1. Robin MacKnight Robert Martini

2. November 9, 2006 Technical amendments October 16, 2006 Notice of Ways and Means Motion – Eligible Dividends December 20, 2006 – CRA Guidelines on Eligible Dividends Ontario Bill 74 – “Strengthening Business Through a Simpler Tax System Act, 2006” Recent cases

3. Technical Amendments November 9, 2006 technical amendments (includes revised NRT and FIE rules) What to watch for

4. Technical Amendments: Stock Dividends Proposed non-recognition of cost base Dividends subject to s. 112 deduction not included in ACB Impact on stock dividend planning?  OBCA proposed amendments  but proposals could thwart use of stock dividends in reorganizations

5. Technical Amendments: Safe Income Strips Similar to stock dividend issue PUC increase/deemed dividend problem  cost base not increased  on deemed dividends  where contributed surplus converted to PUC Uncertainty? What alternatives should be considered?

6. Technical Amendments: Cost Base Policy Rationale for these proposals? Alternative method:  daylight loan  pay actual dividend  recapitalize If same result, why introduce this rule?

7. Technical Amendments: Loss of Status as Testamentary Trust Anti-avoidance rule Watch for trust debt and liabilities Exceptions prevent loss of status

8. Technical Amendments: Other Too numerous to mention Don’t assume they are inconsequential Could affect your situation

9. Eligible Dividends October 16, 2006 revised NWMM Some changes to opening GRIP  “full rate” taxable income and M&P  intercompany dividends Uncertainty remains  dividend streaming?

10. Eligible Dividends – CRA Guidelines CRA issued Guidelines on December 20, 2006 Guidelines set out notification procedures CRA position on:  non-residents  partial dividends

11. Eligible Dividends: Issues and Considerations Consider share reorganization  class for resident shareholders  class for non-resident shareholders Investment income  can you restructure?  Goal – deferral plus eligible dividend treatment  possible?

12. Ontario Bill 74 “Strengthening Business Through a Simper Tax System Act, 2006” Stated Benefits:  single tax form  single tax collector  one set of income tax rules

13. Ontario Bill 74 One set of income tax rules?  still differences  transitional provisions Taxation Act – combines ITA and CTA

14. Recent Cases Book-keeping error or retroactive tax planning?  Irmen  9100-2402 Quebec Inc. Gambling winnings not taxable  Leblanc 2006 TCC 680 Waivers – Honeywell 2007 FCA 22 De Facto directors – Hartrell

15. Recent Cases RRSP strips – Nunn FCA Trusts – Rose v. Rose Piercing the corporate veil – Wildman v. Wildman