How to transfer cottage ownership and reduce the tax bite

How to transfer cottage ownership and reduce the tax bite

Excerpted article written by Tim Cestnick, The Globe and Mail

If you’re visiting a friend’s cottage this summer, here are a few tips that will be sure to create lasting memories for everyone: Bring four very large suitcases (store one in each bedroom if necessary), bring at least two dogs (those with digestive problems are best), start a fire (preferably outside the cottage, and big enough to burn a picnic table), roast marshmallows (bring those mini ones with toothpicks and see who can stand the heat) and scare the kids (ghost stories to give them nightmares for three days can add to the fun).

Today, I want to talk about steps you can take to reduce the tax bill on the eventual transfer of the cottage. Consider the following ideas:

1. Use the principal residence exemption.

A gift or sale of the cottage will be treated as a disposition at fair market value. It may be possible to use your principal residence exemption (PRE) to shelter a gain from tax, whether during your lifetime or upon death. The PRE can only be used to fully shelter one property from tax if you own more than one at the same time. Be sure to visit a tax pro to determine whether you’re able, and whether it makes sense, to use the PRE on the cottage.

2. Maximize your adjusted cost base.

Keep track of all major repairs and improvements to your cottage over the years. You may be able to use these amounts to increase your adjusted cost base (ACB) of the property. A higher ACB will mean a lower capital gain, and lower taxes on the transfer of the cottage.

3. Leave it to your spouse.

If your plan is to transfer or sell the cottage after your death, consider leaving the property to your surviving spouse. This can defer the tax, if any, until the date of your spouse’s death.

4. Make a transfer today.

If you want to make a transfer during your lifetime, consider doing it today. This will move the future growth – and future tax bill on that growth – into the hands of your heirs, deferring the tax for years. You’ll still be deemed to have sold the property at fair market value today when making the transfer, but there might be little tax to pay if the property hasn’t appreciated much. You can maintain control and use of the property even after a transfer using a trust or an agreement with your heirs.

5. Claim a capital gains reserve.

If you want to gift the cottage to your kids during your lifetime, try this idea: Rather than gifting the property, sell it to the kids at fair market value and have them pay you using promissory notes. You don’t have to collect on the notes if your intention is to make this a gift; rather, you can forgive the notes upon death without tax implications. If you structure the notes properly, the tax on the “sale” can be paid over a five-year period of time rather than all in one year, using what’s known as the “capital gains reserve.” If you simply make a gift, and taxes are owing, you’ll have to pay that entire tax bill in the year of the gift.

6. Claim capital losses to offset a gain.

If you have other assets, perhaps investments, that have dropped in value, consider selling those assets to realize the capital losses. These losses can be applied to offset any taxable capital gain on the transfer of the cottage.

7. Buy life insurance to cover the taxes.

While this idea won’t eliminate the tax bill upon death, it can provide needed cash to pay those taxes where the plan is to keep the cottage in the family and not sell it after you’re gone. You might also consider buying enough insurance to help fund all or part of the annual maintenance costs for your heirs. Life insurance may allow you to fund the tax bill using just pennies on the dollar.

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The Co-operators ranked among Best Corporate Citizens in Canada

GUELPH, ON, June 15, 2015 /CNW/ – The leadership and commitment to sustainability demonstrated by The Co-operators has been recognized for the sixth consecutive year, as it has been ranked among the top ten on the Best 50 Corporate Citizens in Canada list.

Corporate Knights is an organization dedicated to the promotion of responsible business practices in Canada and the advancement of social and environmental sustainability worldwide. The list evaluates companies’ performance on a wide range of sustainability indicators including board diversity, resource use, sustainability mandate and oversight, and percentage of women in executive management.

“We approach our sustainability journey in a comprehensive and balanced manner that reflects our identity as a co-operative,” said Kathy Bardswick, president and CEO of The Co-operators. “We continue to aspire to be a sustainability leader, and it’s through the commitment and support at all levels of our organization that we’re having success in advocating, educating and acting to create a more sustainable future.”

In 2014, The Co-operators became the first Canadian insurance company to sign the Montreal Carbon Pledge, through which it committed to measuring and publicly disclosing the carbon footprint of its investment portfolio. Ninety-eight per cent of The Co-operators assets are now managed under its Sustainable Investment Policy. Also last year, The Co-operators achieved a 50 per cent reduction in net carbon emissions compared to 2010 levels.

Co-operative values and principles are inherently linked to sustainability, and that connection can been seen with the appearance of five co-operatives on this year’s list.

For more information about the progress The Co-operators has made in advancing its sustainability goals, please see its annual Sustainability Report at www.cooperators.ca/sustainability_report. To view the Best 50 Corporate Citizens inCanada list, please visit www.corporateknights.com.

About The Co-operators:
The Co-operators Group Limited is a Canadian-owned co-operative with more than $40 billion in assets under administration. Through its group of companies it offers home, auto, life, group, travel, commercial and farm insurance, as well as investment products. The Co-operators is well known for its community involvement and its commitment to sustainability. The Co-operators is listed among the 50 Best Employers in Canada by Aon Hewitt; Corporate Knights’ Best 50 Corporate Citizens in Canada; and the Top 50 Socially Responsible Corporations inCanada by Sustainalytics and Maclean’s magazine. For more information visit www.cooperators.ca.

SOURCE The Co-operators

Charlottetown saving $330K on insurance

CBC News

The City of Charlottetown is changing its insurance provider, and expects to save hundreds of thousands of dollars.

At last night`s council meeting they voted to accept the proposal from JLT insurance, and the new deal is expected to save the city close to $330,000.

It’s been a few years since the council has even looked at pricing other options. Coun. Melissa Hilton made this her first priority when she became chair of the finance committee this year.

“For the last number of years since I’ve been on council, since  2005, we`ve used the exact same insurance company and never gone out to tender,” said Hilton.

“I thought it was time that we actually see if we are getting the best bang for our buck.”

Hilton said the coverage from JLT is very similar to what the city got from its previous insurance company.

The city’s chief administrative officer will meet with the company soon to work out the details.

Homes sales climb higher in May as buyers look to preempt insurance hikes

By Alexandra Posadzki

THE CANADIAN PRESS

TORONTO – Home sales accelerated in May to their highest level in more than five years, as some home buyers looked to preempt an increase in mortgage insurance premiums.

The Canadian Real Estate Association said Monday sales last month through its MLS system were up 3.1 per cent from April, marking the fourth consecutive month-over-month increase.

Sales in the Toronto area grew by 4.1 per cent in May compared with the previous month, while sales in Calgary climbed 6.7 per cent and Ottawa gained 6.2 per cent.

CREA president Pauline Aunger says news that CMHC will be increasing mortgage default insurance premiums for home buyers with less than a 10 per cent down payment effective June 1 could have impacted home sales.

“Some buyers may have jumped off the fence and purchased in May to beat the increase,” Aunger said in a statement.

CREA chief economist Gregory Klump says a rebound in sales in Calgary and Edmonton, which posted a 3.2 per cent month-over-month gain, suggests uncertainty stemming from low oil prices could be easing.

The association also revised its outlook for the full year upwards to reflect better-than-expected sales in British Columbia.

CREA now anticipates that national home sales will climb to 487,200 units this year, 1.3 per cent higher than last year.

Compared with a year ago, sales across the country in May were up 2.7 per cent, led by Vancouver, Toronto and Montreal.

The national average price for a home sold in May was $450,886, up 8.1 per cent from a year ago. Excluding the red-hot markets of Toronto and Vancouver, the average price of a home gained 2.4 per cent to $344,988.

The aggregate composite MLS home price index was up 5.2 per cent from a year ago to $493,100.

The Canadian Real Estate Association says the home price index is a better measure of price trends than the average selling price because the index is not affected by changes in the mix of sales activity.

TD Bank economist Leslie Preston said a recent rise in government bond yields could push mortgage rates higher this year, dampening demand for real estate across the country.

“Overall, though, we expect the regional divide to continue,” Preston said in a statement.

“While sales in oil-related markets of Edmonton and Calgary have risen off their January lows, price gains remain modest. The Vancouver and Toronto markets should cool slightly on higher interest rates, however. Given the tightness in these markets, prices should remain relatively strong.”

Preston anticipates that house price gains will slow next year to around two to three per cent.

canada-press

 

Scotiabank Selects Ivalua for Global Supplier Risk and Procurement Platform

Redwood City, CA – As of June 9, 2015 – Ivalua, a leading global spend management solutions provider, announced that Scotiabank, one of Canada’s largest banks and the 9th largest bank in North America by assets and profits, has selected Ivalua to address its need for a centralized procurement process and solution that will empower its global procurement and vendor risk management initiatives.

“Scotiabank needed a comprehensive solution that would allow us to more effectively manage the source-to-pay process, as well as improve enterprise visibility into supplier performance and risk. After reviewing all of the top players on the market, Ivalua’s integrated solution and experience in the financial services industry made it the clear choice for us,” said John Moran, Senior Vice President of Finance at Scotiabank. “We’re very excited to start working with Ivalua and we look forward to a long-term, successful relationship.”

Prior to signing with Ivalua, Scotiabank’s strategic and transactional procurement processes were managed through multiple systems resulting in efficiency challenges with limited visibility across source-to-pay processes. In addition, emerging compliance standards in the financial services industry increased the need for a more effective procurement and supplier management platform.

Scotiabank will use Ivalua globally to automate and support the following processes:

• All elements of Scotiabank’s Source-to-Pay Process
• Spend Analysis
• Services Procurement
• Expense Management
• Vendor Risk Management
• Procurement Portfolio Management

“Ivalua has a long tradition of working with leading financial services companies, and we are honored and excited to be working with such a large player in the industry like Scotiabank,” said Dan Amzallag, CEO of Ivalua. “In today’s market you need to move beyond slogans to deliver real, measurable value to large, discerning buyers, and when companies like Scotiabank look deeply at the various technologies on the market they tend to find their way to Ivalua.”

About Ivalua

Ivalua is a global provider of spend management solutions and a leader in Gartner’s 2015 Strategic Sourcing Magic Quadrant. Ivalua’s cloud-based software is used by procurement and finance organizations in large, global companies, and every day more than 500,000 users and millions of suppliers from over 70 countries log into the Ivalua platform.

Ivalua offers a single platform solution with highly configurable functionality across all major procurement and finance processes, including performance and risk tracking, sourcing, contracts, procure to pay, invoice automation and analytics. The breadth and flexibility of Ivalua’s offering accelerates user adoption, spend category coverage and bottom-line savings.

About Scotiabank

Scotiabank is Canada’s most international bank and a leading financial services provider in North America, Latin America, the Caribbean and Central America, and parts of Asia. The bank is dedicated to helping its 21 million customers become better off through a broad range of advice, products and services, including personal and commercial banking, wealth management and private banking, corporate and investment banking. With a team of more than 86,000 employees and assets of $852 billion (as at January 31, 2015), Scotiabank trades on the Toronto (TSX: BNS) and New York Exchanges (NYSE: BNS).

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