1. PricewaterhouseCoopers LLP The colour contrast has been set to maximum. Click on PwC, Tools, Colour Contrast, to select Normal-contrast colours. The colour contrast has been set to maximum. Click on PwC, Tools, Colour Contrast, to select Normal-contrast colours. Page 1 Canadian Association of MoversDecember 2007 Tax Structuring – A Primer Jason Safar Jill Blanchard

2. PricewaterhouseCoopers LLP The colour contrast has been set to maximum. Click on PwC, Tools, Colour Contrast, to select Normal-contrast colours. The colour contrast has been set to maximum. Click on PwC, Tools, Colour Contrast, to select Normal-contrast colours. Page 2 Key Point Plan in Advance Produces best tax results. Provides most flexibility.

3. PricewaterhouseCoopers LLP The colour contrast has been set to maximum. Click on PwC, Tools, Colour Contrast, to select Normal-contrast colours. The colour contrast has been set to maximum. Click on PwC, Tools, Colour Contrast, to select Normal-contrast colours. Page 3 Tax Plan Overview No two tax plans are alike. Each plan is unique to the individual and their family. The starting point for the tax plan is defined and clear objectives.

4. PricewaterhouseCoopers LLP The colour contrast has been set to maximum. Click on PwC, Tools, Colour Contrast, to select Normal-contrast colours. The colour contrast has been set to maximum. Click on PwC, Tools, Colour Contrast, to select Normal-contrast colours. Page 4 Tax Plan – Internal vs. External Are we planning for succession? Are we planning for sale?

5. PricewaterhouseCoopers LLP The colour contrast has been set to maximum. Click on PwC, Tools, Colour Contrast, to select Normal-contrast colours. The colour contrast has been set to maximum. Click on PwC, Tools, Colour Contrast, to select Normal-contrast colours. Page 5 Common Components of the Tax Plan Freeze Trusts Holding Companies

6. PricewaterhouseCoopers LLP The colour contrast has been set to maximum. Click on PwC, Tools, Colour Contrast, to select Normal-contrast colours. The colour contrast has been set to maximum. Click on PwC, Tools, Colour Contrast, to select Normal-contrast colours. Page 6 Basic Estate Freeze Mr. X (Owner) Opco Preferred Mrs. X (Kids) Common

7. PricewaterhouseCoopers LLP The colour contrast has been set to maximum. Click on PwC, Tools, Colour Contrast, to select Normal-contrast colours. The colour contrast has been set to maximum. Click on PwC, Tools, Colour Contrast, to select Normal-contrast colours. Page 7 What is a Freeze? Fixes the value of the current shareholders interest in the business. Allows for future increases in the value of the business to be transferred to new shareholders.

8. PricewaterhouseCoopers LLP The colour contrast has been set to maximum. Click on PwC, Tools, Colour Contrast, to select Normal-contrast colours. The colour contrast has been set to maximum. Click on PwC, Tools, Colour Contrast, to select Normal-contrast colours. Page 8 Why Freeze? Multiply the $750,000 lifetime capital gains exemption -Additional $3 million of tax-free proceeds ($750,000 x 4). -Potential tax savings of $700K. Fix your death tax liability Incentive for the next generation Income splitting opportunities

9. PricewaterhouseCoopers LLP The colour contrast has been set to maximum. Click on PwC, Tools, Colour Contrast, to select Normal-contrast colours. The colour contrast has been set to maximum. Click on PwC, Tools, Colour Contrast, to select Normal-contrast colours. Page 9 Freezes Partial Freezes What percentage of future growth do you want? Real Estate & Business – freeze one, not the other. Flexible Freezes Use a trust structure and be a beneficiary.

10. PricewaterhouseCoopers LLP The colour contrast has been set to maximum. Click on PwC, Tools, Colour Contrast, to select Normal-contrast colours. The colour contrast has been set to maximum. Click on PwC, Tools, Colour Contrast, to select Normal-contrast colours. Page 10 Basics About Trusts Separate legal entity treated for tax as an individual Discretionary versus non-discretionary. Trustees control (discretionary). Beneficiaries benefit.

11. PricewaterhouseCoopers LLP The colour contrast has been set to maximum. Click on PwC, Tools, Colour Contrast, to select Normal-contrast colours. The colour contrast has been set to maximum. Click on PwC, Tools, Colour Contrast, to select Normal-contrast colours. Page 11 Trust - Basic Structure Opco Family Trust Mr. X Preferred Common Mr. X, Mrs. X, Kids, Others

12. PricewaterhouseCoopers LLP The colour contrast has been set to maximum. Click on PwC, Tools, Colour Contrast, to select Normal-contrast colours. The colour contrast has been set to maximum. Click on PwC, Tools, Colour Contrast, to select Normal-contrast colours. Page 12 Why Trusts? Give without giving. Enhanced flexibility. Income splitting opportunities.

13. PricewaterhouseCoopers LLP The colour contrast has been set to maximum. Click on PwC, Tools, Colour Contrast, to select Normal-contrast colours. The colour contrast has been set to maximum. Click on PwC, Tools, Colour Contrast, to select Normal-contrast colours. Page 13 Income Splitting Opportunities Structure allows for income splitting between family members. Dividends can be split between the owner and the trust. The trust distributes income to the various beneficiaries. A spouse or adult child in university with no other income could receive up to $48,000 in dividends each year tax free.

14. PricewaterhouseCoopers LLP The colour contrast has been set to maximum. Click on PwC, Tools, Colour Contrast, to select Normal-contrast colours. The colour contrast has been set to maximum. Click on PwC, Tools, Colour Contrast, to select Normal-contrast colours. Page 14 Income Splitting Opportunities Non-eligible Dividends 2007 Eligible Dividends Dividends received$35,115$48,839 Federal income taxNil Ontario income tax$450$856 Federal AMT *Nil Ontario AMT *Nil Total tax paid by low income person$450$856 As percentage of dividend1.28%1.75% High rate taxpayer’s tax$11,005$12,254 Potential tax savings$10,555$11,398 Dividend Refund if CCPC has RDTOH$11,705$16,280 * Tax can be applied against future tax liabilities

15. PricewaterhouseCoopers LLP The colour contrast has been set to maximum. Click on PwC, Tools, Colour Contrast, to select Normal-contrast colours. The colour contrast has been set to maximum. Click on PwC, Tools, Colour Contrast, to select Normal-contrast colours. Page 15 Holding Companies Ability to receive tax free inter-corporate dividends. Creditor Proofing. Sale Planning.

16. PricewaterhouseCoopers LLP The colour contrast has been set to maximum. Click on PwC, Tools, Colour Contrast, to select Normal-contrast colours. The colour contrast has been set to maximum. Click on PwC, Tools, Colour Contrast, to select Normal-contrast colours. Page 16 Mr. X Opco Shares Cost = $0 FMV = $1M Holding Companies – Corporate Structure

17. PricewaterhouseCoopers LLP The colour contrast has been set to maximum. Click on PwC, Tools, Colour Contrast, to select Normal-contrast colours. The colour contrast has been set to maximum. Click on PwC, Tools, Colour Contrast, to select Normal-contrast colours. Page 17 Holdco Opco Shares Cost = $0 FMV = $1M Mr. X Shares Cost = $0 FMV = $1M Insert a holding company on a tax deferred basis. Holding Company – Corporate Structure

18. PricewaterhouseCoopers LLP The colour contrast has been set to maximum. Click on PwC, Tools, Colour Contrast, to select Normal-contrast colours. The colour contrast has been set to maximum. Click on PwC, Tools, Colour Contrast, to select Normal-contrast colours. Page 18 Holdco Opco Debt Cost = $1M FMV = $1M Mr. X Shares Cost= $0 FMV = $0 Pay a dividend equal to FMV and loan it back to the corporation. Shares Cost = $0 FMV = $1M Holding Company – Corporate Structure

19. PricewaterhouseCoopers LLP The colour contrast has been set to maximum. Click on PwC, Tools, Colour Contrast, to select Normal-contrast colours. The colour contrast has been set to maximum. Click on PwC, Tools, Colour Contrast, to select Normal-contrast colours. Page 19 Complications: Safe Income. $750 Capital Gains Exemption. Holding Company – Corporate Structure

20. PricewaterhouseCoopers LLP The colour contrast has been set to maximum. Click on PwC, Tools, Colour Contrast, to select Normal-contrast colours. The colour contrast has been set to maximum. Click on PwC, Tools, Colour Contrast, to select Normal-contrast colours. Page 20 Holding Company - Over Trust Structure Opco Mr. X (Owner) Holdco Preferred Shares Discretionary Trust Mr. X, Mrs. X, Kids, Others Common Shares

21. PricewaterhouseCoopers LLP The colour contrast has been set to maximum. Click on PwC, Tools, Colour Contrast, to select Normal-contrast colours. The colour contrast has been set to maximum. Click on PwC, Tools, Colour Contrast, to select Normal-contrast colours. Page 21 Holding Company – Over Trust Structure The benefits of this structure will allow: QSBC status to be maintained for capital gains exemption. -Excess cash can be given as a dividend up the organizational chart. Eligible dividends qualify for lower tax rates -RDTOH planning with respect to investment income.

22. PricewaterhouseCoopers LLP The colour contrast has been set to maximum. Click on PwC, Tools, Colour Contrast, to select Normal-contrast colours. The colour contrast has been set to maximum. Click on PwC, Tools, Colour Contrast, to select Normal-contrast colours. Page 22 Dividend/Bonus Planning Consider cash needs. Deferral advantage increases as corporate tax rates decline. Federal/Ontario Corporate Tax Rates General CCPC (Up to $400K) 200736.12%18.62% 200834.5%17% 200934%16.5% 201033%16.5% 201132.5%16.5%

23. PricewaterhouseCoopers LLP The colour contrast has been set to maximum. Click on PwC, Tools, Colour Contrast, to select Normal-contrast colours. The colour contrast has been set to maximum. Click on PwC, Tools, Colour Contrast, to select Normal-contrast colours. Page 23 Dividend/Bonus Planning New Dividend Legislation Dividends more advantageous than bonus Federal & Ontario Top Rates Eligible Dividends Non-Eligible Dividends Before 200631.34% 200625.09% 200724.64% 200823.96% 200923.06% 201022.38%

24. PricewaterhouseCoopers LLP The colour contrast has been set to maximum. Click on PwC, Tools, Colour Contrast, to select Normal-contrast colours. The colour contrast has been set to maximum. Click on PwC, Tools, Colour Contrast, to select Normal-contrast colours. Page 24 Dividend/Bonus Planning New Dividend Legislation Designation must be made. Based on available “GRIP” balance. Penalties for excess designations.

25. PricewaterhouseCoopers LLP The colour contrast has been set to maximum. Click on PwC, Tools, Colour Contrast, to select Normal-contrast colours. The colour contrast has been set to maximum. Click on PwC, Tools, Colour Contrast, to select Normal-contrast colours. Page 25 Dividend/Bonus Planning New Dividend Legislation 2007 Corporate Non – M&P Taxable Income Small Business Deduction 2007 Top Rate Tax per $100 of income Tax paid on $100 Bonus$48.36 If Bonus is not paid Corporate tax$18.62$36.12 Individual tax on dividends$25.48$15.74 Total Tax Paid – No Bonus$44.11$51.86 Potential tax deferral if bonus not paid$29.74$12.24 * Does not consider impact of R&D Tax Credits

26. PricewaterhouseCoopers LLP The colour contrast has been set to maximum. Click on PwC, Tools, Colour Contrast, to select Normal-contrast colours. The colour contrast has been set to maximum. Click on PwC, Tools, Colour Contrast, to select Normal-contrast colours. Page 26 Dividend/Bonus Planning New Dividend Legislation 2010 Corporate Non – M&P Taxable Income Small Business DeductionTop Rate Tax per $100 of income Tax paid on $100 Bonus$48.36 If Bonus is not paid Corporate tax$16.50$33.00 Individual tax on dividends$26.17$15.00 Total Tax Paid – No Bonus$42.67$48.00 Potential tax deferral if bonus not paid$31.86$15.36

27. PricewaterhouseCoopers LLP The colour contrast has been set to maximum. Click on PwC, Tools, Colour Contrast, to select Normal-contrast colours. The colour contrast has been set to maximum. Click on PwC, Tools, Colour Contrast, to select Normal-contrast colours. Page 27 Other Considerations Corporate owned life insurance Attribution rules. U.S. citizens.

28. PricewaterhouseCoopers LLP The colour contrast has been set to maximum. Click on PwC, Tools, Colour Contrast, to select Normal-contrast colours. The colour contrast has been set to maximum. Click on PwC, Tools, Colour Contrast, to select Normal-contrast colours. Page 28 Summary All planning requires advanced planning. Can significantly increase after-tax proceeds.

29. PricewaterhouseCoopers LLP The colour contrast has been set to maximum. Click on PwC, Tools, Colour Contrast, to select Normal-contrast colours. The colour contrast has been set to maximum. Click on PwC, Tools, Colour Contrast, to select Normal-contrast colours. Page 29 Questions and Answers

30. The colour contrast has been set to maximum. Click on PwC, Tools, Colour Contrast, to select Normal-contrast colours. The colour contrast has been set to maximum. Click on PwC, Tools, Colour Contrast, to select Normal-contrast colours. pwc