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Direct from Drache, September 2006

   Drache LLP Grows Again
   Prescribed Rates to Rise Again!
   Planning Against Elder Abuse
   Who gets to chose YOUR Nursing Home?
   Employer Reimbursement for PHSP Premiums
   L’Agence du Revenu du Canada Surveille les membres de votre famille!
   Practical Considerations When Dealing with the Tax Court of Canada
   Software Piracy and Small Businesses: What you need to know
   Net worth Statements and the Taxman
   The Employer Health Tax and Charities
   Work Orders/Building Permits and Title Insurance

Drache LLP Grows Again
Effective September 1st, 2006, Drache LLP has moved to new, larger premises and added two new associates in order to better serve our clients’ needs. We are now located at 222 Somerset St. W. between Elgin and Metcalfe, where we have taken the entire 2nd floor to accommodate our current needs and leave us with room for growth.
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Prescribed Rates to Rise Again! - Charles Rotenberg
Just like the South, the prescribed rate will rise again. The significance of the prescribed rate of interest has been discussed in our newsletters many times. For example, see our July, 2005 issue of Direct from Drache. For the 4th quarter of 2006 the prescribed rate for inter-family loans and shareholder benefits will rise from 4% to 5%, for the first time since the end of 2001. The rate of interest payable in respect of overdue taxes will rise to 7%.
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Planning Against Elder Abuse - Douglas Buchmayer
Elder abuse can take many ugly forms, but few consider the financial havoc that can be wreaked on an otherwise well thought-out estate plan by the actions of an interloper. Consider the following story. Ten years ago, Mr. Smith, an elderly gentleman, lost his wife. As part of the grieving process, Mr. Smith wanted to ensure that upon his death the modest wealth he and his wife had accumulated over 50 years of marriage would be put to the maximum benefit of his 3 adult children and 8 grandchildren. To honour the significant contributions his wife had made to the community during her life, Mr. Smith also wished to benefit various charities in her name. The result was an extremely well drafted Will that divided his estate between his adult children, his grandchildren, and the various charities. Straight-forward trusts were developed for the grandchildren to ensure their shares would fund educational goals and other aspirations, and the charitable gifts were drafted to ensure the perpetual memory of his wife.
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Who gets to chose YOUR Nursing Home? - Elizabeth Lockhart
It is often said, at least half in jest, that you should treat your children well because they will be choosing your nursing home, with a well drafted Power of Attorney for Personal Care [“POAPC”], you can avoid that concern. A Power of Attorney for Personal Care ["POAPC"] is a written authority given from one individual (the "grantor", "principal" or "donor") to another individual(s) (the "attorney(s)") allowing the attorney(s) to do certain acts or make certain decisions on behalf of the grantor with respect to the grantor’s personal decisions, such as health care, housing, nutrition, hygiene, clothing, safety. The attorney will also have access to the incapable’s personal information, including health information and records and will have decision making authority regarding the grantor’s employment, education, training, recreation and his or her receipt of any social services once incapable.
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Employer Reimbursement for PHSP Premiums - Arthur Drache
For many Canadians, the most attractive perk of employment is coverage under a health care plan. Usually with large employers, they enter into such plans with insurers and cover all or part of the employee premiums. These are called private health services plans or PHSPs. For purposes of the Income Tax Act, a PHSP is defined as a contract of insurance in respect of hospital expenses, medical expenses, or any combination of such expenses, or a medical care insurance plan or hospital care insurance plan, or any combination of such plans
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L’Agence du Revenu du Canada Surveille les membres de votre famille! - Sebastien Desmarais
Quand est-ce qu’un simple geste de générosité envers un membre de votre famille peut-il revenir les hanter? Certainement lorsque l’Agence du Revenu du Canada décide de s’ingérer et questionner la validité de votre bonté. L’article 160 de la Loi de l’impôt sur le revenu est un des outils de collection (perception ou recouvrement) préféré de Revenu Canada, et certainement un des plus menaçants pour les contribuables. Le but premier de l’article 160 est de prévenir tout transfert de biens à un membre de la famille (époux, épouse, conjoint, conjointe, mineur ou autre personne avec un lien de dépendance) lorsque le donateur a une dette envers Revenu Canada. Ainsi, advenant une omission du donateur de rembourser sa dette fiscale et que pour la même année, il aurait transigé avec un membre de sa famille, ce bénéficiaire sera tenu personnellement responsable en partie ou de la totalité de la dette du donateur.
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Practical Considerations When Dealing with the Tax Court of Canada - Steven Szilagyi
Having spent the last year clerking for the Tax Court of Canada I have been privy to observe many trial procedures in front of the Judges of the Court. In my first article for this newsletter I hope to provide some useful pointers when preparing or presenting an action in front of the Tax Court. Background: The Tax Court of Canada was created in 1983 when the Tax Court of Canada Act came into force. Since 1991, the Court has exercised original jurisdiction to hear and determine matters relating to the Income Tax Act, Canada Pension Plan, Unemployment Insurance Act, Petroleum and Gas Revenue Tax Act, Old Age Security Act, the Excise Tax Act (Part IX), the Cultural Property Export and Import Act, the Customs Act (Part V.1), the War Veterans Allowance Act, the Civilian War-related Benefits Act and the Veterans Review and Appeal Board Act. At any given time the Court has a maximum of 22 judges. Judges of the Court are required to be resident in Ottawa but they travel to hear cases in 69 locations across the country.
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Software Piracy and Small Businesses: What you need to know - Tracy Molino
A recent IPSOS Reid poll commissioned by Microsoft Canada Co. indicated that over 90 per cent of small businesses agree that using pirated software is unethical. The same percentage agrees that small businesses need to be vigilant in making sure the software they use is genuine. Many small business owners often find that they run out and buy software as they need it, or that they bring software from home and load it onto multiple computers at work. As a result, many small businesses end up with computer systems that are a mix of different platforms and have no real method for tracking whether their software has been obtained legally or not. In Canada, computer software is protected by the Copyright Act. Under the Act, only the owner of the copyright – which, in the case of software is likely a corporation, like Microsoft – can authorize the reproduction of the software. The copyright owner can also enter into licensing agreements with other parties. These licensing agreements allow people and businesses to load software onto a certain number of computers. The copyright owner therefore uses the licensing process as a way of controlling access to, and use of, its software products.
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Net worth Statements and the Taxman - Victor Au
Many people have probably heard of net worth statements used in the context of financial health and planning but many are unaware that net worth statements are also used by the Canada Revenue Agency (“CRA”) to determine what they consider to be unreported or under-reported income. So what exactly are net worth statements and how do they work?
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The Employer Health Tax and Charities - Adam Aptowitzer
It should not astonish any reader that the imposition of the Employer Health Tax (the “EHT”) in Ontario is fraught with complexities. However, it may come as somewhat of a surprise that the Ontario Ministry of Finance has taken a liberal position in applying the EHT to registered charities – more surprising is that this position has seemingly no basis in law.
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Work Orders/Building Permits and Title Insurance - Chad Boyd
Title insurance is a popular choice for purchasers of new homes as it can result in cost savings when compared with the traditional lawyer’s opinion on title. These cost savings are achieved because several searches that would otherwise have to be performed can be avoided. For instance, a tax certificate, showing whether the property taxes have been paid or are in arrears does not have to be obtained (the cost of which, in the City of Ottawa, is $56.00). In the event that after closing it is shown that there are tax arrears or that the taxes have not been paid in full, title insurance will satisfy the outstanding amount and then pursue the Vendors of the property for the amounts that had to be paid.
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