Top tax stories of 2015

There was a lot of action on the tax front this year, and we’ve kept tabs on the government’s every move. Here are the biggest stories.

Trusts

They were great while they lasted, but graduated rates for testamentary trusts will be read their last rites on New Year’s Eve. For some people, however, they’ll live on—albeit for a relatively short time—in the form of Graduated Rate Estates (GREs) or Qualified Disability Trusts (QDTs).

If you’re thinking of soothing the sting of these changes by setting up a trust in Alberta, think again, because the tax situation in oil country ain’t what it used to be.

T1135

This year’s federal budget streamlined the foreign property reporting requirement (Form T1135) for certain taxpayers. What a relief! But don’t get too excited, because T1135 reporting is still no easy task. This article answers some of the most common questions people have about the form; this one discusses key pitfalls to avoid when filling it out. Unless you read the Income Tax Act for fun, best to leave all of this to your advisor and accountant.

RRIFs

You asked for it, you got it. Minimum RRIF withdrawals were lowered this year, but did the government go far enough? One think tank says No.

But it’s not even clear you should take advantage of the lower minimums. And if you have a Guaranteed Minimum Withdrawal Benefit (GMWB), the new RRIF rules may not be so welcome after all.

Probate in Ontario

Valuing an estate for probate used to be a piece of cake. Not any more. The Ontario government felt some executors were lowballing estate values, so they stiffened up the reporting regime.

Insurance

Insurance is complicated business, and new rules make it more so. In addition to modernized exempt testing that reflects the fact people are living longer, new rules impact corporate-owned life insurance and capital dividend account strategies. Also, expect to pay more tax if you have an insured annuity.

But it’s not all bad. Here’s a rundown of pros and cons.

Charitable giving

New rules change the way you’ll need to plan for donations on death, and give your executor more flexibility. This year also saw the government take steps toward extending favourable tax treatment to donations of private company shares and real estate. See what it might look like with this case study.