From: Canuck57@nospam.com   
      
   On 06/05/2014 5:10 AM, Alan Baggett wrote:   
      
   > Mrs. L still received the income, but the trust paid the taxes at low rates   
   rather than Mrs. L at high rates. Overall this meant less money to Revenue   
   Canada, as it was called then, and more money for her--much more.   
      
   Greedy Ottawa tries double taxing in such situations.   
      
   Another tip is not to use trusts like RRSP/LIRA as bank accounts. Even   
   though I don't need the income, I withdraw on these accounts to a tax   
   rate I am happy with, which is lower than the max rate.   
      
   Taking out say $50k a year even if you don;t need it over say 20+ years   
   is a lot cheaper tax wise than waiting until you are dead and get 45% of   
   it taxed.   
      
   My problem is I am in a RRSP tax trap.  RRSP grows faster than I can   
   take it out without paying 40% or more in taxes.   
      
   My surprise for greedy Ottawa is that the entire RRSP is going to be   
   donated to 2 real charities, as a research charity has durable value,   
   bailouts for corporations/banks/unions/war/corruption/FN waste and other   
   money for nothing consumption has no durable value.   
      
   Taxation has become modern day slavery.   
      
      
   > The new accountant also recommended that Mrs. L file amended returns and   
   seek refunds for prior years. She asked for some of her tax money back.   
   >   
   > The government decided to fight her over the refunds. She won. Her court   
   victory added a hefty tax refund to her bank accounts, on top of the future   
   tax savings she began to achieve. This story is taken from the published   
   decision of the court,    
   omitting Mrs. L's name to save her embarrassment.   
   >   
   > Why should we be interested? There is, firstly, a technical lesson to be   
   learned here. Subsection 104 (13.1) of the Income Tax Act allows a beneficiary   
   of an estate or trust to receive the income and spend it on cars and vacations   
   and wine, but elect    
   along with the trustees of the trust to have the income taxed in the hands of   
   the estate or trust, often at low rates.   
   >   
   > That is good news when the alternative is to have the income taxed in the   
   hands of the beneficiaries at higher rates.   
   >   
   > Moreover, as a result of Mrs. L's court case, a beneficiary can file amended   
   returns retroactively if they missed the boat through an honest mistake or bad   
   accounting advice along the way.   
   >   
   > There is a second lesson to be learned here--one that is of some use to the   
   average Joe.   
   >   
   > A testamentary trust is like a piano. If you take a piano to someone who   
   doesn't know how to play it you will be lucky if they plunk out chopsticks.   
   >   
   > If you take a piano to someone who plays it for a living, who has studied   
   it, who plays the piano on a regular and recurrent basis, then they will play   
   beautiful music.   
   >   
   > If you take a testamentary trust or any other legitimate tax avoidance   
   structure to a professional who regularly works with those vehicles in their   
   practice, then they, too, will play beautiful music for you.   
   >   
   > They will wring the maximum tax-savings from the structure, and avoid   
   potential pitfalls that await the unwary. Mrs. L's former accountants had been   
   playing chopsticks.   
   >   
   > Are you a beneficiary of a trust? Do you have an interest in a privately   
   owned corporation? Have you implemented other structures in a bid to improve   
   your family's tax positioning? If so, you owe it to yourself to find an   
   accountant who can play Chopin.   
   >   
   > Here is a third lesson. If you have a spouse, and if you like your spouse,   
   you might consider amending your will to contain Mr. L's testamentary trust.   
   >   
   >   
   > John Poyser Practices As A Wills And Estate Lawyer With The Wealth And   
   Estate Law Group (Alberta). A Former Chair Of The Wills, Estates And Trusts   
   Section Of The Canadian Bar Association, He Co-authors A Textbook For Lawyers   
   And Accountants On Trust    
   And Estate Taxation. Contact Him At (403)613-2128 Or jpoyser@welglawyers.ca.   
   >   
   >   
   > (c) Copyright (c) The Calgary Herald   
   >   
   >   
   >   
   > -----------------------------------------------------------   
   > Miss a Tax Tale Miss a lot!   
   > Pop the link below into your browser to view the entire CRA SOTW Library!   
   > http://canada.revenue.agency.angelfire.com   
   > ------------------------------------------------------------   
   > Alan Baggett - http://www.taxcollectorsbible.com/ - Tax Collector's Bible   
   >   
      
      
   --   
   Socialist-statism corruption is a great idea so long as the credit is   
   good and other people pay for it. When the credit runs out and those   
   that pay for it leave, they can all share having nothing but   
   unemployment, debt and discontentment.   
      
   --- SoupGate-Win32 v1.05   
    * Origin: you cannot sedate... all the things you hate (1:229/2)