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When an individual dies, a final return must be filed by their legal representative from January 1st up to the date of the death.

Generally, the final return is due on or before the following dates:

• April 30th – For deaths occurring between January 1 – October 31
• Six months after the date of death – For deaths occurring between November and December.

Any income earned by the estate after the date of death is reported on a T3 Trust Income Tax Return.

All corporations resident in Canada (except registered charities) are required to file a corporate income tax return each year even if no taxes are payable.

Your corporate tax return is due to be filed 6 months after your fiscal yearend date.

There are many reasons for a corporate restructuring to occur including:

• Preparing for the transfer of your business to a child
• Preparing for the sale of your business to an arm’s length party
• Multijurisdictional/ cross-border issues
• Tax planning

While our firm does not specialize in corporate tax reorganizations, we work closely with various experts in this area to facilitate the process on behalf of our clients.

There are two different types of trusts in Canada

1. Testamentary

This is a trust or estate that is generally created on and as a result of a death. The terms are established by the will or court order.

2. Inter vivos trust

An inter vivos trust is basically any trust that is not a testamentary trust, and there are many different types. The most common types of inter vivos trusts that we work with are family trusts.

A family trust is basically a relationship in which one person (settlor), gives property to another person (trustee), to manage on behalf of beneficiaries who are usually dependent children and or a spouse. Trusts are often established for small business owners and their estate planning.

An estate is considered a trust. As a result, the executor is required to file a T3 Statement of Trust Income generally by a March 31st due date. The trust is an arrangement in which the trustee holds property for the benefit of the estates beneficiaries. The trust is considered a taxpayer and accordingly must file an annual tax return to report all of the income of the estate until such a time that all of the assets of the trust have been distributed to the beneficiaries.

Upon completion of all distributions to beneficiaries, a request for a clearance certificate can be sent to CRA. In many cases this process is time intensive as estates can be very complex, in particular when contested with a legal challenge.

Regardless of whether you are an employee or a small business owner, the Canadian tax system is exceedingly detailed and complex. Due to the continuously changing nature of our tax system, it is increasingly important to align yourself with a trusted advisor that can help determine a tax planning strategy that will minimize the taxes you pay.

Personal tax planning may include:

• RRSP vs TFSA
• RESP
• Sale of a house
• Retirement & Estate planning

Corporate tax planning may include:

• Wages vs dividends
• Share restructuring & estate planning
• Lease vs buy analysis

Estate planning involves creating a comprehensive plan for the transfer of your assets after death. Unfortunately estate planning is ignored by many until the latter stages of life. However, estate planning is something that should be considered by every adult, in particular those with children. A comprehensive estate plan usually involves participation from the following parties:

• Lawyer to help create a will, power of attorney, assign an executor, and in some cases establish a trust.
• Financial Advisor to help create a financial plan, manage investments, and set up life insurance, disability insurance, and critical illness protection plans.
• Accountant to put in place tax planning strategies to minimize the tax implications on death. Furthermore, the accountant will maintain tax compliance requirements of the estate upon death and correspond with the lawyer and financial advisor to facilitate the process.