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The problem with Section 84.1, according to the Department of Finance is the wording as it describes a specific type of avoidance transaction.  Therefore, the section does not apply to transactions that avoid its specific terms.  In particular, the section can be avoided to enable an individual shareholder to obtain capital gains treatment rather than taxable dividend treatment with respect to taxable capital gains that are ineligible for the Lifetime Capital Gains Exemption.  With the case of intergenerational business transfers, the government did mention that they are reviewing the current income tax system that may have had adverse effects on genuine...
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For the past weeks, our blogs have been focused on the proposed changes that the Government announced to address tax planning strategies used by private corporations.  We’ve already reviewed the proposed changes to the first two strategies: income sprinkling and holding passive investments in the corporation.  This week, we’ll take a look at the proposed changes to address the third tax planning strategy – converting a private corporation’s regular income into capital gains. This strategy, according to the Department of Finance, can reduce income taxes by taking advantage of the lower tax rates on capital gains.  Generally, income is paid out...
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