700 401 West Georgia Street Vancouver BC Canada

700 – 401 West Georgia Street Vancouver, BC Canada V 6 B 5 A 1 www. rbs. ca Election Year: No Crazy Budget (yet) So what’s new elsewhere? October 29, 2019 Presented by: Rose Shawlee

Agenda • 2019 Transparency – BC Business Corporations Act Transparency Ledger – BC Land Owner Transparency Act • 2019 Trusts & Estates – Discretionary Trusts and Family Law – Settlors – Litt Estate (2019 BCSC) – Property Transfer Tax GAAR (existential crisis…) • Budget Considerations – Crystal Ball Gazing • Reminder of Common Pitfalls • Questions

Transparency

2019 Transparency BC Business Corporations Act – Transparency Ledger • Business corporation Amendment Act (Bill 24) • Principles: – Driven by: • Financial Action Task Force (FATF) • Anti-money laundering • Anti-terrorist financing • Tracing to the underlying individual • Alignment with real estate transparency requirements – Disclosure of beneficial ownership & control

Transparency BC Business Corporations Act - Transparency Ledger • Transparency Register contents: – Name – Date of birth – Address – Whether: • Canadian Citizen or Permanent Resident – if not, his/her citizenship • Resident of Canada for tax purposes – Date / how the individual became a “significant individual”

Transparency BC Business Corporations Act - Transparency Ledger • D-Day: May 1, 2020 • Practice Point: – For your clients who have companies, encourage them to start gathering information now!

Transparency BC Business Corporations Act - Transparency Ledger • Key timing – Must notify the “significant individual” of being listed within 10 days – Significant individual must remain on register while a “significant individual” plus 6 years • Shareholder non-compliance: If a shareholder doesn’t provide the information, the register must record: • Non-compliance by the shareholder • Steps taken to obtain the information

Transparency BC Business Corporations Act - Transparency Ledger • Rights Access to register – be afraid…. • Police / RCMP • Tax authorities (BC or Canada) • Certain regulators – BC Securities Commission – FICOM – FINTRAC – Law Society of British Columbia

Transparency BC Business Corporations Act - Transparency Ledger • Significant Individual: s. 119. 11(2)(a) and (b) • Therefore based on: – Share ownership – Control

Transparency BC Business Corporations Act - Transparency Ledger • Significant Individuals - Share Ownership: – 25% of registered ownership – 25% of beneficial ownership • “beneficial owner” s. 1 BCA – Indirect control of 25% • Family Trust example: disclose all of: – Trustee – Settlor, if the settlor has retained control – All beneficiaries • do not divide registered owner’s interest amongst trust beneficiaries • Each are treated as owning trust’s interest

2019 Transparency BC Business Corporations Act - Transparency Ledger • Share Ownership – Combination Rules: example from Ministry of Finance (BC) • Ben = 30% – 10% as registered owner – 10% as beneficial owner – 10% as indirect control

Transparency BC Business Corporations Act - Transparency Ledger • Significant Individuals - Rights affecting control (25% interest is irrelevant): – key is control of director (elect, appoint, remove) • Directly • Indirectly • By influence over an individual who has such a right the ability to exercise direct and significant influence over an individual who has the right or indirect control described in subparagraph (i) or (ii)

Transparency BC Business Corporations Act - Transparency Ledger • Acting in Concert – Associates: • spouse • Child • Relative of the person (or his/her spouse) living in the same home • Exclusions – Pub. Cos – Extra-provincial companies • Remember stems from FATF (Financial Action Task Force)…

Transparency BC Business Corporations Act - Transparency Ledger Penalties: – Individual: max $50, 000 – Non-individual: max $100, 000 – Beware: • 427. 1(2)(a) (2) Subject to subsection (4), a private company commits an offence if its transparency register (a) identifies an individual as a significant individual who is not a significant individual in respect of the company,

Transparency BC Land Owner Transparency Act • Principle: housing affordability • Introducing: Beneficial Ownership Registry • Timing: – Became law May 16, 2019 – Coming into force by regulation – stay tuned • Practice Points: – For clients who are currently only registered or only beneficial owners, start gathering information now!

Transparency BC Land Owner Transparency Act • Obligation to disclose in 3 circumstances: – On LTO registration – On change in unregistered owner • ex: Sale of company • ex: Beneficial transfer – Pre-existing nominees/trustees – prescribed (TBD) grace period to disclose • ex: general partner holding for limited partners • ex: properties transferred to a trust, but not registered

Transparency BC Land Owner Transparency Act – Cont’d • Information to be disclosed – Selected Notables: – Companies • Name, head office, business/incorporation number • Corporate interest holder (10% votes or shares): – name, citizenship, place of residence – SIN, date of birth , nature of interest – Completing Individual: identifying information

Transparency BC Land Owner Transparency Act – Cont’d • Information to be disclosed – Selected Notables: – Trusts • Trustee, beneficial owner(s), and settlor: identification information • Beneficial owner & settlor: date of birth and SIN • Key excluded trusts: – AET/JSTs – testamentary trusts

Transparency BC Land Owner Transparency Act – Cont’d • Administrative Penalties – Non-individual: max of greater of $50, 000 and 5% of the assessed value of the property – Individual: max of greater of $25, 000 and 5% of the assessed value of the property • Offences (fines) – Non-individual: max of greater of $50, 000 and 15% of the assessed value of the property – Individual: max of greater of $25, 000 and 15% of the assessed value of the property

Trusts & Estates

Trusts & Estates Discretionary Trusts & Family Law • Peril: – Determination that 100% value of discretionary trust is shared property on spousal breakdown • Practice Points: – Co-trustees – Restrictions on distributions of capital

Trusts & Estates - Settlors Settlement asset Trust Settlor Trustee Beneficiaries

Trusts & Estates - Settlors • Good old days… one shot deal • Banking Requirements – SIN – Signing availability – Identification verification – Original Trust Deed • Information Retention for – Land Owner Transparency Act – BC Business Corporations Act (where control)

Trusts & Estates - Settlors • Practice Points: – obtain complete information, including SIN – Obtain ID and have lawyer prepare certified copies – Ensure electronic transmission / copies clause in Will (so when the client loses the original trust deed…)

Trusts & Estates - Litt Estate • Grewal v. Litt 2019 BCSC 1154 • Mom’s will: – Estate approx $9 M – $150, 000 to each daughter (approx 7% of estate in aggregate) – balance between two sons (approx 93% of estate in aggregate) – Culturally driven planning: south Asian family – Daughters involvement included providing care for parents in later years

Trusts & Estates - Litt Estate • Variation by court: (rounded) – 40% between sons (20% each) – 60% amongst daughters (15% each) – Notable: all 6 children agreed the parents’ wills failed to satisfy the moral obligation to the daughters https: //www. canlii. org/en/bc/bcsc/doc/2019 bcsc 1154. html? result. Index=1

Trusts & Estates - Litt Estate • Practice Points: – WESA test [s. 60]: adequate, just, and equitable provision obligations: • limited deference to cultural traditions where the traditions are discriminatory • But – court will consider the extent to which the will-maker’s decision was influenced by cultural values vs. non-cultural factors • So: – keep clear statutory declarations as to reasons underlying distribution – will substitute planning

Budget Considerations

Budget Considerations - Capital Gains • The platform, condensed: – NDP: increase capital gains inclusion rate to 75% • Combined with: – Liberal pre-campaign approach of “fairness” at any cost = uncertain, but likely not good • Practice Points: – Consider capital gains crystallization – Anticipate more restrictive TOSI – Be on the lookout for renewed attacks on pipeline planning

Reminder of Common Pitfalls (not new, but would delight me to see planning problems on these decline…)

Just a Reminder… Common Pitfalls • Beneficiary designations – Don’t update beneficiary designations without checking domestic agreements • Americans – Beware attorneys who are American for tax purposes • Joint assets – Casual use of joint assets keeps litigators in business post-Pecore

Just a Reminder… Common Pitfalls • Joint and several liability – RRIF/RRSP proceeds: – s. 160. 2 Income Tax Act – Remit to Receiver General directly – O’Callaghan TCC 169 • PTT GAAR – Not related to oneself – Beware steps in accessing exemption when transferring to an AET or JST

Just a Reminder… Common Pitfalls • Multiple Wills – Risky for blended families / wills variation • Graduated Rate Estates (GREs): – GRE status for estates must be designated in first T 3 • Qualified Disability Trusts (QDTs): – 1 QDT / individual entitled to the federal disability tax credit – Annual joint election

Whatever You Want… Questions?

For further information and inquiries contact: Rose Shawlee, Partner 604. 661. 9200 rshawlee@rbs. ca Richards Buell Sutton LLP

Disclaimer (we’re lawyers – you knew it was coming…) The information in this presentation is for general information and guidance on estate planning, as at October 28, 2019, in British Columbia. Such information is provided without any knowledge regarding your identity or specific circumstances. Richards Buell Sutton LLP has made every effort to ensure that the information presented is accurate and clear. However, Richards Buell Sutton LLP cannot be held liable for any errors or inconsistencies. This information should not be construed as legal advice or legal opinion or other professional advice or services on any specific facts or circumstances. Circumstances vary, and individual situations should be carefully examined to determine appropriate planning methods. You are urged to consult with a lawyer regarding your own situation and any specific or legal questions you may have.