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Archive for Estate Planning Tax

Compliance 2014 – Capital Acquisitions Tax – Ireland

The 2010 Finance Act introduced a fixed pay and file date for all gifts and inheritances with a “valuation date” after 14th June 2010. As a result, the Capital Acquisitions Tax year runs from 1st September to 31st August in the following year.

C.A.T. arising on gifts/inheritances, where the “valuation date” falls within the twelve month period ending on 31st August in a particular tax year, must be paid and filed with Revenue by the 31st October of that year.

What do we mean by “Valuation Date”?

The “valuation date” is the date on which the property making up the gift or inheritance is valued. The “valuation date” for a gift is the date the individual receives the gift but Read more

Capital Gains Exemption – What You Need to Know

Tax Saving of Claiming Capital Gains Exemption

A Canadian business owner who carries on an active business through a corporation may be eligible for an $800,000 lifetime capital gains exemption (indexed for inflation after 2014) on the sale of his/her corporation shares or on the deemed disposition of his/her corporation shares immediately before his/her passing. For a Canadian business owner in the top marginal tax bracket, the claim of the $800,000 lifetime capital gains exemption will result in a tax saving ranging from $156,000 to $200,000, depending on the province in which the business owner is a resident.

How to Qualify for the Capital Gains Exemption

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Australian “Significant Investor” Residence Visa Applicants Need To Consider Tax And Estate Planning Issues.

Australia’s 2012 “significant investor” residence visa scheme has attracted some 1,000 applicants who have committed to invest AUD4 billion in businesses or other complying investments. To date, the vast majority of applicants have been from Chinese nationals.

The scheme might have been expected to attract some interest from Russian entrepreneurs and investors. However, Australia’s personal tax rates may be a distraction (an effective maximum marginal rate of 49% currently applies to income in excess of AUD180,000 pa). Furthermore, the current geopolitical situation around Ukraine and the flight MH17 atrocity may now deter potential applicants who might be regarded as associates of the Russian leadership. Read more

Canadians With US Rental Property – What Are The Cross-Border Tax Implications?

Canadians earning income from US rental property can be fraught with unexpected tax problems, which could severely hurt their after-tax return on investment. It is important to consult a cross-border tax professional before the purchase to understand all the US and Canadian tax implications of owning US rental property and to make the best decision for their situation on the right structure to own and finance the purchase of US rental property.

This is the first of a series of articles on the cross-border tax considerations of investing in US rental property. If you are planning to purchase US rental property, you need to have some basic understanding of the following US and Canadian tax law before you can make a sound decision on how you should own and finance the purchase of US rental property. Read more

IRC 1014 And The Significance of Stepped Up Basis In Estate Planning

According to Internal Revenue Code Section 1014 the basis of property acquired from a decedent is the fair market value of the property at the date of the decedent’s death. This is often referred to as stepped up basis and it is profoundly significant for US taxpayers dealing with the myriad of issues surrounding estate planning or tax preferential transfer of assets.

For those of you not used to the term ‘basis’ it generally is defined as the cost or value of an investment, asset or something that is owned, given or inherited at the time it was acquired. It also refers to any investment in improvements made to the asset while you owned it. Read more

Special Rules In The Canada-US Tax Treaty Apply To Cross-Border Death Tax Issues

Canada and the United States have very different regimes for imposing taxes on death. The United States imposes a Federal Estate Tax; however, Canada has not imposed any Estate Tax since 1971. Rather, Canada taxes accrued, but unrealized, capital gains on death, as part of its income tax system.

Most tax practitioners are not aware of the fact that there special rules found in Article XXIX-B of the Canada-United Tax Convention (“the Treaty”) that are aimed at providing relief in connection with certain cross-border death taxes issues.

Some of these are summarized below:

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How Wealthy Immigrants To Canada Can Use A Holding Company To Create A Tax-Free “Pipeline”

There is a little-known method by which wealthy immigrants to Canada can use a holding company (“Holdco”), either in Canada or offshore, to receive, otherwise taxable, money tax-free in Canada.

This will be applicable in situations where that immigrant holds a significant interest in foreign a corporation (“Forco”), either alone, or with family members.

This technique will be even more attractive now that “immigrant trusts” will no longer be available as a tax planning tool for wealthy immigrants (see my blog posting A Sudden Death For The Canadian “Immigrant Trust”!). Read more

Distributions From Canadian Trusts Or Estates To Foreign Beneficiaries Can Entail Tax Notification And Clearance Requirements

In certain cases, a distribution of capital by a trust(1) to a non-resident beneficiary will bring into play certain notification and tax clearance requirements found in subsection 116.

As a general rule, a distribution of capital by a trust to a beneficiary is considered a “disposition” by that beneficiary of all or a portion of that beneficiary’s capital interest in the trust(2).

If the interest of the beneficiary is “taxable Canadian property” (“TCP”), the beneficiary will be required to send a notification of such disposition to the Canada Revenue Agency (“CRA”) within 10 days after the disposition(3). In addition, the CRA takes the position that the trust itself can be liable for tax, in such circumstances, if a tax clearance is not Read more

U.S. Taxation of Entities, Associations, and Partnerships: What’s Your “Situs” Roger?

In the U.S. tax system, there is no characteristic of associations or entities (partnerships, corporations, and trusts) that corresponds exactly to the “nationality” or “residence” of individuals. For most organizations, however, there is a place – or at least a distinct legal environment – that establishes their existence and identity. This place, sometimes referred to as an entity’s “situs”, bears heavily on its taxation.


The situs of a corporation is inextricably tied to the country of its incorporation. To that end, two simple words define the tax treatment of a corporation: “domestic” and “foreign.” A “domestic” entity (including a partnership or a corporation) is one “organized in the United States under the laws of the United States or of any State.” § 7701(a)(4). Colloquially, Read more

40% of Big Firm Partners Retiring Within Decade

High Net Wealth Partners Retiring

On April 28, 2014 The American Lawyer published its annual (2014) Big Law report in which it found that 16% of partners in the US’ largest 200 law firms by revenue are 60 years old or older, with at least 8% 65 or older.  These 16% of big firm partners will be retiring over the next five years.  Moreover, right behind this retiring group are 28% more partners that have reached at least 50 years of age.

While these thousands of retiring partners leading up to retirement may have been earning between $750,000 and $3 million annually, most also have lifestyles that correspond to spending this level of income.  These retiring partners are now asking Read more

Foreign Trusts and Installment Sales


A United States Settlor of an irrevocable Foreign Trust having a United States beneficiary is deemed to be the owner of the Foreign Trust. Subject to statutory exceptions, the Settlor is the taxable party regardless of whether the Settlor has released all dominion and control of the trust assets by an irrevocable transfer and the right to alter, amend, or modify the trust document. This is the income tax treatment of a United States Settlor by Section 679 of the Code. (1) Because the Settlor is treated as the owner of the trust assets, the transfer of appreciated assets to a Foreign Trust does not occasion a taxable event as contemplated by Section 684 of the Code. Read more