Joint ownership is common, easy and cheap to set up, but surprisingly complicated in practice. Two recent cases in the Ontario Court of Appeal explore the possibilities that it affords and highlight how important it is for advisers to understand the principles governing joint ownership of accounts and to properly document their customer's intention when they set up jointly owned accounts.
Several media outlets have revealed the existence of leaked financial documents apparently showing that more than 130,000 people throughout the world - reportedly more than 450 of whom are Canadian - have placed funds in offshore tax havens. The revelations have heightened the need for Canadian taxpayers to consider making voluntary disclosures where unreported amounts have been invested offshore.
In a recent case the Tax Court of Canada considered whether two Barbados trusts were entitled to claim the benefit of the capital gains exemption in Article XIV(4) of the Canada-Barbados Income Tax Convention on their dispositions to an arm's-length purchaser of shares of two Canadian holding corporations which indirectly owned a Canadian automotive parts manufacturing and assembly business.
A majority of the Supreme Court of Canada recently dismissed the taxpayer’s appeal in Lipson v The Queen. The case involved a transfer of company shares between spouses financed with borrowed funds secured against the taxpayer’s residence, which triggered the application of the spousal attribution rules. The minister of national revenue challenged the transactions under the general anti-avoidance rule.