamentary
trust established under a will nor an
insurance testamentary trust (whether
established under a will or otherwise)
canqualifyasaGRE.Totheextentthat
anestatetakesmorethan36months
to administer – as a result of estate
litigation or the existence of complex
assets–theGRElosesthebenefitsset
outabove.Atthetimethatanestate
ceasestoqualifyasaGRE(whether
becausethe36-monthperiodexpires
orbecausetheGREceasestoqualify
as a testamentary trust), a deemed
taxationyear-endwillbetriggered.
EstatesinexistenceonJanuary1,2016
mayqualifyasGREs,providedthatall
oftheaboveconditionsaremet.For
example, the estate of an individual
whodiesin2015mayqualifyasaGRE
until the third anniversary of the indi-
vidual’sdeath.
If a deceased individual held private
company shares and post mortem loss
carrybackplanningisdesirable,itwill
be necessary in many cases to ensure
thattheestatequalifiesasaGRE.Itis
not uncommon for individuals to use a
combination of vehicles, such as mul-
tiple wills (which are often used to deal
with multijurisdictional assets or to
facilitate the administration of estate
assets without court proceedings) or
insurancetrusts.Anysuchplanning
should be reviewed in light of the new
rules because it may be necessary for
thesevehiclestoqualifyasaGRE,and
modifications to current planning may
be required to ensure that there is one
estatethatiseligiblefortheGREdesig-
nation.Planningmaybefurthercompli-
cated when it is desirable, for non-tax
reasons, to appoint different executors
ortrusteestodealwithdifferentassets.
Changes to the rules regarding Charitable GiftsCurrently, gifts to qualified donees
made “by will” are deemed to be made
immediatelybeforeanindividual’s
death.Thetaxcreditcanbeusedin
the year of death (reducing taxes trig-
gered by the deemed disposition on
death)orcarriedbacktotheimmedi-
atelyprecedingyear.Thisregimemet
with criticism because unused credits
could not be carried forward and used
bythedeceased’sestate,andbecause
4 STEPInside•FEBRUARY2015•VOLUME14NO.1
the requirement that the gift be made
by will created some confusion and
uncertainty in drafting donation pro-
visions that ensured that the credit was
available to the appropriate taxpayer
atthedesiredtime.
The new rules significantly change the
way in which donations on death will be
treatedfortaxpurposes.Giftsmadeby
will, made by beneficiary designation
gifts, and gifts made by an estate will
all be deemed to be made by the estate
at the time that the property is actually
transferredtothecharity.Thevalueof
the gift will be the value at the time of the
donation.Theestatecancarryforward
theunusedtaxcreditforfiveyears.
Special rules will apply to gifts
madebyestatesthatqualifyasGREs
atthetimeofthedonation.Inthese
cases,thecreditcanbeclaimed(1)
by the deceased individual in the year
of death or the immediately preced-
ingyear,(2)bytheGREintheyearof
the donation or any prior year of the
GRE,or(3)bytheGREinanyofits
next five taxation years (provided that
itremainsinexistence).Theserules
increase flexibility in maximizing the
taxcreditsavailable.Theexemption
from capital gains for publicly traded
securities will continue to apply to gifts
madebyGREs,resultinginnodeemed
disposition immediately before death,
provided that the securities are subse-
quently donated to a qualified donee
bytheGRE.
Althoughthenewruleswillalleviate
the issue of unused tax credits in cer-
tain situations, many existing plans
maynolongerbetax-efficient.For
example, gifts made by an alter ego,
joint partner, or spousal trust (after the
death of the settlor or spouse) can no
longer be used to shelter the gain trig-
geredinthetrustondeath.Asaresult
of(1)proposedchangesdiscussed
below that will, first, trigger a year-
end in the trust at the end of the day
on which the settlor or spouse, as the
case may be, dies and, second, deem
the income for this tax year to be pay-
able to the settlor or spouse, and (2)
the fact that the charitable donation
will not be made by the trust until a
later tax year, it will not be possible for
thetrusttocarrybackthecharitable
tax credit to shelter the tax triggered
asaresultofthedeath.
Qualified Disability TrustsTheQDTregimecreatesanexception
to the taxation of testamentary trusts
atthehighestmarginalrate.Inorder
foratrusttobeaQDT,
1. the trust must be a testamentary
trust (created by will or through a
beneficiary designation),
2. the trust must be resident in
Canada for the year,
3. the trust must jointly elect with
one or more of the beneficiaries
(the electing beneficiary) who are
named under the will or benefi-
ciary designation trust,
4. the electing beneficiary must
qualify for the disability tax credit,
and
5. the electing beneficiary cannot
have made the joint election with
anyothertrust.
There does not appear to be any relief
intheeventofalateelection.Accord-
ingly, it will be important for a trustee
ofatrustthatiseligibletobeaQDT
to ensure that the proper joint elec-
tion is filed in a timely manner by the
trustee and the disabled beneficiary
or, if appropriate, his or her guard-
ian.Thisfilingrequirementmaycause
some complications because many
individualswithdisabilitieswholack
mental capacity may not have court-
appointed guardians and accordingly
will be unable to file the joint election
untilsuchaguardianisappointed.
ThelimitofoneQDTperdisabled
beneficiary means that only one trust
established for the disabled benefici-
ary will be eligible for graduated rates,
even if the aggregate income from all
such trusts would, if combined, be
taxed at rates that are lower than the
highestmarginalrate.
ThetaxreliefgrantedtoQDTsis
notabsolute.QDTsaresubjecttoa
recovery tax that is triggered in a year
inwhich(1)thetrustceasestoqual-
ifyasaQDT(whichwilloccurifany
of the above conditions are not met)
or (2) a capital distribution is made
toanon-electingbeneficiary.This
tax is intended to recover tax savings
obtainedbytheQDTasaresultofthe
application of graduated rates in prior
years.Therecoveryiscalculatedby
determining the amount that would
have been payable if the income of
the trust that is never distributed to the
electing beneficiary had been taxed at
thehighestmarginalrate.
STEPInside•FEBRUARY2015•VOLUME14NO.1 5
Giftsmadebywill,designatedgifts,andgiftsmade by an estate will all be deemed to be
made by the estate at the time that the propertyisactuallytransferredtothecharity.
Changes to rules regarding Life Interest TrustsOneofthenewrules’mostsignificant
changes will have profound implica-
tions for planning that involves spousal
trusts, alter ego trusts, joint spousal
trusts, and joint common-law partner
trusts (herein referred to as “life inter-
esttrusts”).
Starting in 2016, life interest trusts
will undergo a deemed disposition trig-
gered at the end of the day of the death
of the last surviving life interest bene-
ficiary (either the settlor or the spouse,
depending on the nature of the life
interest trust). All of the trust’s income
for the taxation year, including capital
gains arising on the deemed disposition
of assets triggered by the death of the
life interest beneficiary, will be deemed
to have been made payable to the life
interest beneficiary and will be included
in his or her terminal tax return.
Althoughthisdeemedpayablemech-
anism may address concerns about
having the trust income taxed in the life
interest trust at the highest marginal
rate, it may create significant financial
hardship in certain circumstances in
which trusts are commonly used to retain
control over the distribution of income or
capital.Thishardshipisillustratedbythe
examplethatfollows.
A spousal trust is established in
John’s will to provide for his second
wife, Jane. On Jane’s death, the capital
of the spousal trust is to be left to John’s
children of his first marriage. In her
will, Jane leaves her estate to the chil-
dren of her first marriage. If John dies
first, his assets will pass to the spousal
trust. On Jane’s death, the spousal
trust will undergo a deemed dispos-
ition of its assets. Under the new rules,
all income (including taxable capital
gains) will be deemed payable to Jane,
such income will be reported in Jane’s
terminal return, and the tax will be
borne by Jane’s estate. Because Jane’s
beneficiaries (her children) are differ-
ent from the remainder beneficiaries
of the spousal trust (John’s children),
and her children will not receive any of
the assets of the spousal trust, they will
effectively bear the tax burden of the
spousal trust without benefiting from
its assets. This situation results in a
windfall for John’s beneficiaries.
The new rules provide that the life
interesttrust(John’sspousaltrust)
will be jointly and severally liable
withthe life interestbeneficiary’s
(Jane’s)estateforthetaxliability.In
response to concerns about the new
rules, theDepartmentof Finance
released revised explanatory notes
inlateOctober2014,statingthat“it
isintendedthattheMinister[ofRev-
enue assess the trust] in respect of an
amount owing … as though the trust
were liable in the first instance for that
amount.”However,giventhatthenew
rules are clear that the estate of the
lifeinterestbeneficiary(Jane’sestate)
is primarily liable for the tax and that
it is the administrative practice of the
CanadaRevenueAgency (CRA) to
assess and initiate collection proceed-
ings against the primary taxpayer and
only to initiate proceedings against
other taxpayers as a last resort, it is
unclear if the provisions can, or will,
be administered as suggested by the
department.Further,eveniftheCRA
exercises its discretion to enforce dir-
ectly against the trust assets, it will
not necessarily forgo its rights against
thelifeinterestbeneficiary’sestateto
theextentthatthetrustassetsare(1)
illiquid (or otherwise difficult to realize)
or(2)insufficienttofundthetax.The
CRAhasnotcommentedonthenew
rules or whether it intends to enforce
themassuggestedbythedepartment.
Althoughthepotential financial
hardship is clearly problematic, the
new rules may have other unexpected
results.Becauseoftheuncertainty
regarding which taxpayer (the trust or
thebeneficiary’sestate)willultimately
bear the tax burden, and the fact that
the tax liability will not be determined
until after the life interest benefici-
ary’sterminaltaxreturnisfiledand
assessed, it may be difficult for the
trustees and executors (even if they
are cooperating) to ensure the timely
paymentofthetax.Totheextentthat
the taxes are collected against the
trust rather than the estate of the life
interest beneficiary (as is intended by
the department), the trustees of the
trust may be obliged, by virtue of their
fiduciary duties, to litigate to recover
taxes from the estate of the life interest
beneficiary.Further,areimbursement
by the life interest trust to the benefici-
ary’sestateofthetaxestriggeredmay
cause the estate to lose its status as a
testamentary trust (and therefore lose
itsstatusasaGRE),whichmayhave
significant adverse affects on other
planning(asdescribedabove).
The new rules represent a signifi-
cant change for taxpayers and their
advisers.Everyoneshouldreviewhis
orherestateplanningbefore2016
to ensure that it remains appropriate
andthatitwillachieveitsobjectives.
Those whose arrangements (such as
existing irrevocable life interest trusts
and planned charitable donations)
are already in place and those who are
incapable and unable to amend their
existing testamentary planning may
find it difficult or impossible to adhere
tothenewrules.Itistobehopedthat
theDepartmentofFinancewilladdress
these practical concerns in an amend-
mentbeforetheJanuary1,2016imple-
mentationdate.n
6 STEPInside•FEBRUARY2015•VOLUME14NO.1
SHELaGH rINaLD, TEP
President, Rinald Tax Advisory;
Member, STEP Vancouver
When a Canadian-resident
individual dies owning
appreciated shares of a
private corporation, the shares are
exposedtodoubletaxation.Provi-
sionsexistintheIncomeTaxActto
eliminatethisproblem;however,the
methodologyfortakingadvantageof
these provisions is not self-evident,
and executors and beneficiaries may
not be able to use the provisions with-
outproperplanning.
ThisispartIofatwo-partarticle.
It describes how double tax exposure
arises, gives a general overview of
the tax-planning strategies that can
mitigate this exposure, and outlines
the circumstances that are relevant to
implementingthesestrategies.Part
II,whichwillappearintheMay2015
issue of STEP Inside, discusses the strat-
egiesingreaterdetail.
Thetaxplanningtobeundertaken
after the death of an owner of appreci-
ated private corporation shares depends
on the tax attributes and the nature of the
assets of the corporation at the time of
death, as well as the intentions of the
beneficiarieswithrespecttotheshares.
Anestateplanmustbesufficientlyflex-
ible to accommodate the mechanisms
formitigatingdoubletaxexposure.
The discussion in this article
assumes that the testator, estate,
beneficiaries, and corporation are all
Canadianresidents.Italsoassumes
top marginal tax rates and a personal
capital gains rate that is lower than
the tax rate on dividends (both eli-
gible and ineligible) and lower than
the corporate capital gains rate on a
flowthroughbasistoshareholders.In
general terms, the exposure to double
taxation can be described as follows:
• With certain exceptions, when
a Canadian-resident individual
dies, he or she is deemed to have
disposed of all capital property
immediately before death at fair
marketvalue, thusrealizingall
accrued capital gains and losses
andpayingtaxaccordingly.Asa
result, the executor receives the
property from the deceased at an
adjustedcostbase(ACB)equalto
thefairmarketvalueimmediately
before death, which will ultimately
becometheACBofthepropertyto
the beneficiaries of the estate (the
newshareholders).
• Later,when thecorporation is
wound up or the corporate assets
are sold and any gains inherent
in these assets are realized, it is
assumed that the net assets of the
corporation are distributed to the
new shareholders through a repur-
chaseofsharesbythecorporation.
Anyproceedspaidbythecorpora-
tion on the purchase of its shares in
excessofthepaid-upcapital(PUC)
of the shares give rise to a dividend
for Canadian tax purposes and a
capital loss to the new sharehold-
erstotheextentthattheACBof
thesharesexceedsthePUCofthe
shares (as a result of the reduction
in the proceeds of disposition of the
shares for the amount of the divi-
dendreceived).
• There is no mechanism by which
the new shareholders can apply
this capital loss against the gains
realized at the time of the original
shareholder’sdeath;therefore,if
the new shareholders do not real-
ize any capital gains against which
this capital loss can be applied,
double taxation occurs: first as a
result of the taxation of the capital
STEPInside•FEBRUARY2015•VOLUME14NO.1 7
Post Mortem Planning for Private Corporation SharesPART I: ALTERNATIVES FOR MITIGATING THE DOUBLE TAX EXPOSURE ARISING
ON THE DEATH OF THE OWNER OF PRIVATE CORPORATION SHARES
When a Canadian-resident individual dies owning appreciated shares of
a private corporation, the shares are exposedtodoubletaxation.
8 STEPInside•FEBRUARY2015•VOLUME14NO.1
Estate, spousal trust, alter ego trust, or joint spousal trust owns shares of a private corporation (2)
Intentiontowindupcorporationinlosscarrybackperiod(3)
Shares of the corporation are to be sold to a third party or capital loss on wind-up is to be used by
beneficiaries(4)
CorporationhasGRIPandRDTOHorCDAbalances(5)
NettaxbasisincorporateassetsisatleastequaltoACBofcorporateshares(6)
Corporation has non-depreciable capital property
YES
NO
NO
NO
NO
GRIPand RDTOHorCDA
balance incorporation
YES
YES
NO
NO
YES/PARTIAL
NO YES
YES
Assetscanbe sold in
first tax year
Acquisition-of-control
or bump-denial
issues
YES
Losttaxdeferral if
property is sold to trigger
gain (7)
NO
NO
Noactionrequired
regarding loss
carrybackor bump planning
Subsection 164(6)or
loss carryback
planning (8)
Hybrid planning (8)(9)
YES
NO
Bump and
pipeline planning
before asset sale
(9)
Pipeline planning
(9)
Figure 1: Post Mortem Planning to Mitigate Double Tax Exposure (1)
YES
STEPInside•FEBRUARY2015•VOLUME14NO.1 9
gain inherent in the shares when
the original shareholder dies, and
second as a dividend to the new
shareholders when the net assets
of the corporation are distributed
tothem.
This exposure to double taxation can
be mitigated as follows:
• If the shares of the corporation
(as opposed to its assets) are sold
by the new shareholders or if the
capital loss that is created on the
wind-up of the corporation or the
repurchaseofthecorporation’s
shares can be used by the new
shareholders, there is no exposure
todoubletaxation.
• If the beneficiaries do not antici-
pate selling the corporate assets for
a significant time, the discounted
present value of the future taxes
payable will be reduced, and the
double tax exposure will be miti-
gatedaccordingly.
• If theACBof thesharescanbe
used to create an opportunity for
the tax-free extraction of tax-paid
capital from the corporation (that
is, thePUC inthesharesof the
corporation or a debt owing from
the corporation to the new share-
holders) that is at least equal to the
ACBoftheshares,theexposureto
doubletaxationwillbemitigated.
This strategy is often referred to as
the“pipelinestrategy.”
◊ In applying the pipeline strategy,
the net tax basis in the corporate
assets (that is, the tax basis of the
corporate assets less the liabilities
of the corporation) should be at
leastequaltotheamountofPUC
or loan to the new shareholders
that is created through the pipe-
linestrategy.Ifthisconditionis
not met, trapped refundable taxes
on the ultimate sale of corporate
assets will give rise to an addi-
tional exposure to double taxation
(effectively,athirdlayeroftax).
◊ Bumpplanningisastrategythat
is used to increase the net tax
basis of the corporate assets to
equaltheamountofPUCorloan
to the new shareholders, which is
created using the pipeline strat-
egy.Bumpplanningallowsforan
increaseintheACBofthenon-
depreciable capital property of
the corporation to an amount up
totheACBofthesharesifcertain
complexcriteriaaremet.
• If the loss that is created on the
wind-up of the corporation or
the repurchase of the corporate
sharescanbecarriedbackand
offset against the gain that is trig-
gered on the death of the original
shareholder to recover the related
capital gains taxes that were paid
on death, the exposure to double
taxationwillbemitigated.These
arelosscarryback(LCB)strategies
and require the loss to be triggered
on the repurchase of shares to the
estate within the first taxation year
followingdeath.InapplyingLCB
strategies, it is essential that the full
amount of the dividend that arises
on the repurchase of shares can be
attributed to a combination of
◊ dividends that are paid on a tax-
freebasisfromthecorporation’s
capitaldividendaccount(CDA),
and
◊ dividends for which there will be
a recovery of refundable dividend
tax to the corporation equal to
one-thirdofthedividendspaid.
• If this condition is not met, trapped
refundabletaxesandCDAonthe
sale of corporate assets and the
distributionofnetproceeds[AU:
please clarify, if necessary] will
give rise to additional exposure to
double taxation (again, effectively
athirdlayeroftax).
• IfneitherthepipelinenortheLCB
strategies can be used to mitigate
the double tax exposure on death
(which is often the case), another
strategy to consider is hybrid plan-
ning.Thisstrategy involvesthe
timely triggering of capital gains on
the transfer of assets to a subsidiary
corporation to provide for the tax-
efficient repurchase of shares by
thecorporationtotheestate.Gener-
ally, pipeline planning allows for the
preservation of the personal capital
gains tax rate arising on death, while
LCBplanningeffectivelyconverts
the personal capital gains tax rate to
personal dividend rates or, at best,
corporatecapitalgainsrate.There-
fore, assuming that the conditions
noted above are met, pipeline plan-
ningispreferabletoLCBplanning
when personal capital gains rates
are lower than corporate capital
gainsrates.However,theriskof
reassessment under subsection
84(2)oftheIncomeTaxActandthe
complexities arising in the applica-
tion of bump planning (both to be
discussed in part II of this article)
can prevent the use of pipeline
planning.Furthermore,whenan
estatefreezehasbeenundertaken
duringthetestator’slifetime,the
timingissuesandtheriskofpre-
paying taxes on the sale of corpo-
rate assets that arise with respect
toLCBplanningcanpreventtheuse
oftraditionalLCBplanning.Inthese
circumstances, hybrid planning can
play a practical and important role
inmitigatingdoubletaxexposure.
Figure1isintendedtoassistindeter-
mining the preferable strategy to miti-
gate double tax exposure in a variety
of circumstances that may exist at the
timeofdeath.Itshouldbeusedonlyin
the context of a full analysis of all rel-
evanttaxmatters.Aswillbediscussed
further in part II of this article, tax leg-
islation that was passed on December
16th,2014effectivefor2016andsub-
sequent years will affect the details for
applying the tax-planning strategies
discussedhere.
1. Figure1isbasedonthefollow-
ing assumptions, which may not
apply in all provinces:
a. corporate capital gains rates on
a flowthrough basis exceed per-
sonalcapitalgainsrates;
b. eligible dividend rates are lower
than the corporate refundable tax
recoveryrate;
c. ineligible dividend rates are
higher than the corporate refund-
abletaxrecoveryrate.
Referencesto“partial”applywhen
the proposed alternative may not fully
minimizetaxonapostmortembasis.If
the partial reference is applicable, both
possibilitiesmustbeconsidered.
2. Subsection164(6)orlosscar-
rybackplanningmaystillbe
required with respect to other
assets owned by the estate or the
spousal, alter ego, or joint spou-
sal trust within the first taxation
year of the estate or the first three
yearsofthetrust,respectively.
3. Riskswithrespecttosubsection
84(2)requirecarefulattention
if pipeline planning is used in
conjunction with a wind-up of the
corporation.
4. Ifitislikelythatthesharesofthe
corporation (as opposed to its
assets) will ultimately be sold by
the beneficiaries of the estate or
if it is anticipated that the benefi-
ciaries will otherwise be able to
use the capital loss generated on
a wind-up against gains that they
realize personally, post mortem
planning may not be required to
mitigate the double tax exposure
inherent in the shares of the cor-
poration.
5. If the beneficiaries of the estate or
trust are not the ongoing owners
of the participating shares of the
corporation, the interests of both
the beneficiaries and the ongo-
ing shareholders of the corpora-
tionmustbenegotiated.Their
competing interests should be
anticipatedintheshareholders’
agreement with respect to the
allocation of general rate income
pool(GRIP)andCDAbalances.
IftherearenoGRIPbalancesin
the corporation, the tax efficiency
of redeeming shares to recover
refundable dividend tax on hand
(RDTOH)balanceswillrequire
careful consideration (because
ineligible dividend rates are
assumedtoexceedtheRDTOH
recoveryrate).
6. If the net tax basis (that is, the tax
basis of assets less liabilities of
the corporation) in the corporate
assetsisatleastequaltotheACB
inthecorporation’ssharesto
the estate or trust, pipeline plan-
ning can be used to mitigate the
double tax exposure inherent in
the shares, providing that the pro-
visionsofsubsection84(2)donot
apply.Ifthenettaxbasisinthe
corporate assets is less than the
ACBinthecorporation’sshares
totheestateortrust,andtheACB
of the assets of the corporation
cannot be increased sufficiently
with a bump transaction, partial
pipeline planning could be con-
sidered in conjunction with hybrid
planning.
7. If a corporate estate freeze has
beenundertaken,thetaxdeferral
arising from the estate freeze (that
is, arising from the increase in the
fairmarketvalueofthecorporate
assets since the estate freeze was
undertaken)wouldbelostifthe
corporate assets were sold within
thelosscarrybackperiodofthe
estate (to generate the refund-
abletaxandCDAbalancesthat
are required for effective post
mortemlosscarrybackplanning).
If so, a hybrid strategy should be
considered.
8. Subsections40(3.6),112(3.2),
and112(3.3)requirecarefulcon-
sideration whenever losses are
created on a post mortem basis
through the redemption of shares
toanestateortrust.Subsection
40(3.61)mayproviderelieffrom
the provisions of subsection
40(3.6)whenlossesarecarried
backpursuanttosubsection
164(6).Thetaxlegislationthat
waspassedonDecember16th,
2014limitstheavailabilityofsub-
section164(6)andthe“50per-
cent solution” in subparagraph
112(3.2)(a)(iii)toagraduatedrate
estatefor2016andsubsequent
years.
9. WhentheACBinherentinshares
is used to create a loan from a
corporation (on the transfer of
the shares to the corporation),
subsection84(2)andsection84.1
requirecarefulattention.n
10 STEPInside•FEBRUARY2015•VOLUME14NO.1
MarK HaNDELMaN
Counsel, Whaley Estate Litigation
This is part II of a two-part article
examining the Rasouli case and
thestepsthatadviserscantake
to prevent the problems that can arise
when clients have not discussed end-
of-life decisions with their legal or
medicaladvisers.Thefirstpartofthe
articleappearedintheOctober2014
issue of STEP Inside.
Doctors’ MistakesApatientadmittedtohospitalwith
brokenbones is likelytoreceivea
visit from a dietician if he or she is sig-
nificantlyoverweight.Hospitalstaff
membersroutinelyvisitsmokersto
encourage the use of nicotine replace-
menttherapy.Ifapatient’shomelife
couldputhisorherhealthatrisk,dis-
charge planners are available to ensure
a safe transition from the hospital into
thecommunity.However,unlessa
patient’sconditionisimminentlyter-
minal, few hospitals and almost no
doctorsofferadviceaboutmaking
end-of-lifedecisions.
Fewdoctorsunderstandthelegal
process that lies behind an assessment
ofapatient’scapacitytomakehisor
herowndecisions,knowthedefinition
of“capacity”tomaketreatmentdeci-
sions, or are familiar with the hierarchy
ofsubstitutedecisionmakers(SDMs)
and the principles on which substitute
decisionsmustbemade.
Physiciansmaynotspeakclearly
to patients and their families about
thepatient’sconditionandprogno-
sis.Theymaynot takethetimeto
answer the many questions that arise
whentreatmentdecisionsarefinal.
They sometimes (even unintention-
ally)reverttojargon.Forexample,the
answer to the following question is
unlikelytomeetthetestofinformed
consent:“AsaresultofaCVA,your
husband suffered anoxic brain injury
andisnowPVS.We’dliketopalliate
him,ok?”
The following case deserves par-
ticularattention.Thepatient,amanin
his late eighties, was in the final stages
ofdementia.Hewasunabletospeak
andbarelyawareofhisenvironment;
therewasnoprospectofrecovery.His
bedsores were extensive, and his body
wasnolongerabletohealitself.Hesuf-
feredrepeatedboutsofpneumonia;
received nutrition through a feeding
tube inserted into his stomach through
an incision in his abdomen, and could
not breathe without the assistance of
aventilator.
Thisman’swifeinsistedthat“every-
thingbedone”tokeephimalive.This,
she claimed, was what he wanted
because he was a religious man who
believed that the sanctity of life was
paramounttoallotherconsiderations;
he would have wanted to suffer if suf-
fering was necessary to prolong the
fighttostayalive.
Dementiatakesyearstodevelop,
and symptoms usually become appar-
ent before the victim loses his or her
capacity to express capable end-of-
lifetreatmentpreferences.However,
throughout the entire course of this
man’sillness,includingmonthsinhos-
pital,itseemsthatnooneaskedhim
for his views about the end of his own
life.
Patients’ MistakesPatientsshouldexaminethechecklists
provided in this article for lawyers and
doctors, and add any items that are
importanttothem.Afterall,apatient’s
health care and treatment decisions
arehisorherownresponsibility.
STEPInside•FEBRUARY2015•VOLUME14NO.1 11
Whose Mistake? Part II
A BRIEF CHECKLIST FOR DOCTORS AND OTHERT HEALTH PRACTITIONERS• Assessthepatient’scapacitytomakehisorherowntreatmentdecisionsandchartyourfinding.
• Askwhetherthepatienthasapowerofattorneyforpersonalcare(POAPC)orotherwiseidentifythepatient’sSDMs.
• Enquireaboutthepatient’svaluesandbeliefspertainingtohisorherend-of-lifedecisions.
• Explainthepatient’sconditionandprognosistotheSDMsintermsthattheycanunderstand,andtakethetimeto
answertheirquestions.
• IfyoubelievethattheSDMsaremakingabadtreatmentdecision,explainyourhospital’sdisputeresolutionprocess
and,inOntario,theroleoftheConsentandCapacityBoardinresolvingdisputesbetweendecisionmakersandthe
patient’streatmentteam.
No Heroic MeasuresThe term “no heroic measures” means
different things to different people,
anddifferentthingsatdifferenttimes.
Giventhemanymedicaladvances
over the past half century, some doc-
tors claim that there are no longer any
heroicmeasures,justexpensiveones.
Othersmaintainthatwhatmightbe
considered heroic today will be com-
monplaceinlessthanadecade.
Inmakingend-of-lifedecisions,
patients should be less concerned with
a particular treatment than with their
prospects for recovery and the quality
oflifethatwillfollow.
When my mother was in her mid-
eighties, she needed surgery for bowel
cancer.Wewenttogethertomeetthe
surgeon, who thoroughly explained
therisksandbenefitsofthesurgery.
Motherunderstood,andconsented,
but there was one more issue: the
doctor explained that sometimes
resuscitation is required during sur-
gery, and she was the subject of a “do
notresuscitate”(DNR)order.
Mymotherdidnotrememberthat
shehadeveragreedtoaDNRorder
(ifsheeverdidagree).Herorderwas
ablanketDNR,whichdidnotaddress
the circumstances existing at the time
thatsheneededresuscitation.Suppose
shehadtrippedinherkitchenandfallen
unconscious: should she be resusci-
tated?Iwouldcertainlyhopeso.Need-
lesstosay,werescindedtheDNRorder.
(Bytheway,thesurgerywassuccessful,
she lived almost another decade, and
she had the good fortune to die asleep
inherownbedattheageof94.)
I have given considerable thought
to my own end-of-life wishes and spent
time explaining them to those who will
makethedecisionsformeifIaminca-
pable.Mythoughtsareencapsulated
in my own power of attorney:
Death is as much a reality as birth,
growth, maturity, and old age. It is
the one certainty of life. I recognize
this.
Therefore, while I am incapable,
should a situation arise where my
attending physician determines that
I will not recover from a disability and
that my death is imminent, I DIRECT
MY ATTORNEY to permit me the dignity
of a peaceful passing. I do not wish to
be kept alive by measures that would
only serve to prolong my dying process,
but I rather wish to die with dignity
and in comfort. In that situation, I wish
for treatments that will allow me to
die peacefully, even though they may
abbreviate the dying process, resulting
in a hastening of my death.
Mostimportantly,Ihavespenttime
talkingtothepeoplewhomayhaveto
makethesedecisionsforme:first,to
ensure that they are willing to assume
theresponsibility;second,toensure
that they understand the meaning of
mywords;andthird,toempowerthem
torespectmywishes.
Children: a Special CaseInOntario,thereisnominimumageat
whichapersonisentitledtomakehis
orherownhealthcaredecisions.Chil-
drenofanyageareentitledtomake
their own treatment decisions if able
to understand relevant information
andabletoappreciatethelikelyconse-
quences.Inotherprovinces,thecon-
cept of “the mature minor” is gaining
12 STEPInside•FEBRUARY2015•VOLUME14NO.1
A BRIEF CHECKLIST FOR PATIENTS• ObtainaPOAPC,namingresponsiblepeopletomakedecisionsforyouwhenyoucannotdoso.
• TalktoyourfutureSDMs,tellingthemaboutyourend-of-lifewishes,ensuringthattheywillseektoachievethem,
andsatisfyingyourselfthattheyhavethenecessarycourageandcertaintyofmindtocarryoutyourinstructions.
• ReadyourPOAPCtoensurethatitreflectsyourwishes.Ifthereisa“noheroicmeasures”provision,consider
whetheritaccuratelyreflectsyourviews.
• Whileyouarestillcapableofdirectingyourowncare,makeinformeddecisions.Understandthetreatmentthat
yourphysicianproposesandaskforexplanationsofmedicaltermsthatyoudonotunderstand.
I have spent time talking to the people
who may have to make these
decisions for me: first, to ensure that they
are willing to assume the responsibility;
second, to ensure that they understand the
meaning of my words; and third, to empower
them to respect my wishes.
STEPInside•FEBRUARY2015•VOLUME14NO.1 13
prominence, with a bit of a push from
the Supreme Court of Canada in a
recentcase.
InA.C.v.Manitoba(Directorof
ChildandFamilyServices),2009SCC
30,a15yearoldgirlarguedsheshould
be treated as a “mature minor” and her
wishes respected when she refused a
blood transfusion based on her reli-
giousbeliefs.Shewasapprehended
bytheFamilyServicesdepartment,
whichconsentedtothetransfusion.
Hadshebeenapprehendedafterher
16thbirthday,thechildwelfarelegisla-
tion would have presumed her capable
tomakethatdecision.Theargument
was based upon the age-related dis-
criminatorytreatment.TheSupreme
Court “read into” the child welfare leg-
islation–andthereforeManitobalaw—
the presumption of the mature minor,
whose treatment wishes should be
respected on a sliding scale, depend-
inghowcapablehe/shewas.
However,parentsthinkthatthey
knowwhatisbestfortheirchildren
andwanttomakedecisionsforthem,
especially those that involve life-and-
deathissues.
How is itpossible tobalancea
child’sright toself-determination
againstaparent’swishtodowhathe
orshethinksbestforthechild?The
balanceisstruckbymeansofaclear
understanding, on the part of the par-
entsandthechild’streatmentteam,of
thechild’scapacitytomakeanimpor-
tantmedicaldecision.Suchanassess-
ment can be very difficult, requiring
far more probing questions than in the
caseofanadult.
Parentswhoarecalledontomake
substitute decisions for children usu-
ally do so on the basis of their own
beliefsandnot thoseof thechild.
Becauseveryyoungchildrenlacka
system of values and beliefs, decisions
about their care should be based on
objective considerations involving the
child’sbestinterests.
How and When To Talk about DeathAlthoughitisdifficulttobroachthe
subject of death, it is important to find
opportunities to do so, and opportuni-
tiesdoarise.Peopledieontelevision
all the time, and it is not hard to intro-
duce the subject of death between the
end of a medical television show and
the beginning of the evening news, for
example.
When my mother was in her early
eighties,shecalledmeonedaytoask
ifIcouldtakehertothefuneralofa
closefriend.MotherandItalkedabout
her own end-of-life views on the way
homeafterthefuneral.Becauseshe
was upset that her friend had lingered
through the dying process while her
familydecidedwhattodo, Iasked
herforherownviewsaboutdeath.It
wasaneasysegue.Motherwasnotan
educated person, but she was wise and
able to sum up her own views pithily
andsuccinctly:“Whenthere’snobody
home,youturnoutthelights,don’t
you?”
ConclusionTheprocessofinformeddecision-mak-
ing rests with communication between
a health practitioner and either the
patientorthepatient’sSDM.Simply
put,apersonmakinghealthcaredeci-
sionsneedstounderstandtherisks
and benefits of a proposed treatment
(including the worst possible out-
comes) and the alternative treatments
orlackoftreatments.
SDMs need to understand the
wishes, values, and beliefs that inform
an incapablepatient’sdecisions.
A patient’s autonomy cannot be
respected and patient-centred care
cannotbeundertakenintheabsence
ofthisknowledge.n
“Whenthere’snobodyhome,youturnoutthelights,don’tyou?”
POWERSOFATTORNEY:THEIMPORTANCEOFWELL-INFORMEDDECISIONS
JoNaTHaN HooPEr
Associate Lawyer, Coady Filliter
TheLawReformCommissionofNova
Scotia issued a discussion paper in
March2014proposingchangesto
theNovaScotiaPowers of Attorney Act.
Oneoftheproposalsincludesspecific
guidance on how an attorney should
makedecisionsinthebestinterests
of the donor (that is, the person who
appoints the attorney under a Power
ofAttorneydocument(“POA”)).The
LawReformCommissionnotedthat
academic literature and anecdotal
information indicate “that there may
be confusion as to how exactly attor-
neysaretogoaboutmakingdeci-
sions”(LawReformCommissionof
NovaScotia,DiscussionPaper,March
2014,section9.2.1,page125).Incon-
sistencies can result in legal actions
that are costly, both emotionally and
financially,forallparties.Inadvis-
ing clients about powers of attorney
(POAs),estateprofessionalsshould
thereforeexplainthekeyconcepts
thatareoutlinedbelow.
Estate professionals should clarify
the extent of the authority that donors
areentrustingtotheirattorneys.They
should also ensure that attorneys fully
understand their role and responsi-
bilities.Itmaybenecessarytoprovide
ongoing support and information
to attorneys so that they are able to
function effectively in their role as the
agentsforthedonor.Ifprofessional
advice falls short of these standards,
thedonor’sriskoffinancialvulnerabil-
ityincreases,asdoestheriskthatthe
attorneys may not be able to carry out
theirobligationsproperly.
Whether advising donors who
want to appoint an attorney or advis-
ingclientsactingunderexistingPOAs,
estate professionals should provide a
cleardefinitionofaPOAduringthe
initialinterview.Itisessentialthatcli-
entsunderstandthataPOAisalegal
document in which one person gives
authority to another person to act on
his or her behalf with respect to prop-
ertyandfinancialmatters.Thisdocu-
ment creates a legal agency, which
produces a fiduciary relationship
between the donor and the attorney
(or agent) and imposes a legal duty on
the attorney to act for the benefit of the
donor.
In most cases, the legal definition
ofaPOAprovidesinsufficientinfor-
mation to properly instruct donors and
attorneys about how to perform their
duties.Donorsalsoneedtounder-
stand the standard that attorneys are
obligedtomeetwhenmakingdeci-
sionsforthem.Forexample,inNova
Scotia an attorney must exercise the
care that a reasonable person would
exercise when conducting his or her
own affairs ((Re) Isnor Estate,[2001]
NSJ.No.659(SC),atparagraph57)).
Estate professionals should directly
askdonorswhetherthepersonthat
they are considering as an attorney can
meetthisstandardofperformance.
Donors also need to understand
that if an appointed attorney does not
fulfill his or her fiduciary duties, their
14 STEPInside•FEBRUARY2015•VOLUME14NO.1
I N T H E H E A D L I N E S
only remedy is applying to the courts
tohavetheattorneyremoved.Onsuch
an application, the courts consider the
abilities of the attorney to manage the
financial affairs and property of the
donor when deciding whether the
attorney has met his or her obligations
((Re) Isnor Estate,[2001]NSJ.No.659
(SC),atparagraph60).
Bothdonorsandattorneysneed
tobetoldthatanattorney’sactions
mustbeundertakeningoodfaithand
inthedonor’sbestinterests(Vernon v.
Sutcliffe,2014NSSC376).Thisadvice
sounds straightforward to estate pro-
fessionals, but it is not always easy
for attorneys to understand how this
principle should guide the decisions
thattheymakefordonors.Recently,
the LawReformCommissionhas
put forward four principles to guide
anattorney inacting inadonor’s
bestinterests:(1)theattorneymust
consider if and when the donor may
regaincapacity tomakethedeci-
sion;(2)theattorneymust,asfaras
is reasonably practicable, permit and
encourage the donor to participate,
or to improve his or her ability to
participate, as fully as possible in the
decision;(3)theattorneymustcon-
sider, as far as is reasonably ascertain-
able,thedonor’swishes,intentions,
beliefs, values, and any other factor
that would be relevant to the donor
ifthedonorhadthecapacitytomake
thedecision;and(4)theattorney
must consult with anyone named by
the donor as someone to be consulted
on the decision in question or on any
similardecisions(LawReformCom-
missionofNovaScotia,Discussion
Paper,March2014,section9.2.1,
page129).
Finally,allpartiesmustknowwhen
thePOAwillcomeintoeffect.Typically,
POAsbecomeeffectiveimmediately
after they are executed or when the
donor becomes incapable of managing
hisorherfinancialaffairs.However,in
NovaScotiathefiduciaryobligation
oftheattorneyariseswhenthePOA
document is executed (see BFH v. DDH,
2010NSSC340).Thistimingmeans
thattheattorney’sfiduciarydutymay
arisebeforethedonorisincapable.It
also means that an attorney may be
liable for any decisions that he or she
reasonably contributes to after the
POAisexecuted.
Ifestateprofessionalstakecareto
ensure that both donors and attorneys
understand the concepts outlined
above, all parties should be protected
from the costs of addressing prevent-
ablecomplications.
INALIENABILITYCLAUSE
JENNIFEr LEaCH
Associate, Sweibel Novek LLP
Can a clause in a will prohibiting
the alienation of property by an heir
prevent the heir from including the
object of the legacy in his or her own
will?Thatwasthequestionconsid-
eredbytheQuebecCourtofAppeal
inthe2014decisionofVallée c. Roy,
2014QCCA927.ArthurL.Roydiedin
April2008.Inthefinalyearsofhislife,
helivedwithoneofhissons,J.Martin
Roy,andhisson’sspouse,Mélanie
Vallée. J. Martin Roywas named
as the universal legatee of all the
immovablesinhisfather’sestateon
his death, which included a house and
agriculturallands.Thisbequestwas
made subject to the express condition
that the universal legatee may neither
alienate nor encumber these immov-
ables with a mortgage for a period of
10yearswithoutthepriorconsentof
J.MartinRoy’ssiblings,theresidual
legateesofArthurRoy’sestate.The
willmadeitclearthatArthurRoy’s
wishwastokeepthelegaciesmade
under the will within family control
duringhisheirs’lifetimes.
J.MartinRoydied in2009, just
oneyearfollowinghisfather’sdeath.
Hehadpreparedaholographwill,
whereinhenamedhisspouse,Mélanie
Vallée,ashisuniversal legatee. J.
MartinRoy’ssiblingsandhismother
contested the validity of this will and
the legacy made thereunder on the
basisthatArthurRoy’swillprohibited
the alienation of the immovables left
toJ.MartinRoyfor10yearswithout
thepriorconsentofhissiblings.At
trial,theQuebecSuperiorCourtcon-
firmedthatinmakingMélanieVallée
hisuniversallegatee,J.MartinRoy
had alienated the immovables inher-
ited from his father, in contravention
of the prohibition against alienation
setoutinhisfather’swill.
TheCourtofAppealsoughttodeter-
mineArthurRoy’strueintentionsin
drafting the will by reference to the
rules of contractual interpretation in
article737andfollowingintheCivil
Code of Québec.TheCourtofAppeal
held that in reaching its decision, the
Superior Court had applied the legal
meaningofalienation.However, if
onestoodintheplaceofArthurRoy,
it was clear that his real objective was
tokeephisimmovableswithinfamily
control.Thenotarywhoprepared
thewilltestifiedthatArthurRoyhad
sought to do so by preventing his son
from selling the immovables without
thepriorconsentofhissiblings.The
CourtofAppealconcludedthatArthur
Royhadintendedtoprohibitonlyinter
vivos transfers of the immovables, not
toprohibittransfersonhisson’sdeath.
Therefore, the transfer of the immov-
ablesfromJ.MartinRoy’sestateto
MélanieValléedidnotcontravene
theprovisionsinArthurRoy’swill.
STEPInside•FEBRUARY2015•VOLUME14NO.1 15
However,MélanieValléewouldremain
subject to the prohibition on inter vivos
transferswithoutthepriorconsentofJ.
MartinRoy’ssiblingsuntil10yearshad
elapsedfromthetimeofArthurRoy’s
death.
QUEBEC’SNEWCODEOFCIVILPROCEDURE
JENNIFEr LEaCH
Associate, Sweibel Novek LLP
On February 20, 2014,Quebec’s
National Assembly unanimously
adopted Bill28,whichestablishedthe
new Code of Civil Procedure.Thenew
Code, which introduces important pro-
cedural changes, is expected to come
intoforceinlate2015.Onechangethat
is of interest in the context of trusts and
estates relates to property that is exempt
fromseizure.Article553ofthecurrent
Code of Civil Procedure providesthat“[p]
roperty declared by a donor or testator
to be exempt from seizure … may how-
ever be seized by creditors posterior to
the gift or to the opening of the legacy,
with the permission of the judge and to
theextentthathedetermines.”
Article696(2)of thenewCode
incorporates the conditions for non-
seizabilityfoundinarticle2649ofthe
Civil Code of Quebec.Itprovidesthat
“property declared by the donor or
testatortobeexemptfromseizure[is
valid]ifthestipulation[ofnon-seizabil-
ity] is made in an act by gratuitous title
and is temporary and justified by a seri-
ousandlegitimateinterest.”
Likecurrentarticle553,article
696(2)ofthenewCodeprovidesthat
the property may be seized on the
request of creditors whose claims are
subsequent to the gift or the opening of
the legacy, with leave of the court and
totheextentthatthecourtdetermines.
Thepostambletosection696provides
that notwithstanding the preceding, up
to50percentofthepropertydescribed
inarticle696(2)maybeseizedtoexe-
cute partition of a family patrimony, a
support claim, or a compensatory allow-
ance.Thisruletakesprecedenceover
anylegislativeprovisiontothecontrary.
ONTARIO’SNEWESTATE INFORMATIONRETURN
JoaN JuNG, TEP
Partner, Minden Gross LLP;
Member, STEP Toronto
TheOntarioEstate Administration Tax
Act,1998wasamendedasaresult
ofthe2011provincialbudgettoadd
audit, inspection, and assessment pro-
visions and to impose a duty to provide
“such information about the deceased
person as may be prescribed” in
applications for the appointment
ofanestatetrustee.Originally,this
amendment was to apply to applica-
tionsmadeafterJanuary1,2013,but
implementationwasdelayed.
Theregulation(O.reg.310/14)
detailing the prescribed information
wasfinallyfiledonDecember22,2014,
and it is effective for applications for
estate certificates made on or after
January1,2015.Thenewform,called
an estate information return, and a
13pageguidemaybefoundatthe
OntarioMinistryofFinancewebsite
www.fin.gov.on.ca/en/tax/eat/.
The estate information return must
bereceivedbytheministry90calen-
dar days after the estate certificate is
issued.Theguideindicatesthatthe
return may be delivered, sent by mail,
orfaxedtotheMinistryofFinance
atthelistedOshawaaddress.Italso
states that the return may be delivered
inpersontospecifiedServiceOntario
locations. It is unknownwhether
receiptswillbeprovided.Unlikethe
federal Income Tax Act, the Estate
Administration Tax Act,1998provides
no deemed date of receipt if the return
issentbyfirstclassmail.Accordingly,
estate trustees must ensure that they
meetthefilingdeadline.Failuretodo
so may produce penalties and lead to
consequences respecting the reas-
sessmentlimitationperiod.
The guide states that if the court
issueda“CertificateofAppointment
ofEstateTrusteeLimitedtotheAssets
ReferredtointheWill”,thenonlythe
assets referred to in such will are to
be reported in the estate information
return.Theplanningtechniqueof
multiple wills involves a primary will
for the disposition of assets requir-
ing probate and a secondary will for
otherassets.Onlytheprimarywillis
probatedusingForm74.4.1,“Appli-
cationforCertificateofAppointment
ofEstateTrusteeLimitedtotheAssets
ReferredtointheWill”andthecourt
issues a limited grant of probate or
technically,a“CertificateofAppoint-
mentofEstateTrusteeLimitedtothe
AssetsReferredtointheWill”.Based
on the guide, only the assets referred
to in the primary will are reported on
theestateinformationreturn.
Boththeregulationandtheestate
information return contemplate dis-
closure of specific information on an
asset-by-assetbasis.Forrealproperty,
the full address, actual value of encum-
brances, assessment roll number,
and property identifier number are
required.Forcash,aloanreceivable,
a security, a contract of insurance with-
out a named beneficiary, a derivative,
a partnership interest, or “any other
investment,” a full description of the
asset is required, including the type
of asset, number of units held by the
deceased, and particulars of the asset
(suchasitsseriesorclass).However,
16 STEPInside•FEBRUARY2015•VOLUME14NO.1
if the last-described group of assets
are held by an adviser or institution
on behalf of the deceased, it is unnec-
essary to provide an asset-by-asset
description;instead,itissufficientto
provide the name and contact informa-
tion of the adviser or the institution,
the account number, and the total
valueoftheaccount.Ifthedeceased
owned an asset as a tenant-in-com-
mon, the percentage of the asset
owned by the deceased and the total
valueoftheassetmustbedisclosed;
these amounts allow for a simple arith-
metic calculation without any minority
discount.
The regulation also dictates that the
estate representative update informa-
tionaboutthedeceased’sassetsand
file a revised return if any of this infor-
mationisincorrectorincomplete.The
revised return must contain a reason
for updating the information and must
befilednolaterthan30daysafterthe
estate representative becomes aware
that the information is incorrect or
incomplete.Thereisnorequirementto
file a revised return if the estate repre-
sentative becomes aware of the incor-
rect or incomplete information after
the fourth anniversary of the day that
thetaxbecamepayable.Presumably
this anniversary is measured from the
daythattheestatecertificateisissued.
The fourth anniversary of the day
that the tax becomes payable matches
the end of the limitation period in sec-
tion4.5oftheEstate Administration
Tax Act, 1998, during which the min-
ister may assess or reassess the tax
payablebytheestate.Thefour-year
reassessment limitation period was
introducedbythe2011provincial
budget, and there are exceptions to
it.Theassessmentorreassessment
period remains open if the minister
establishes a failure to comply with
section4.1oftheEstate Administra-
tion Tax Act, 1998 (the requirement to
provide prescribed information about
the deceased person in the prescribed
timeandmanner).Giventheamountof
informationregardingthedeceased’s
assets that the regulation requires,
omissionsorerrorsmayarise. It is
not clear if a simple error or omission
amounts to a failure to comply with sec-
tion4.1,therebyleavingthereassess-
ment period open, or if the filing of an
amended return cures the original error
oromissionforthispurpose.
The assessment or reassessment
period also remains open if the minis-
ter establishes that any person made
a misrepresentation attributable to
neglect, carelessness, or willful default
in providing information about the
estate or in omitting to provide infor-
mationabout theestate.Because
there is similar language in the fed-
eral Income Tax Act in the context of
an open reassessment period, related
jurisprudence might provide guidance
regardingtherequiredstandard.The
cases show that an incorrect statement
constitutes a misrepresentation, and
the standard of care is that of a “wise
andprudentperson.”Inlightofthe
detailed information that must be
provided in the required return, estate
representatives should beware of the
possibility of an open-ended reassess-
mentperiod.
TRUSTATTACkCASECOMMENT
NaNCy L. GoLDING, TEP
Partner, Borden Ladner Gervais LLP;
Member, STEP Calgary; Member, STEP
Worldwide Council
In Lafleur Estate (Re),2014ABQB698,a
decisionrenderedinNovember2014,
GreckolJchangedthetermsaffecting
a spousal trust pursuant to a depen-
dant’sreliefclaimbyawidow.
BradleyLafleurhadanestateplan
that included preferred and common
shares in a privately held corporation,
a family trust, a spousal trust, and sev-
eralindividualchildren’strusts.Hiswill
was rather simple, however, because
there were few assets in the estate at
the time of his death and all of them
passedtohiswife,YuliyaLafleur.Brad-
ley’sfatherwasnamedasthetrusteeof
thetrustsandtheexecutorofthewill.
Yuliya received various bank
accounts, money from a life insurance
policy, and a registered retirement
savingsplan;shewasalsoreceiving
income from rental property in the
estate and dividends from the private
corporation.Inaddition,shecontrolled
thefamilytrust.Yuliyaappliedforrelief
for the entire estate to be provided to
herwithoutrestriction.Sheargued
that the trusts failed to recognize her
deserved and desirable independence,
and that they left both herself and her
children vulnerable and at the mercy
ofthetrustee.
The court examined the terms of the
trusts and the money that was flow-
ingthroughthem.Itthenconsidered
Tataryn v. Tataryn Estate,[1994]2SCR
807,andsummarizedtheapplicable
principles as follows:
1. What is “adequate” goes beyond
the “bare necessities,” and the
applicablestatute(theBritish
Columbia Wills Variation Act) does
not contemplate a “needs-based
test.”Anawardunderthestatute
cantakeintoaccountthefamily’s
lifestyleandtheclaimant’srealis-
ticexpectations.
2. The statute attempts to balance
the interests of testamentary
autonomy with the need to provide
economic protection to surviving
familymembers.Ifpossible,the
STEPInside•FEBRUARY2015•VOLUME14NO.1 17
18 STEPInside•FEBRUARY2015•VOLUME14NO.1
court should attempt to recognize
bothinterests.
3. Anawardunderthestatute
shouldtakeintoaccountnot
only the legal obligations of the
deceased toward the family but
alsothedeceased’smoralobliga-
tions.
4. What is “adequate” must be
measured against contemporary
community standards, having
regard to what “a judicious person
would do in the circumstances, by
reference to contemporary com-
munitystandards.”
5. The extent to which all legal and
moral claims can be met depends
onthesizeoftheestate.
6. The statute gives the court a wide
discretion.
The court then reviewed Koma v.
Tomich Estate,2011ABCA186, in
the context of balancing the compet-
ing values of testamentary autonomy
and the legitimate claims and expec-
tationsofsurvivingfamilymembers.
Commenting on Tataryn, the court in
Tomich stated that “there is a range of
estate plans that will satisfy the legal
and moral obligations of the testator,
and that ‘provided that the testator has
chosen an option within this range, the
willshouldnotbedisturbed.’”
The court then made a detailed
review of the factors in Boje v. Boje
(Estate of),2005ABCA73,todeter-
mine the level of support that was
adequate for thespouse. Itnoted
thatbecauseBradleywas33yearsold
when he died and his wife was a simi-
larage,itwaslikelythatshewould
remarry.OneofBradley’sinterests
therefore was ensuring that a portion
of his estate would be preserved for
the children of his marriage and would
not be vulnerable to claims by a third
partywithwhomYuliyahadbecome
legally involved, such as a new part-
ner.Thecourtfurtherobservedthat
if this application were successful,
itwouldresultinYuliyaowning100
percentoftheprivatecorporation’s
shares and having complete control
overthecorporation.
ThecourtfoundthatBradleyhad
methis legalobligationstoYuliya
because she had received more than
one-half of the total family assets and
would receive monthly income that
was tantamount to spousal and child
support.Italsonotedthatshewas
young, and because her children were
in school, she had the opportunity to
pursueacareer. Itconcludedthat
Bradleyhadestablishedtheestateplan
and the trusts to secure income that
was adequate to serve the ongoing
needs of his wife and children, includ-
ing their future educational needs, and
that these should be protected against
anyincursionbyathirdparty.
In balancing the interests of tes-
tamentary autonomy with the need
to provide economic protection to
surviving family members, the court
indicated that community standards
dictatedthatYuliyashouldbeableto
makealifeforherselffreelyandinde-
pendently.Therefore,itdirectedthat
Yuliyawouldcontrolanypropertyheld
in the spousal trust, with the exception
of the preferred shares in the private
corporation, noting that it would not
be wise to remove control of the pre-
ferred shares from the trustee since the
majority of the voting shares were held
forthechildren.Thepreferredshares
weretoremaininthecontrolofBrad-
ley’sfather,whowascontinuingtorun
thecorporation.
The result in this case is interest-
ing, not only because it amends what
appears to be a well thought out estate
plan put in place by the deceased with
specified trusts providing sufficient
income to the beneficiaries, but also
because it exempts a spousal trust and
splits its assets into those controlled by
the spouse and those controlled by the
father.
DISCRETIONISNOTUNFETTERED:BINNINGHOUSEANDFRAUDON APOWER
aNDrEa E. FrISBy
Associate, Legacy Tax + Trust
Lawyers; Student Member,
STEP Vancouver
KaTE S. MarPLES, TEP
Principal, Legacy Tax + Trust
Lawyers; Member, STEP Vancouver
The recent case of TLC The Land Conser-
vancy of British Columbia v. The Univer-
sity of British Columbia,2014BCCA473,
hascapturedtheimaginationofBritish
Columbians as a result of its subject
matter,whichinvolvesawell-known
heritagepropertycalled“theBinning
house,” and its focus on the competing
concernsofinsolvencyandtrustlaw.
TheBritishColumbiaCourtofAppeal
applied the equitable doctrine of fraud
on a power in a forceful decision that
upholds the following principles: a
trustee who deliberately uses a power
in a will to benefit non-objects rather
than objects is committing a fraud on
apower;goodfaithbythetrusteeisno
defencetosuchaclaim;andatransfer
that is made as a result of a fraud on a
powerisvoid.
Underthetermsofherwill,Mrs.Bin-
ningexpressedthewishthattheBin-
ning house be preserved and that, if it
was “feasible and practical,” her trust-
ees establish a foundation or other
organization to “hold, maintain and
use”theBinninghouse.Ifthetrustees
determined that it was not feasible or
STEPInside•FEBRUARY2015•VOLUME14NO.1 19
practical for the foundation to hold the
Binninghouse,thewillprovidedthat
theBinninghouseshouldbesold,and
the proceeds should be given to the
UniversityofBritishColumbia(UBC)to
beaddedtotheB.C.Binningmemor-
ial fellowship fund, a scholarship fund
thatMrs.Binninghadestablishedafter
herlatehusband’sdeath.
The executors of the will and the
trustees of the estate considered
sellingtheBinninghousesinceat
thetimeofMrs.Binning’sdeaththe
estate lackedthe fundsthatwere
necessarytorealizethefoundation.At
thistime,theybecameawareofTLC
TheLandConservancyofBritishCol-
umbia(TLC),anon-profitcharitywith
a mandate to preserve and protect
historicpropertiesforthepublic;TLC
had expressed an interest in acquiring
theBinninghouse.However,when
the trustees initially sought legal
advice regarding the practicality of
transferringtheBinninghousetoTLC
to be maintained and preserved, they
were advised that under the terms of
the will they were empowered only
totransfertheBinninghousetothe
foundation established by the trust-
ees to be held subject to the restric-
tionssetoutinthewill.
OnJuly3,2008,thetrusteesincor-
porated the foundation in the form of
theBinningHeritagePropertySociety,
with two of the trustees and one repre-
sentativeofTLCastheinitialdirectors
andofficers.Thetrusteesresignedas
directors and officers on September
15,2008andwerereplacedbytwoTLC
employees.OnOctober16,2008,title
totheBinninghousewastransferred
from the trustees to the foundation and
immediately thereafter from the foun-
dationtoTLC.Bydeedofgift,thefoun-
dationgavetheBinninghousetoTLC.
Thus,atransferoftheBinninghouse
toTLC,whichcouldnotbeachieved
directly,wasachievedindirectly.
Intheinterveningyearsfrom2008
to2013,TLCheldtitletotheBinning
house.However,inOctober2013,as
a result of financial circumstances,
it entered into a formal restructur-
ing proposal under the Companies’
Creditors Arrangement Act(CCAA).On
October28,2013,TLCreceivedan
unsolicitedoffertopurchasetheBin-
ninghouseforthepriceof$1,600,000.
UndertheCCAAprocess,TLCsought
court approval for the use of the sale
proceeds as operating funds for
therestructuring.Atthistime,UBC
became aware of the pending sale of
theBinninghouseandadvancedthe
positionthatthetransferoftheBin-
ninghousefromthefoundationtoTLC
hadbeenafraudonapowersinceTLC
wasanon-objectunderthewill.UBC
asserted its right as the beneficiary of
the proceeds of sale under the terms
of the will, although it did not object
totheproposedsale.
The trust law argument was heard
by a chambers judge in the context of
theprotectiveCCAAprocess.Inthis
process, a court focuses on assisting
an insolvent company in restructuring
its affairs for the benefit of its ongoing
businessanditscreditors.However,
this meant that the equitable argu-
ment concerning a fraud on a power
was subjugated to the practical pres-
sures of proceeding with an insolvency
plan.Nevertheless,theCourtofAppeal
held that the trust law argument was
fundamental in determining who was
rightfully the recipient of the potential
proceedsofsaleoftheBinninghouse.
It determined that the transfer of the
Binninghouseviathefoundationto
TLCmustbeexaminedinrelationto
the equitable principle of fraud on a
power.
Initsdecision,theCourtofAppeal
reviewed two leading commonwealth
cases concerning fraud on a power
(Wong v. Burt,[2004]NZCA174,and
Kain v. Hutton,[2008]NZSC61)and
adopted the two basic elements of a
fraud on a power that are set out in the
second edition of Thomas on Powers
(Oxford:OxfordUniversityPress,
2012,atparagraph9.02).Theseele-
mentsareasfollows:(1)“adisposition
beyond the scope of the power by the
donee, whose position is referable to
the terms, express or implied, of the
instrument creating the power” and
(2) “a deliberate breach of the implied
obligation not to exercise that power
foranulteriorpurpose.”Inrelationto
the first element, the court interpreted
the terms of the will and determined
thatthedispositionoftheBinning
house to a non-object was beyond the
scope of the power given to the trust-
eesunderthewill.Inrelationtothe
second element, the court held that
the trustees had deliberately used the
power in the will for an ulterior pur-
pose.Thecourtconfirmedthecham-
bersjudge’sfindingthatthetrustees
had acted in good faith, but it deter-
mined that good faith is not a defence
toaclaimoffraudonapower.
The factual outcome of the case is
that the historic building was effect-
ively returned to the estate because
the transfer constituted a fraud on a
powerandwasthereforevoid.The
jurisprudential outcome of the case
is a substantial appellate statement
about fraud on a power that supports
theprinciplethatatrustee’sdiscretion
is not unfettered, but rather is tied to
the content and intention of the instru-
mentthatempowersthetrustee.n
20 STEPInside•FEBRUARY2015•VOLUME14NO.1
IaN WorLaND
Happy new year!Thankstoourmanyvolunteersandsupporters,2014wasaverysuccessfulyearforSTEPCanada.We were able to exceed our goals and expand our services to members because of the generosity and commitment of
somanyofyou.Onbehalfoftheboardofdirectors,Iwishyouanewyearfilledwithpeace,joy,andsuccessinyourendeavours. ThenewyearbringsanewlookforSTEP.Internationally,STEP is rolling out a new logo designed to represent us as a pro-fessional,international,andoutward-facingorganization.Thephrase “advising families across generations” has been added toourlogotoproclaimthecorevaluesofSTEP.Wewillgraduallychange the branding on all of our products to reflect the new logooverthecomingmonths. Thenewyearalsobringsnewdevelopments.OnJanuary28,weofficiallylaunchedourthirdregionalchapter.ThankstotheinauguralchairofSTEPSaskatchewan,BeatyBeaubier,andExecutiveCommitteemembers,ShawnBaier,PinaMelchionna,CrystalTaylor,andTonyBanik,fortheirdedicationanddrive,which will greatly enhance the membership experience in this newregion.Iattendedthechapter’slaunch,alongwith120otherpractitioners. ThefirstofthreecoursesinSTEPCanada’scertificateinestateandtrustadministration(CETA)programwaslaunchedonscheduleinmid-November.ManyCETAstudentsfromtrustcompanies,aswell as law and accounting firms, are enjoying the robust new online learningprogram.IencourageallmemberstoconsidertheCETAcourseaspartofyourorganization’sprofessionaldevelopmentplanfor the administrators and the professionals who surround and sup-portSTEPmembersinvariousroles.Pleasevisitwww.step.catoviewthecourseobjectivesandcurriculum.Also,pleasenotethatthecourseswillincludeQuebecCivilCodecontent.Toaccommo-date our francophone audience and to fully support the national organizationsthathavemadetheCETAprogramarequirementfortheir estate and trust administrators and professionals, our entire programwilleventuallybetranslatedintoFrench. Students in our Diploma program wrote their examinations onNovember24,andanother33studentshavenowsuccess-fullycompletedtheprogram.Providedthattheyhaveaccu-mulated the necessary industry experience, these students will be invited to apply for the trust and estate practitioner (TEP) designationandforfullmembershipinSTEPearlyintheyear. AsthenationalteamcontinuesitsefforttomeetwiththebranchesandchaptersthatmakeupSTEPCanada,theExecutiveCommitteewilltraveltoHalifaxtomeetwiththeSTEPAtlanticExecutiveCommitteeandlocalmembersinMarch.ThismeetingwillprecedetheregularMarchnationalboardmeeting,whichtakesplacebymeansofaconferencecall. IsincerelythankallmembersfortheircontinuedsupportandmembershipinSTEPCanada.Wenowhaveover2,100TEPsand
studentsstudyingfortheirTEPdesignation.Thisgrowthcon-firmsthattheeducation,events,networkingopportunities,andextraordinary efforts of our committees are relevant and valuable forourmembers.InMarch,allmemberswillreceivetheirannualmembershiprenewalpackages,andIencourageyoutoreturnyourrenewalnoticewithpaymentbeforeApril1toensurethatyourmembershipremainsingoodstanding. AsIwroteinmylastmessage,our17thnationalconferencewillbeheldonJune18and19,attheMetroTorontoConventionCentre;pleasemarkyourcalendars.TheProgramCommittee,ledbyRachelBlumenfeld,BrianCohen,andChristineVanCauwen-berghe,hasbeenworkingdiligentlytodesignanotherwonder-fulprogram.WithBillC-43receivingroyalassentonDecember17,thecommitteeisincludingaseriesofsessionstoaddressthislegislation, its impact on personal planning, and its effect on busi-nesssuccessionandcorporateplanning.ThemuchanticipatedpreliminaryprogramisdueforreleaseinearlyFebruary.Watchfortheearly-birdregistrationofferthatwillcomewithit. Lookingbackattheactivitiesandeventsofthepastfewmonths, I must compliment STEP Worldwide for its flawless plan-ning and execution of the first worldwide congress, which was heldinNovemberinMiami.ThenationalboardofSTEPCanadatravelledtoMiamitoattendthecongressandhelditsregularin-personNovembermeetingthere;italsohostedaverysuc-cessful joint event that brought the executives of STEP Canada andSTEPUSAtogether. TheTrustandEstateTechnicalCommittee’s2014prioritycontinuesinto2015:encouragingprovincialbranchestoreviewtheUniformLawConferenceofCanada’sUniform Trustee Act and considerhowitmightbepromotedineachjurisdiction.Thecom-mitteerecentlycirculatedasurveyonbankingprotocolstoallmembers. OnNovember14,theTaxTechnicalCommittee(TTC)pro-ducedawell-attendedwebcastabouttheOctober2014legislativeproposalsbytheDepartmentofFinance.Thepanel,madeupofPamelaCross,LisaHeddema,andAngelaRoss,deliveredanote-worthy presentation that contained technical information with whichallmembersshouldfamiliarizethemselves.Aspredictedinthewebcast,BillC-43receivedroyalassentonDecember17.Memberscanpurchasethearchivedwebcastfromwww.step.ca. TheTTCwasaskedbytheOntarioMinistryofFinanceforasubmissionconcerningthedraftEstateAdministrationTaxReg-ulations,guide,andformofreturn.ThissubmissionwassenttoDanMichaud,directoroftheAdvisoryandComplianceBranchoftheMinistryofFinanceandsharedwithSTEPmembersonDecember18inaneNewscommunication. OnbehalfoftheSTEPCanadaExecutiveCommittee,madeupofDeputyChairsTimGrieveandRuthMarch,TreasurerChris Ireland, and Secretary Pamela Cross, in addition to board members, past chairs, my colleagues at STEP Worldwide, and the dedicated professional team at the STEP Canada national office,Ithankeveryonewhoismakingpositivechangesinhisorherregion;servingonvariouslocal,regional,andnationalcommittees;andspreadingthenewsaboutSTEP.Youreffortsare very much appreciated and greatly enhance the strength andvitalityofourorganization.n