And another thing ... a few more comments from CPAs on estate freezes

TORONTO, September 13, 2019  – Debate continues among Canadian tax professionals in the accounting and legal communities over an article written by Allan Lanthier, FCPA, FCA, in the National Post titled "Rich Canadians are getting out of paying taxes with 'estate freezes' — and the CRA endorses it" and Mr. Lanthier's subsequent article on Canadian Accountant: "Why some Canadian accountants are wrong about estate freezes." 

The Canadian Taxation Professionals group on LinkedIn has a robust discussion about the article(s), led by Tax Consultant Hugh Neilson, FCPA, FCA, TEP: "I note one point of agreement between Allan and Kim," says Mr. Neilson. "[W]e need a full review of our tax system. Funny how every stakeholder I can think of, with the exception of departments of the federal government, and the House of Commons itself, has recommended such a review (yes, even the Senate!) but none of our elected representatives want to discuss the possibility." 

Mr. Neilson also posted comments to Mr. Lanthier's article that can be found at the bottom of the webpage: Why some Canadian accountants are wrong about estate freezes. Wendy Crowe of Miller Thomson LLP also published a rebuttal entitled "Estate Freezes Belong in the Tax Planning Garden."

Kim Moody Responds

Kim G C Moody, FCPA, FCA, also responded to the article. Mr. Moody is the director of Canadian tax advisory services at Moodys Gartner Tax Law and the author of "Estate Freezes: Should they be legislated out of existence?", which we posted on Canadian Accountant. Mr. Moody published the following comment on LinkedIn:

The author of the NP article who said that estate freezes should be eliminated wrote a follow-up article to justify his position in Canadian Accountant. My original rebuttal was published along side. I won’t be publishing another rebuttal. But here’s my quick comments:

• freezes don’t “minimize” taxes on death or at all;
• the new common shares have high FMV? No. Such shares - if properly done - have nominal value; - The fact that the TOSI regime came out after the GAAR is not relevant. The Department of Finance’s position was and is clear;
• freezes are not “disguised gifts” & therefore there is no rollover on the transactions is not correct;
• “But the controversy invites debate on a broader issue: Should Canada impose tax on death in the first place?” This simply is not relevant to whether or not estate freezes should be abolished;
• “What we do know is that Canadians have been paying capital gains tax on death for close to 50 years, with no reports of calamitous results”. Hmm, I have dozens of files that have had liquidity problems on death. It’s real;
• freezes are not reserved for the rich; and
• I agree that comprehensive tax review / reform is needed.

More to Come

We are very pleased at Canadian Accountant to have featured this debate on estate freezes and to have provided a forum for Canadian accountants and tax practitioners to weigh in with their comments. Allan Lanthier, FCPA, FCA, the author of the original article(s), is working on a follow-up article to his original post on Canadian Accountant. We look forward to publishing it in the near future.

By Canadian Accountant staff.