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Tag: estate tax planning

The Liability of Personal Representatives in Estate Administration

Personal Liability of Personal RepresentativesThe purpose of the personal liability provision is to encourage personal representatives to ensure that they do not overlook their obligations, such as to file tax returns on behalf of an estate and to provide the CRA with a direct source for the payment of tax. Taking into account such provisions of the ITA, a prudent personal representative looking to avoid personal liability should settle the deceased taxpayer’s estate after the assessment and audit process of the CRA. Due to this, significant delays can occur before the estate was fully distributed. It is very difficult to administer an estate on this basis.As an alternative, many personal representatives assume the personal liability described above by making interim distributions and retain a reserve to meet and exceed anticipated taxes. They do not distribute the reserve until the clearance certificate is in hand. Otherwise, if the personal representative is on good terms with the beneficiaries (and considers them to be solvent), he or she may be prepared to distribute the entire estate prior to the receipt of a clearance certificate and to accept the undertaking of the beneficiaries to indemnify the personal representative to the extent that the personal representative is subsequently found to be liable for additional tax.

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The Basics of Corporate Income Tax and Shareholders’ Dividend Tax

A corporation is a legal entity separate from its owners, the share holders, and is subject to federal and provincial income taxes (like individuals). There are two ways in which the taxation of a corporation differs from that of an individual. Firstly, a corporation is subject to both federal and provincial taxes on capital. Secondly, unlike individuals, who are charged progressive income tax rates, corporations are

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Death Tax, Probate Tax, Estate Tax, Inheritance Tax, Wealth Tax and Final Income Taxes; which of these should we Canadians be concerned for?

Unlike some other countries in the world, Canada does not impose taxes on wealth or the value of an inheritance upon death; but in its place Canada taxes the deceased’s income for its final year. Canada, unlike the United States, does not charge an estate tax on the value of the capital of an estate. Although there are only taxes on income in Canada, certain specific rules make the tax more burdensome in the year of

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