PRESCRIBED INTEREST RATES

CRA has announced the prescribed rates for the third quarter, July 1 to September 30, 2010. The following rates apply:

• Interest charged on overdue taxes – 5%
• Interest paid on overpaid corporate tax – 1%
• Interest paid on overpaid personal tax – 3%
• Interest calculated on taxable benefits for shareholders and employees – 1%

BIG BROTHER IS WATCHING – CRA’S NEW POLICY ON ACCESS TO INFORMATION

CRA has announced their new policy on access to taxpayer’s documents. Encouraged by the Supreme Court decision in the EBay case, CRA is now in the position to require unfettered access to all documents including all working papers and communications with accountants. It has been a practice of accountants and their clients using a lawyer as an intermediary for their communications in order to ensure that tax planning memos and strategies are protected by the solicitor-client privilege but CRA has questioned this procedure and maintains that it is not protected.

This is dangerous precedent and likely to result in a number of cases that will surely land on the desks of the Supreme Court.

US ESTATE TAX – RRSP INVESTMENTS IN US COMPANIES

Recent changes in the Canada – US Tax Treaty related to foreign tax credits for Canadian’s with US holdings in their RRSPs and RRIFs has provided some planning complexities. Under US estate tax rules many US assets held at death by a non-resident, non-citizen of the US is still subject to US estate taxes. As we have mentioned before, this includes US assets held by pension plans. The protocol allows for an offsetting foreign tax credit in Canada for the US estate tax but if the assets are taxed in Canada at death.

The problem arises when the US assets are held in a pension or annuity which has a named beneficiary, such as a spouse, who, under Canadian law, can receive the proceeds of the plan or annuity tax-free into their own plan. Since there is no tax triggered in Canada there can be no offset of the US estate tax paid.

CALDWELL SECURITIES LTD/ALZHEIMER SOCIETY OF YORK REGION GOLF

We would like to thank every one of our clients and friends who participated in our annual tournament and congratulate everyone on a job well done. We set a new record for funds raised and look forward to an even more successful tournament next year.