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2. Agenda Overview of Canadian tax filing requirements on death
Other tax considerations
Mitigating death taxes
© 2016 Khalfan Chartered Accountancy. All rights reserved. CONFIDENTIAL

3. Tax Filing Requirements
Death of a Taxpayer – T4011 Guide
Types of returns to file:
Terminal T1 return – Jan 1 to date of death
“Deemed disposition” of all capital property at FMV on last to die
Various deductions and elections available
Filing deadlines to avoid penalties
Could result in a large tax bill that is due immediately
© 2016 Khalfan Chartered Accountancy. All rights reserved. CONFIDENTIAL

4. Tax Filing Requirements
“Rights & Things” return
optional return
covers certain items such as dividend payable but not paid, vacation pay etc.
Essentially, offer opportunity to file a second tax return and benefit from graduated tax rates
© 2016 Khalfan Chartered Accountancy. All rights reserved. CONFIDENTIAL

5. Tax Filing Requirements
Estate return (”Testamentary Trust”)
Covers day after date of death to Dec 31 or off calendar period
Tax changes for deaths occurring in 2016 and beyond
Graduated Rate Estate (GRE)
GRE Benefits
Charitable gifting – timing of deduction
© 2016 Khalfan Chartered Accountancy. All rights reserved. CONFIDENTIAL

6. Other Tax Considerations
Residency of estate for tax purposes
“Mind and management test”
Voluntary disclosure
Confession of sins
U.S. tax issues
Were you born in the U.S. OR have a Green Card?
Clearance certificate request
Before distributing assets
Partial and final
Can take upwards of 6 to 9 months
© 2016 Khalfan Chartered Accountancy. All rights reserved. CONFIDENTIAL

7. Mitigating Death Taxes
Managing your tax burden
Goal to minimize taxes applicable on death
Various techniques and planning tools available – “Estate Planning”
Use of Family Trusts
“Freeze” or cap death taxes for owners of private companies
© 2016 Khalfan Chartered Accountancy. All rights reserved. CONFIDENTIAL

8. Family Trusts Typical Corporate Structure Mr. X Mrs. X OPCO C/S C/S
Legend:
C/S = Common Shares
© 2016 Khalfan Chartered Accountancy. All rights reserved. CONFIDENTIAL

9. Family Trusts Freeze Kids Mr. X Mrs. X Mr. X Mrs. X HoldCO OPCO C/S
P/S
C/S
P/S
C/S
OPCO
Legend:
C/S = Common Shares
P/S = Preferred Shares
© 2016 Khalfan Chartered Accountancy. All rights reserved. CONFIDENTIAL

10. Life insurance matters
Funding death taxes
Permanent insurance is often used to fund death taxes
Beware of significant changes coming to new Life Insurance policies issued after 2016

11. Q&A Thank You