The ITA specifies who is required to file and remit taxes in a given tax year. The rules are complex and cover a vast array of situations. However, there a few instances worth noting that are particularly relevant to the Will and estate planning process.

The ITA contains many provisions that deem there to have been a transfer of property even if there was no actual sale. One example is the situation where property (real or personal) is transferred to a person not dealing at arm’s length with the transferor (e.g. parent transfer to child) for nominal consideration. Here the ITA deems there to have been a disposition of the property at fair market value with the transferor having to report those proceeds for tax purposes rather than the actual amount received. This could mean a much larger gain than the actual transaction with no way to pay the applicable taxes. The person receiving the property is, however, deemed to have received them at a cost base equal to the consideration paid. This can lead to double taxation when the person later sells or otherwise disposes of the property. Therefore, if a gift is intended, it should be a true gift with no consideration (not even $1 or $2).

Something as simple a changing an account from single ownership to joint with rights of survivorship can trigger a deemed disposition with a resulting tax liability depending on the nature of the relationship between the persons. There are some transactions that create exemptions from the results of a deemed disposition, such as transfers between spouses, but in many instances there is no such relief. Just because a change of ownership form is simple to complete does not mean the tax and other estate planning implications are simple.

Another example of where a deemed disposition can occur is a transfer of property to a trust or corporation for little or no consideration. Again, the transferor will be deemed to have disposed of the property as if there had been a sale and to have received fair market value proceeds. There are exceptions that can apply in some instances to allow the transfers to take place on a rollover basis (at the cost base of the property rather than fair market value) but these need to be explored in advance to confirm the requirements for eligibility.

The filing deadline for individuals is April 30th unless they carried on a business in the year in which case it is June 15th but any amount owing still has to be paid by April 30th.