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New tax loophole for the wealthy
Year Published: 1992Resource Type: Article Cx Number: CX4443 Abstract: The federal government has instituted a change in Canada's tax laws which will mean a multi-billion dollar tax windfall for Canada's richest citizens. The legislation relates to something called 'family trusts', a means by which the wealthy avoid capital gains taxes. By putting money into a family trust, wealthy individuals can permanently avoid capital gains taxes because taxes are imposed only when ownership of an asset changes. By means of a family trust, assets can be passed on from generation to generation without technically ever changing hands, since the trust continues to retain ownership. In 1972, the federal government put a 21-year limit on the length of time that family trusts could escape being taxed. This would have meant that starting in 1993, family trusts would have been liable to tax on capital gains realized by their holdings. However, the Progressive Conservative government has now changed the legislation to put off tax liability until the time of death of the youngest child in the family, thereby extending the tax liability another 80 years or so into the future: a multi-billion dollar gift to the wealthy. |