1 cga-bc taxation of real estate richmond chapter december 2012 don nilson

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CGA-BC

TAXATION OFREAL ESTATERichmond Chapter

December 2012Don Nilson

Don Nilson

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Nilson & Company, Professional Accountants, was established in 1979 and provides accounting, tax and business advisory services to individuals and businesses, as well as fee-based personal financial planning.

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A.F.T. Trivest Management Inc, Investment Counsel, was registered with the B.C. Securities Commission in 1993 and provides investment management services by applying Accounting, Finance and Taxation principles to portfolio management.

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www.investoru.ca www.nilsonco.com

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websites

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www.nilsonco.comwww.investoru.ca

My regular column:

http://www.nilsonco.com/CMABC_update.htm

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OTHER COURSES OF INTEREST

10 Commandments of a True ProfessionalTaxation of Investment IncomeWealth Management PrimerFinancial Planning PrimerEstate Planning PrimerAnnual Tax UpdateIncome Splitting from A to ZTFSAsUsing Tax Returns as a Roadmap to Financial Planning

Strategic Planning

Practitioners’ Boot Camp Retreat– 3 days/ 2 nights– Harrison Hot Springs– Oct 25-27, 2013

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ABOUT THE PRESENTERAfter completing a BCom with an accounting

major at UBC in 1976, Don articled with a large international accounting firm before

starting Nilson & Company in 1979. During his articling period, he gained experience auditing

large, sophisticated accounting systems as well as smaller private businesses.

Don returned to university in 1980 to complete a Master's degree. His 100 page thesis, entitled

"Income Taxation of the Small Business Sector in Canada" provided a valuable insight

to taxation in Canada and other countries.Don attained his professional accounting

qualification in 1981, his financial planning designation in 1998 and his Trust & Estates

designation in 2006. He has been licensed as a Portfolio Manager with the BC Securities Commission since 1994.

Don Nilson

BCom MSc(Bus Admin) CMA FCMA TEP

CFP Fellow of FPSCTM

Registered Portfolio Manager

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ABOUT THE PRESENTERSince 1980, Don has lectured in accounting

and tax topics for the University of BC, the Society of Management

Accountants, the BC Real Estate Association, the Canadian Institute of

Financial Planners and the Certified General Accountants Association. He presently delivers the Taxation 1 course

on the internet across Canada and internationally for CGA Canada. He has

been involved in developing national exams and curricula for the professional

accounting bodies. Don has delivered seminars on practice management,

financial planning and taxation issues across professions throughout Canada

and in the U.S.He has participated in the Press lock-ups of

the federal and provincial budgets.He writes and edits quarterly newsletters on

tax and financial planning and on investing. He is on the Editorial Board of

a professional publication and has a regular column therein.

Don oversees the day-to-day management of both firms. His primary focus is business

advisory services, corporate and personal tax, investment management

and business year-ends.

Don Nilson




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ABOUT THE PRESENTERDon has served on the National Boards of

the Financial Planning Standards Council and CIFPs, and as Chair of

the CMABC Public Practice Licensing Committee.

Don currently serves on an Editorial Board and is national Treasurer of the

Canadian Association of Professional Speakers.

Don has received career achievement recognitions from the University of

British Columbia, the Sauder School of Business, the Certified

Management Accountants of Canada, the Certified General

Accountants Association of BC, the Financial Planning Standards

Council of Canada and the Certified Management Accountants of BC. These awards have recognized his

contributions to leadership, teaching, volunteerism, the university community and the financial

services industry. Don Nilson




Can FPA

Canadian Federation of Progressive Accountants

www.canfpa.com

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Today’s mission

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LIST OF TOPICS

The pinball machine

Tax rates

Owner structure

Rental income

Capital gains

Reserves

Corporate tax issues– Property income– Capital gains

Principal residence– Change in use

Recreational property

Checklist

All-Day course!

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STRUCTURE OF THE TAX ACT

LESSON 2 LESSON 3 LESSON 5 LESSON 6 LESSON 5

EMPLOYMENT BUSINESS PROPERTYCAPITAL

GAINSOTHER

CERTAIN CERTAIN CERTAIN CERTAIN CERTAIN

DEDUCTIONS DEDUCTIONS DEDUCTIONS DEDUCTIONS DEDUCTIONS

SUM =

DIVISION B

INCOME

MINUS

DIVISION C LESSONS 7 & 8DEDUCTIONS

=

DIVISION C aka TAXABLE INCOMEINCOME

TIMES

TAX RATES

MINUS

TAX CREDITS

=

TAX PAYABLE

OJ

aka NET INCOME

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CAPITAL GAIN vs. BUSINESS INCOME

Taxpayer’s original intention

Feasibility of intention

Extent to which intention is carried out

Change of intention

Geographical location and zoned use..

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CAPITAL GAIN vs. BUSINESS INCOME

Nature of asset

Nature of taxpayer’s business

Use of borrowed money

Length of time the Real Estate was held

Extensive dealings with Real Estate

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CAPITAL GAIN vs. PROPERTY INCOME

CONCEPT of the fruit and the tree

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INCOME FROM BUSINESS OR PROPERTY?

Irrelevant:–Being incorporated–The size or type of the building–The number or properties–The degree of furnishings–Hands-on vs delegated effort

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Relevant:–“Incidental” to business, eg excess

space–Turns on the “services” you provide –

beyond mere rental of property, eg• Residential – food, lounge, maid services• Commercial – janitorial, security

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Significant impact on:– “Earned” for child care– Attribution– Allocation across

provinces in which situated

– Impact for non-resident

– Array of deductibles– Fiscal year reporting– Loss restriction on

CCA– CNIL for capital

gains freebie– Tax rate (for corps)

23

PASSIVE TAX RATES

Individuals– Of course – marginal rates!

Private Corporation– Generally passive

• Presently approx 45%– Subject to Part 1 refundable and dividend refund

• May be at ABI rate– If HoldCo/OpCo situation (later)

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PASSIVE TAX RATES

Private Corporation– “Specified investment business” SIB

• Denies small business rate; thus taxed at passive rates, with RDTOH on Part One tax

• Exception if > 5 F/T employees

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2012 PERSONAL RATES

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2012 BC INVESTOR TAX RATES

Taxable

income

< $37013 $37014-

42707

$42708-74028

$74029-

84993

$84994-85414

$85415-

103205

$103206-132406

>

132406

Interest/

Rents

20.1% 22.7% 29.7% 32.5% 36.5% 38.3% 40.7% 43.7%

Capital Gain

10.05% 11.35% 14.85% 16.25% 17.15% 19.15% 20.35% 21.85%

Ineligible

Dividend*

4.1% 7.5% 16.2% 19.7% 22.0% 27.0% 29.9% 33.8%

Eligible

Dividend*

0%

-6.6%

0%

-2.9%

6.7%

10.6% 13.0% 18.7% 21.9% 26.2%

* % of cash amount

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2011(12) CORPORATE RATES-BC

Private corp-active under $500,000 SBD limit

Private corp above SBD limit $500,000 and big corp

Passive

13.5% (13.5%)

26.5% (25.0%)44.66% (44.66%)

As of Dec 31/xx

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OWNERSHIP STRUCTURE

Personal– Calendar reporting– Strategic issue re claiming CCA

• Discussed later

– For a couple – who buys it?• Short vs long term implications

– Income/loss/gain/tax brackets– Loss carryforward? Being smart!

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OWNERSHIP STRUCTURE

Personal– Buying houses for kids– Title issues

• Principal residence issues

– Security issues• Prom note? Second mortgage?

– Marital risk issues… Being smart!

30

OWNERSHIP STRUCTURE

Personal– Buying houses for kids

• Estate issues and equalization

– Joint tenanting parents’ home with kid(s)• Probate dodging

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OWNERSHIP STRUCTURE

New SCC cases re joint tenancy strategy (Pecore) (and Saylor Case)– In absence of clarity of intention-– “Presumption of advancement” is limited to

gratuitous transfers from parents to minor children

– Elsewise, burden of proof is on transferee to prove a gift was intended…

32

OWNERSHIP STRUCTURE

– Evidence of intent inferred from bank documents, the actual control and use of the asset, the bearing of related taxes, or granting Power of Attorney

– Better: a signed Declaration of Intent to clearly outline transferor’s intentions

– Codicil to will– Valid for both new and existing

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OWNERSHIP STRUCTURE

– Joint tenanting• May use up kid’s principal residence

designation, or• May expose half the house to appreciation tax

if the kid already has a p.r.• Knock-on effect

– Precludes PTT exemption on subsequent first home purchase

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STORIES FROM THE TRENCHES

Daughter put on parents’ title

Subsequently bought own p.r.– Claimed PTT exemption

Then sold that p.r.– Audited for invalid PTT exemption– Assessed, with DOUBLE penalty

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RENTAL INCOME

CCA

Interest

Property taxes

Landscaping

Legal

Supplies

Property management fees

R&M

Financing costs

Utilities

Accounting

Travel

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RENTAL INCOME

Purchase cost– Includes Property Purchase Tax and

conveyance costs

Purchase of furniture and equipment

Improvements or major renovations

Apportionment of land and building

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RENTAL INCOME

Repairs– Short-term benefit– Maintenance– Integral part of asset– Minor in relation to value– After purchase of used property– Made regardless of sale of property

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RENTAL INCOME

Renovations – Enduring benefit– Improvement or betterment– Separate asset– Major in relation to value– At time of purchase of used property– Made in anticipation of sale

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RENTAL INCOMELandscaping– Specifically deductible in ITA

Roofs/decks (Lewin case in Tax Court)– Betterment or repair?

Legal re purchase/sale– Capitalized

Financing costs– 5 year straight line

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RENTAL INCOME

Travel– Auto, if conducting repairs

• But not, for travel to locale outside general area of your home

– Unless you own multiple properties• Then also legit for collecting rents, supervising

and managing the property– And between locales, if at least 2, which are different

from your general area

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RENTAL INCOME

Travel expenses– 2008 Court case

• Allowed motor vehicle expenses for several trips from Canada to Florida rental property for property management reasons

• ITA suggests no auto unless:– More than one rental building which are– In at least two different sites

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PROPERTY INCOME

Rental income– Court Case on rental accepted different %

splits of different kinds of expenses in a rental suite situation

• Eg security, gardening, snow removal

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RENTAL INCOME

Interest– The old trace-ability issue– Interest deductibility test is income from

business or property– Turns on answer to the question:

• What did you do with the borrowed funds?

– Issue with change-in-use property• Refinancing to new principal residence

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RENTAL INCOME

Existing mortgage = $300,000

45

RENTAL INCOME

Existing mortgage=$300,000

Extra mortgage=$200,000

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CAPITAL COST ALLOWANCEClass 1 – 4%

Class 3 - 5%

Class 6 -10%

Class 8 - 20%

Class 13 -varies

Class 17 – 8%

Buildings after 1987– See over

Most buildings before 1988

Frame buildings before 1988

Furniture & Fixtures

Leaseholds

Pavement

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CAPITAL COST ALLOWANCE

For additions on or after March 19, 2007– Cl 1b Non-residential buildings in separate

pool at 6%– Cl 1a Manufacturing buildings in separate

pool at 10%– Permissive/elective

• No late-filing permitted

48


Separate pool for RENTAL property >$50,000 cost

Multiple units in condo bldg/row-housing constitute a pool together if > $50,000 in aggregate (IT274R para 3)

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Rental loss restriction– Cannot increase or create a rental loss by

claiming CCA– Applied on a pooled cash basis

• Including any recaptures (technically, elective) and terminal losses (mandatory) on dispositions

• means must do disposition calculations first

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Half year rule

Class 13 tricks– By lease year addition– Minimum 5 years

Deferment of CCA under “available for use” rules

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Permissive!!

Does today’s CCA write-off become tomorrow’s recapture?– For individuals

• Deferral– Clear advantage

• Rate (dis)advantage? – Maybe DISADVANTAGE

» Lumpy!!!

Being smart!


Time value of money

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…versus…rate

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Does today’s CCA write-off become tomorrow’s recapture?– For corporations

• Deferral– Clear advantage

• Rate (dis)advantage – Likely neutral!

• Suggests go-for-it

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STRUCTURE OF THE TAX ACT

LESSON 2 LESSON 3 LESSON 5 LESSON 6 LESSON 5

EMPLOYMENT BUSINESS PROPERTYCAPITAL

GAINSOTHER

CERTAIN CERTAIN CERTAIN CERTAIN CERTAIN

DEDUCTIONS DEDUCTIONS DEDUCTIONS DEDUCTIONS DEDUCTIONS

SUM =

DIVISION B

INCOME

MINUS

DIVISION C LESSONS 7 & 8DEDUCTIONS

=

DIVISION C aka TAXABLE INCOMEINCOME

TIMES

TAX RATES

MINUS

TAX CREDITS

=

TAX PAYABLE

OJ

aka NET INCOME

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CAPITAL GAINS

Capital properties–Types:

• Personal use property “PUP”• Listed personal property “LPP”• Business investment property “BIP”

• The rest “REST”!

Real estate could be either PUP or REST

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OPERATION OF SEC 3B

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CAPITAL GAINS

NB Implications of losses on PUPs (recreational property)

NO GOOD! Ouch

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CAPITAL GAINSInclusion rate– Historical background

• Tax-free pre 1972• Taxed at inclusion rates beginning 1972

– 1972-1987 - 1/2– 1988-1989 - 2/3– 1990-2000 - 3/4– 2000 – multi, ending at ½ at end of 2000– now - 1/2

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CAPITAL GAINSP.O.D.

- A.C.B.

- D.C.

= C.G or C.L.

x INCLUSION RATE

= T.C.G.

or

(A.C.L.)

Proceeds of Disposition

- Adjusted Cost Base

- Disposal Costs

= Capital Gain/Loss

x Inclusion Rate

= Taxable Capital Gain

or

Allowable Capital Loss

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Example of Treatment of Disposals

Assume: Original cost=$10,000and U.C.C.=$8,000

Sold for $6,000

Answer – Terminal loss of $2,000

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sold for $11,000** Apply only original

cost

Answer – Recapture

$2,000 &– Capital Gain

$1,000– What is the point

here?

Example of Treatment of Disposals

Assume: Original cost=$10,000and U.C.C.=$8,000

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CAPITAL GAINS

Buildings and subjacent land– tricky re-allocation of

POD to reduce a terminal loss

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CAPITAL GAINS

Buildings and subjacent land– Report land & building separately

• Latter may have recap/terminal loss

– ITA doesn’t like terminal loss on building and capital gain on land:

– Causes arbitrary reallocation of P.O.D.

64

Subjacent problem: exampleFact pattern

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Subjacent problem: exampleSolution

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Subjacent problem: exampleSolution - amended

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RESERVESOn vendor take-back financing– Remember reserves on business income

• Similar BUT DIFFERENT!– Can spread taxation of gain over, up to, 5

tax years• 2 part calculation annually

– Calculation has two parts• Mini play-off system applied EACH YEAR

– Long term deferral shut down since 1981• Can’t spread recapture

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RESERVESNot available to non-residents, or emigrants– Reserve disallowed for emigrants in year

prior to departure as wellNot available in transactions between related partiesRemember: this is permissive

year-by-year

Being smart!

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RESERVESFred has received an offer to sell a parcel of land for proceeds of $1,000,000. The proceeds are payable as $400,000 cash on closing and $100,000 in each of the subsequent six years. Interest would be paid at 9% on the outstanding balance. The land was acquired for $200,000.

Required: Calculate the tax implications over the six years, assuming that the land is a capital property.

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RESERVESYear 1 POD 1,000,000

ACB 200,000

Capital gain 800,000

Reserve lesser of:

Reserve 800 x 600/1000=480

800 * 4/5 = 640 -480,000


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RESERVES

Year 2 Opening reserve 480,000

Reserve 800 x 500/1000=400

800 * 3/5 = 480 -400,000

Capital gain 80,000


Reserve 800 x 400/1000=320

800 * 2/5 = 320 -320,000

Capital gain 80,000

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RESERVES Year 4 Opening reserve 320,000

Reserve 800 x 300/1000=240

800 * 1/5 = 160 -160,000



Reserve 800 x 200/1000=160

800 * 0/5 = 0 0


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CORPORATE TAX ISSUES

Managing income from property

Managing capital gains income

74 74

Taxation of Passive Income

75


Managing income from property– Taxed at special passive rate if private

corp• 45.16% at December 31/10• 44.66% AT December 31, 2011

– Subject to refundable Part 1 into RDTOH– And dividend refund out of RDTOH…

76


PASSIVE: Private corps only– “Refundable dividend tax on hand” account

• “RDTOH” pot captures two unrelated things– PART I REFUNDABLE @ 26.66%

» All property income except dividends plus» Taxable capital gains

– PART IV on dividends @ 33 1/3%

– Relieved by dividend refund at 33 1/3%

77 77


78


Corporate tax issues– Managing income from property– Managing capital gains income

79 79


80


Capital gains–Capital dividend account: private corps only–Partitions

• Excluded portion of net capital gains• Ditto re sale of ECE• Life insurance proceeds• Capital dividends from subs

–Less payments made–Procedures and tricks

81


Capital gains– Capital dividend account: private corps only– Triggered gain creates and monetizes a CDA

opportunity• Flow tax free $$ out to shareholders to pay off

non-deductible debt• Perhaps then to follow with re-

mortgaging as deductible debt and

shareholder loan– Watch mortgage payout penalties Being smart!

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Also taxed on one half at the corporate passive rate, circa 45%, therefore 23% on the whole gain

84


PASSIVE: Private corps– “Refundable dividend tax on hand” account

• “RDTOH” pot captures two unrelated things– PART I REFUNDABLE @ 26.66%

» All property income except dividends plus

» Taxable capital gains

– PART IV on dividends @ 33 1/3%

• Relieved by dividend refund at 33 1/3%

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Taxable income

Active Passive

Canadian dividendsInterest, rents, royalties,

taxable capital gains

Part IV tax- 33 1/3%Part One refundable

26 2/3%Passive rate – 45.16%

ABI rate- 13.5%

RDTOHDividend refund

33 1/3%

Sched 7

Private Corps!

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PRINCIPAL RESIDENCE

Some form of housing unit– House, apartment, condo, cottage, mobile home, trailer or

houseboat– Including leasehold interest in same– Including share in capital stock of coop

Ordinarily inhabited: the one night stand?– By self, spouse, former spouse or dependent child

• Child under age 21, or else infirm or in school

“Designated”- not formally required year-by-year!– One per couple post-’81

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PRINCIPAL RESIDENCE Size limit– ½ hectare routinely ok – If bigger, ok if:

• Zoning re minimum lot size• Required re access from public roads

Incidental income– Basement suite (reporting?)

If Canadian resident but abroad– Includes property off-shore

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PRINCIPAL RESIDENCE

Condos-in-progress– Ownership does not pass until the condo is

provincially registered (IT 437R)– Ergo, P.R. designation not available– What about sale of right?

• CRA says no P.R. for same reason– May be challenged?– Will be topical these days!

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PRINCIPAL RESIDENCE

Vacant land– Fails the “inhabited” test while unused or

during construction– Can lead to partial exposure to capital

gains on sale, under the “1+” rule – See example later

90

CHANGE IN USE

Is a deemed disposition– To rental from principal residence

• Non-taxable to taxable• Establish FMV at change date

– Any gain is tax-free to that point under P.R. designation

– Mark-to-market at FMV establishes ACB forward as taxable investment property

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CHANGE IN USE

Is a deemed disposition– To principal residence from rental

• Taxable to non-taxable• Establish FMV at change date

– Any gain is taxable to that point – Mark-to-market at FMV establishes ACB forward as

tax-free principal residence

• Creates tax liability without cash flow!...

92

CHANGE IN USE

Alternate is to elect no change-in-use– This defers - but does not eliminate – the

gain on deemed disposition– Cash flow issue often snares you! – Leads to the 1+ rule…

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CHANGE IN USE

The 1+ rule determines the tax-free gain proportion:

1 + # years P.R. designated*

# years owned**

*and Canadian resident

**any part of a year

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CHANGE IN USE

Taxpayer acquires and moves in 1990

Moves out 1996-2000 – no election

Sells the principal residence in 2008

Capital gain =

P.R. relief equals 1+14 divided by 19

Capital gain

$65,000

$167,000

$102,000

-$80,526

$21,474

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CHANGE IN USE

4 year rule– To principal residence from rental

• 45(2)

– To rental from principal residence• 45(3)

4 year rule works both ways– No CCA!

NB: It makes available the property for P.R. designation…

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CHANGE IN USE

Latter (45(3)) not well known

Not claiming CCA is tricky in latter case… if you didn’t know about the rule or your own future plans

Rule extended indefinitely under 45(1) if transferred re job (arm’s length)

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CHANGE IN USE

CHANGE

IN

USE

YES

P.R. to rental

Rental to P.R.

Deemed disposition

FMV establishes ACB for future taxable gain

FMV establishes POD for taxable gain - $$!!. Free fwd

No“1+ rule”

Provides OPTION to elect p.r. years in future upon (first) disposal

45(2)

45(3)

Options 4 p.r. years back

Options 4 p.r. years fwd

98

CHANGE IN USE

Electing out of change-in-use from rental to p.r.– The downside of change-in-use is $$

owing– The downside to the 1+ route on 45(2):– Each add’l year of P.R. designation, the

free fraction gets bigger and thus the taxable fraction gets smaller BUT potentially on a large(r) gain, eg 30+ years!

99

CHANGE IN USE

T2091– P.R. designation form

• Very clear! Fill in the numbers!

– Not required until a disposition occurs which requires designations

• i.e. when there are multiple eligible properties

– Also when an ACG had been used prior

100

VACANT LAND

Taxpayer acquires vacant land in 1998Completes $100,000 construction IN 2001 and commences to occupy the house as a principal residenceSells the principal residence in 2003Capital gain = P.R. relief equals (1+3) divided by 6

Capital gain

$65,000

$195,000$30,000-$20,000

$10,000

101

CHANGE IN USE

Note that there can be no “change-in-use” between a principal residence and a PUP recreational property

No!

“1+” only

102

FIRST-TIME HOME BUYERS

RRSP Home Buyers Plan– Max withdrawal was $20,000 each

• Joint tenancy!

– Increased to $25,000 in 2009 Budget– Neither party can have owned a home in

the year of purchase + 4 preceding years– 90 day freeze on contributions, unless

sufficient $$ previously in…

103

FIRST-TIME HOME BUYERS

RRSP Home Buyers Plan– 15 year straight line amortization– Commencing with contribution deadline for

second year following withdrawal• Or else amount is taken into income annually

– Can PAY larger amounts but…..– Cannot ACCRUE larger amounts into

income

104

PERSONAL CREDITS

First Time Home Buyers (2009)– One time tax credit @ 15% (shared)– Max value is $750 per couple– 15% on $5,000 of costs associated with

the purchase of a home– Definition of first time same as existing one

for HBP• Five calendar years

105

PERSONAL CREDITS

First Time Home Buyers– One time tax credit @ 15% (shared)– Max value is $750 – On $5,000 of costs associated with the

purchase of a home– Or for “non-new” owner with Disab Credit

buying more accessible home

106

PERSONAL USE PROPERTY

Principal residence

Recreational property

107

RECREATIONAL PROPERTY

Watch for cost base bumps!– All those renos over the years!– Including common strata capital costs

Being smart!

108

RECREATIONAL PROPERTY

Divided use– Personal use and rental– Classification has implications for sale

• loss! PUP vs rental property

– Issue of apportionment of operating costs– 3 categories: rented/personal use/dark

• Prove “available for rent”?– Ads? Website?

109

CHECKLIST

1. Was there a 1994 ACG?2. Did that ACG include pre 1982 p.r. designations? 3. Enquire into subsequent additions/improvements for ACB bumps4. Qualify to add prop tax/int to ACB?5. Eligible for p.r. designation?6. Eligible for p.r. designation prior to 1982. See PYITR para 554a for joint properties. 7. Change-in-use election useful or not?8. 4+ Rule for years after change to rental? (45-2)9. 4- Rule for years prior to change to p.r.? (45-3)10. A PUP? CG counts: CL does not, in corp, as well!

110

CHECKLIST11. Multiple properties qualify for p.r.? Do gain/year calcs for each to optimize.See also Beam&Laiken Chapter 7 appendix12. Property size attract any problems?13. Any value to Reserve provisions?13a. Special option when the purchaser ASSUMES existing debt, to calculate the vendor's reserve with the denominator being the EQUITY not the GROSS PROCEEDS. 5 year alternate rule still applies.14. V-Day relevant?15. Depreciable property? Recap/TL issues.16. Divorce implications re CG?17. Split POD between L&B for depreciables?18. Deemed reallocation of POD under 13(21)?19. Waived for demolition situation? #Para 9 of IT 220R2 may negate zero building POD on demolition

111

CHECKLIST

20. Apportion costs of disposal/acquisition21. Additional rules for P.R. owned on and after 1981: Interplay of Sec 40 (2)(b) and 40(6)(a) and (b) See B&L Ch 722. Replacement property deferral rules do not apply on sale and acquisition of RAW land: because it was never "used"23. Replacement property rules CAN apply even though Party A owned the property if it was a former business property used by related (business) Party B. See tax memo in 2005 file for lead references. Also can apply even though the subject property is outside Canada.24. Devaney Jan 07 (5) re transferring PUP to children: gifting vs sham vs forgiveable prom note top up

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