Changing Weekend Visitation Family Lawyer John Schuman was asked the following question: My ex wants to keep my daughter this weekend and it is my weekend. I live in Ontario and this is a court ordered agreement. What can I do about this? John’s answer: A carefully drafted separation agreement, Family Court Order, or parenting plan will anticipate most things that will come up in a child’s life. But, it is not possible to anticipate everything. Things always change for children and unanticipated things creep up. Judges understand that, even when a judge has spent the time determining what custody order is in a child’s best interest. So, where parents can agree that a change to what is set out in a court order, either for once or permanently, is in a child’s best interest, then judges understand – unless a children’s aid society or the judge’s order says that no changes are allowed. In most cases, judges (and children’s aid societies) like it when parents can agree to changes to schedules, and other aspects of their children’s lives, in ways that benefit their children. With judges preferring parents being flexible to meet their children’s best interests, the purpose of Parenting Orders, parenting plans or separation agreements is to really to set out what will happen when the parents, unfortunately, cannot agree. When parents cannot agree whether something is in a child’s best interest, the “fall back” is what is in the Court Order, parenting plan or separation agreement. Put another way, if the parents do not agree to deviate from the parenting plan, one of them cannot do so without getting a judge to change the Court Order or agreement. When a parent asks a judge to change a Parenting Order or agreement, the judge will decide what to do based on what is in the child’s best interest. It is possible that decision is not what one, or both, parents want. Also, a parent who refused unreasonably refused to cooperate with the other parent, or denied to make changes without a good reason, may get in trouble from the judge. That parent may have to pay the other parent’s legal fees. Or, can lose custody of the child if the judge thinks the parent was trying to harm the child’s relationship with the other parent. It is always best to try to be reasonable and cooperate when it comes to parenting after separation – even when the other parent is being unreasonable. The process for going back to court can be quite complicated, and involve several court appearances. Before going to court, it is important for a parent to gather the evidence that what they want is in the child’s best interest. All that will not be worth it for one simple change. And, it is unlikely you will get the change made or an upcoming weekend. (Note, it is best to get travel consents arranged months in advance to avoid court delays.) Parents who find that they have a lot of difficulty cooperating with the other parent and the Court Order or Parenting Plan does not resolve the issues, may want to consider using a parenting coordinator. That professional can quickly either assist with, or make, parenting decisions, such as whether a child should attend a special event on an upcoming weekend. It is important to keep a child insulated from, or losing out because of, fights between parents. You can get a lot more information about Ontario Family Law issues, including a further explanation of child custody and parenting legal issues by downloading this $9.99 e-book for Kindle, Kobo, or iPad/iPhone/Mac or ordering the paperback version. But, to keep out of trouble, it is always best to speak with a good family law lawyer. “This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situation and needs.” By Fauzan SiddiquiBlog, Family LawFebruary 16, 2018June 16, 2020
What Happens When Your Child’s School Registration Form Contains False Custody Information? Family and Education lawyer John Schuman was asked the following question: What are the legal penalties for someone who has filled out an Ontario elementary school registration form with false information concerning a court child custody order? John’s Answer: This question is a good one because it touches on the intersection between schools, parents, kids and the law when parents separate. Parents separating can cause a lot of stress and tension for other people as well. First, it is critical to remember that the school, the principal, the teachers, and the school board do not want anything to do with your separation or divorce. If you think any of them are going to “take sides” and support you, then you are wrong. Most school boards have policies that prevent them from becoming involved in disputes between parents. This does not mean that Family Court Judges do not find the thoughts and observations of teachers useful when deciding which parent gets custody. But, nobody wants them involved (I will mention how to get the useful information below). The most important reason why schools will not become involved in disputes between parents is that schools are the kids’ “space.” School is more than just a child’s “workplace.” It is the center of their social lives, it is where they develop an identity independent of their parents, it can be the center of their non-academic activities and, during times of parental conflict, it is often their sanctuary away from that. So, it is very important that fights between parents do not use the school as the battleground. Section 305 of the Ontario Education Act and Ontario Regulation 474/00 give principals the authority to bar any parent from entering school premises because he or she has done anything to upset any pupil. If a principal does that, a Family Court Judge is sure to notice. With that said, it is very important for schools to know what the current custody order says. This helps the school avoid making mistakes that can create tensions between parents or can even allow a parent to abduct a child. It also avoids having the school hand off the child to the wrong parent – or to a parent who is not supposed to visit the child or go to the school. While it is important for schools to get copies of court orders that relate to the school, it is important that parents do not use those orders as weapons. If the school has a copy of a court order that it should not have, or that is no longer valid, parents can do something about it. Section 266(4) of the Education Act allows parents to request in writing that the principal remove any inaccurate information from a student’s record. If the principal does not remove the information, then a School Board superintendent can hold a hearing to determine whether the information should be removed. The Ontario School Record Guideline sets the test for whether a document or information should be removed from a child’s OSR. Any document that is “no longer conducive to the improvement of the instruction of the student” should be removed from a student’s school record. Therefore, a principal should remove any expired, repealed, or irrelevant court order from a student’s record. That should get the court order out. When deciding custody cases, judges need evidence, and they really like the evidence of impartial professionals. The observations of those professionals of the behavior of the parties, and more importantly, how a child is doing, can really influence a judge when deciding custody cases. But, judges do not want educators put in the middle. Section 35 of the Ontario Evidence Act allows judges to admit into evidence any record that a teacher (or other professional) has made “in the ordinary course of business” without having the teacher testify. Those are any records that someone does as part of their job and not for the purposes of any form of litigation (including disputes in Family Court.) So, judges will look at report cards, school attendance records, school IPRC reports, individual education plans, school forms and school emails that are not directly about the custody/access dispute. Those can give the judge a really clear picture of what is going on, how involved each parent is, and whether either parent is being a “problem.” A parent who is being a “problem” or whose actions are having an adverse impact on a child can get into big trouble in family court. Not being supportive of the other parent, acting unilaterally with respect to the children (especially in contravention of a court order) and not putting the children’s needs first are some of the best ways for a parent to lose custody of children It is often possible to get these helpful school records without involving any school personnel directly in the Family Court Fight and, most importantly, without bringing the fight to the child’s school and sanctuary from the parent’s fighting. You can learn a bit more about the family court process by watching this video or listening to these podcasts (iTunes version here). You can get a lot more information about Ontario Family Law issues, including a further explanation of child custody issues and tips to help you and protect your child in and out of court, by downloading this $9.99 e-book for Kindle, Kobo, or iPad/iPhone/Mac or ordering the paperback version. But, to keep out of trouble, it is always best to speak with a good family law lawyer. On school issues, it can also be helpful to get speak to a lawyer who knows about education law. “This article is intended to inform and entertain. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situation and needs.” By Fauzan SiddiquiBlog, Education Law, Family LawJanuary 31, 2018July 7, 2023
Public Schools Cannot Just “Kick Kids Out” – They Must Have A Full Expulsion Hearing It may seem obvious, but School Principals cannot expel students without actually expelling them. In Ontario, allowing children access to a publicly funded education is a fundamental value. Children should not be deprived of that education, except in extreme circumstances. To deprive a child of the ability to attend school, the principal and the Board must follow the rules and procedures for expelling students. Unfortunately, often School Principal’s take short cuts, which are illegal, to kick kids out of school. Expelling students is hard. There are lots of rules to follow and students have rights in the process. Unfortunately, principals often try to kick students out of school without actually expelling them. The law says that is not allowed. To start, principals cannot kick a student out of school because the student is difficult to teach, has challenging or complicated special needs, has difficult parents or other family members, hangs out with the wrong people or is from a bad neighbourhood. Children can only be expelled if they commit very serious offences either while at school or in an activity that is closely linked to school. Those offences are set out in section 310 of the Education Act. They are as follows: Possessing a weapon, including possessing a firearm. Using a weapon to cause or to threaten bodily harm to another person. Committing physical assault on another person that causes bodily harm requiring treatment by a medical practitioner. Committing sexual assault. Trafficking in weapons or in illegal drugs. Committing robbery. Giving alcohol to a minor. Bullying, if, the pupil has previously been suspended for engaging in bullying, and the pupil’s continuing presence in the school creates an unacceptable risk to the safety of another person. Any activity for which a student might be suspended (such a threatening to cause bodily harm, vandalism, being under the influence of alcohol or drugs or bullying) that is motivated by bias, prejudice or hate based on race, national or ethnic origin, language, colour, religion, sex, age, mental or physical disability, sexual orientation, gender identity, gender expression, or any other similar factor. Any other activity that, under a policy of a board, is an activity for which a principal must suspend a pupil If the student’s behaviour does not constitute one of the above offences or was not committed at school or can be linked to school, then neither the principal nor the School Board can expel the student. Further, before expelling a student, Ontario Regulation 474/07 requires that both a principal and school board consider whether the student’s behaviour is the result of identified special needs – especially if the school has not been accommodating those needs properly, whether the student has been a victim of bullying or harassment and what effect the discipline will have on the student’s education. These factors MAY make it impossible to expel a student. The whole process of expelling a student can be very inconvenient. It should be impossible to kick a student out of school because his or her special needs are difficult to accommodate. There are lots of students who can really irritate teachers, but who knows the rules and don’t do anything to get themselves expelled Sometimes a student is weird, or unpopular, or “different”, or does not reflect well on the school. In all these cases, the expulsion process does to work because the school has no basis in law to expel a student. In those circumstances, where a student’s actions do not allow them to be expelled, principals have taken to just giving students a “Trespass Notice” and telling them that they are not allowed to come onto school grounds anymore. Sometimes, the principal also threatens to call the police if the student tries to come to school. The principal will say that section 265(1)(m) of the Education Act gives a principal the authority to take such action. Indeed, section 265(1)(m) does give the principal of the school the authority to “refuse to admit to the school or classroom a person whose presence in the school or classroom would in the principal’s judgment be detrimental to the physical or mental well-being of the pupils.” The principal does not have to hold a hearing, or follow any set procedure before doing this. Unlike for suspensions, which can only be for 20 days, there is no time limit for how long a person can be denied admittance to the school. There are no other obligations imposed on the principal who refuses to admit someone, except to allow that person to appeal the principal’s decision to the School Board. However, there is no timeline for the hearing of such an appeal. Principals cannot use section 265(1)(m) against their students. Section 3(3) of Ontario Regulation 474/00 says that a principal cannot refuse to admit a student into a school if the student is enrolled as a pupil at that school. To be clear, it is illegal for a principal to refuse to admit a student into the school at which that student is enrolled. It is also a illegal for a principal to issue a “Trespass Notice” to a student in relation to that student’s own school. A principal cannot use a “refusal to admit” or an “exclusion” as a substitute for an expulsion. Parents of students who have been “excluded” should challenge that decision immediately, which may mean an application to the Child and Family Services Review Board. In its decision in DN v. TDSB, a case in which John Schuman was counsel for the parents and student, the Child and Family Services Review Board both commented on the illegality of a principal “excluding” a student from his or her own school, and gave parents and students recourse when a principal does that. In that case, the CFSRB decided that an “exclusion” of a student from his own school was really an expulsion and should be treated as such. For that reason, the CFSRB decided it could hear the student’s appeal of the principal’s decision as if it had been an expulsion. This is important because the CFSRB is not only an objective tribunal that is completely separate from the school board, but also, it hears appeals within 30 days while a School Board can hear an appeal of a “refusal to admit” whenever it feels like it. The CFSRB also commented that if a child is suspended for more than 20 days, the Board looses the right to expel a student. If a principal uses section 265(1)(m) to prevent a student from attending school, that student and his parents should immediately file an appeal to the Child and Family Services Review Board. The CFRSRB is a formal tribunal, with its own procedural rules, and that conducts hearings that look very similar to a trial in court, with live witnesses and legal arguments. For that reason, parents may want to consult with an education lawyer prior to starting the appeal. It may be important to do that as principals and school boards can let “exclusions” go on for months, causing a student to lose his or her year, and perhaps fall out of he education system entirely, before the matters resolved. If a school board cannot meet a child’s special needs within a particular school, including the child’s home school, the school board is allowed to move the child to a school that can better meet a student’s needs. However, the Board must go through the IPRC process to identify the student’s special needs and determine the appropriate school placement. Ontario Regulation 181/98 says parents are entitled to participate in that process… it cannot happen behind the parent’s backs. Other than that, a child can only be removed from or transferred out of a public school with the parent’s consent (or with the child’s consent when the child is old enough to give it.) Schools, school board’s and principals cannot just tell a student that he or she cannot come to school anymore. John Schuman is the education lawyer who represented the parents in DN v. TDSB (and other important education law cases like this one). He has helped get many many students back into school with the services they need. To arrange a consultation with him, at a reduced hourly rate, call 416-446-5869 or use the form below. We try to answer all inquiries promptly as we know it is important to get kids back in school. Contact with us is protected by solicitor-client privilege. “This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situation and needs.” By Fauzan SiddiquiBlog, Education LawJanuary 3, 2018July 5, 2023
Uber Data Breach Affecting 815,000 Canadians, Investigation Launched As much of the world has heard, Uber has had a data breach that affected people worldwide. Now, after several demands from a number of levels of Canadian governments, Uber finally disclosed that 815,000 Canadians were affected by this breach, resulting in the Canadian Privacy Commissioner opening a formal investigation into the breach. Uber has said that only names, emails and mobile phone numbers were taken by the hackers and that no credit card information, bank accounts or dates of birth were compromised. Unlike the U.S. and U.K., Canada has no laws in place requiring Uber to disclose data breaches and under the license agreement with the city of Toronto, the city council had to vote in order to demand information on the breach. The Privacy Commissioner “gave little detail in announcing the formal investigation, noting confidentiality provisions under the Personal Information Protection and Electronic Documents Act (PIPEDA)”. PIPEDA entitles individuals to certain protections for personal information that is collected in the course of commercial activity. “Personal information” is broadly defined by PIPEDA, and includes any information about an identifiable person (s 2). “Commercial activity” is also broadly defined and includes: any particular transaction, act or conduct or any regular course of conduct that is of a commercial character, including the selling, bartering or leasing of donor, membership or other fundraising lists (s. 2). These sections form the basis of the protection of personal information under federal law. When a complaint is filed with the Commission, PIPEDA confers wide-ranging investigative powers to the Commissioner to investigate alleged breaches, make corrective orders to organizations, and assign penalties if a breach is found. Luckily, to address the lengthy process required to obtain information from businesses such as Uber, Federal privacy laws are being developed that would require businesses to disclose if a data breach occurs. Under the revision, the Privacy Commissioner would be limited to issuing a maximum fine of $100,000 for not disclosing a breach. “This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situation and needs.” By Fauzan SiddiquiBlog, Intellectual PropertyJanuary 3, 2018June 17, 2020
Cracking Down on the Issue of Parental Alienation In the UK, parents who are going through a separation or divorce could potentially be denied contact with their children if they try to turn them against their former spouse or partner. The practice of one parent turning the child(ren) against the other, especially during litigation, is nothing new and happens in almost every jurisdiction. Parental alienation can be commonly defined as “when one parent attempts to exclude the child(ren) from the other parents life.” The Children and Family Court Advisory and Support Service (CAFCASS) in the UK, which is similar to the Office of Children’s Lawyer in Ontario, has introduced a new process to give alienating parents the opportunity to correct their behaviour through concentrated therapy. Parents who do not respond will no longer be allowed to have their children live with them. Contact between the alienating parent and child may also be restricted or suspended for a number of months. In the most serious cases, the alienating parent may be permanently banned from contact with their child. CAFCASS notes that alienation occurs in a significant number of the 125,000 cases they hear in the UK each year. They estimate it is present in 11-15% of divorces and separations involving children, and that 1% of children experience it in North America. Sarah Parsons of CASCASS has said that this “new approach is ground-breaking,” and will assist parents and children, with the primary focus on allowing a child to avoid manipulation during the separation of a family. This new approach is unlike the process that occurs in the United States and Canada. In these countries, “parenting coordinators” are used to assist between parents and children who are deemed alienated. In Mexico and Brazil, alienation of a chid is considered a criminal act. The UK’s approach sets out guidelines for CAFCASS workers, known as “the high conflict pathway.” This itemizes the steps workers must take when suspected alienation is present. The pathway will also provide details and information on “when the child should be removed from the alienating parent and given to the “target parent””. These guidelines which will change how cases are dealt with in the Family Courts of England and Wales will also be considered by Judges, Experts, Doctors and Lawyers. In addition to the guidelines, there will be a 12-week programme that will focus on helping abusive parents to break their behaviour patterns by putting them into the child’s shoes. If the parent fails to progress through the programme, experts such as psychologists and mental health experts will be called in and contact to the child will be limited. To begin with, 50 high-conflict families will take part in a trial of this programme. If approved in the spring of 2018, it will then be standardised nationwide. The main goal of this initiative is to “preserve the relationship with both parents,” said Parsons. It is often the child that is the victim in these alienation cases. If successful, one hopes that an approach similar to that of CAFCASS can be trialed in Ontario before the end of 2018. For any family law matters, please contact our family law group. For all other inquiries, please contact our office directly at 416-449-1400. “This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situation and needs.” By Fauzan SiddiquiBlog, Family LawNovember 30, 2017July 7, 2023
Third Party Litigation Funding: Where is it in Canada? Third-party litigation financing presently plays a role in class actions and personal injury cases in Canada. After the event (ATE) insurance is increasingly common for plaintiffs to obtain in pursuing a personal injury case. Such insurance covers the expense that unsuccessful party has to pay towards the successful party’s legal fees. This is invaluable for access to justice for personal injury complainants who may be at risk of losing their homes if they are unsuccessful and ordered to pay the successful party’s legal fees. Such funding also seems appropriate in the class action setting where individually the plaintiffs would not see legal action as a viable means to remedying their claims. Used properly such third party financing and insurance lessens the consequences that an individual plaintiff may face if they decide to pursue their rights in the legal arena, thereby supporting access to justice. This type of funding does not affect the court’s ability to act in its rightful role in weeding out trivial or unmeritorious claims. Costs consequences are appropriate considerations in settlement negotiations, but they should not go so far as to prevent the individual claimant from considering litigating their claims. Where third party litigation financing finds merit in permitting individuals to participate in litigation when otherwise the financial risks of losing would prevent them, what is the rationale for such funding in commercial litigation? Does the policy rationale of promoting access to justice apply in the commercial realm? Outside funding can play a role in two ways for commercial litigation matters: it can fund the legal dispute itself, and it can insure against the litigation risk exposure. One interesting consideration is the relationship between third party litigation funding, litigation risk, and contingency fee arrangements. Contingency fee arrangements are common in personal injury, but much less so in commercial litigation. But, if third party funding develops in the commercial litigation field, will contingency fee arrangements begin to increase? While presently not widely used, contingency fees, unavailable in criminal, quasi-criminal and family law matters, are not prohibited in commercial disputes. The concerns regarding third party litigation financing can be mitigated through the use of competent and ethical lawyering. A commitment to solicitor-client privilege, appreciation for the merits of settlement, and discussing the risks of litigation beyond the financial consequences, such as the time demands, effect on reputation, and precedential effects of judgments. Further, the courts have developed guidelines for external funding arrangements in the class action context, where judicial approval is required, that can be used to shape arrangements that keep the focus of the litigation on dispute resolution and not profit. Moving forward, where third party funding arrangements can be agreed to which keep the financier a non-party to the dispute, there will likely be an increasing role for them in commercial litigation. “This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situation and needs.” By Fauzan SiddiquiBlog, LitigationNovember 29, 2017June 17, 2020
Increase in Self-represented Litigants Increases Issues Recent news stories have been buzzing about the implications of Dellen Millard, the person accused of murdering Laura Babcock some years ago, foregoing counsel and choosing to act as a self-represented defendant. Much of the concern over this interesting strategy regards the court process for examining witnesses. In Criminal Court proceedings, an accused is entitled by law to cross-examine any of the witnesses called by the prosecution. For the Laura Babcock case this means the accused has the right to personally question persons such as the victim’s father. While this may cause unease to some for moral reasons, there is a bigger issue at play when self-represented litigants proceed to trials. The proposed advantages of self-representation, namely the decreased cost to the litigant, are at odds with the judicial system as a whole. Costs are actually increased when one party is self-represented. This is due to that person being unaware of the strict procedures that must be followed in litigation. The strict procedures come from legislation, meaning departures from them are rare and require alternative rules to override them. The savings that a self-represented litigant may appreciate in not having to pay for a lawyer to represent themselves are not actually costs eliminated in whole, but rather costs that are avoided by one party only to be borne by the opposing party and the court system. A trial where one party is self-represented will be lengthier and therefore costlier. A self-represented litigant is not going to understand the law and its procedures well enough to understand which material needs to be pleaded and which do not. This results in that litigant over-filing, which forces the opposing counsel and the court to spend more time sifting through materials that no value to the lawsuit. These litigants continue to cause more delays throughout the actual trial. Not only will a judge have to take time to provide instructions to the litigant throughout the trial, but the litigant themselves will be slower to examine and cross-examine because they will not understand things such as how to phrase questions, how to establish facts, and generally what they need to achieve. They are unable to perform efficiently at trials because they do not have the legal training and experience necessary. Not only does a longer trial increase the lawyer’s fees for the opposing party, but it decreases the amount of cases that a judge can hear. Beyond financial implications of litigation involving a self-represented party, the self-represented litigant is ultimately at a disadvantage when they go to advocate their interests and rights. Not understanding the law and the strict procedures, such litigants are at an exponentially high risk for getting their cases dismissed on summary judgment. Litigants who fail to properly plead materials are at risk for having their cases dismissed given the increase in the availability and the court’s determinations on summary judgment. Further, for cases which are not dismissed on summary judgment, the self-represented litigant is vulnerable because decision-making does depend on whether evidence was adduced and organized alongside arguments on the law. While self-represented litigants, such as Dellen Millard, may appreciate being in control of their trials and advocating their own interests, they have a significant effect on legal proceedings which are not in line with justice. They cause increased expense for the opposing party, take up an increased amount of time and resources of the court which limits the volume of cases the court can hear, and, ultimately, they place the self-represented litigant at risk of having their cases adjudicated without the court having received a well-informed, appropriate legal argument and all its accouterments. By: Samantha Hamilton, Student-at-Law “This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situation and needs.” By Fauzan SiddiquiBlog, Criminal LawOctober 25, 2017June 17, 2020
UPDATE – Tax Measures Targeting Privately Held Corporations On July 18, 2017, the Department of Finance released a set of proposals to amend the Income Tax Act (the “July 18 Proposals”). The position taken by the Department of Finance and the rhetoric surrounding the July 18 Proposals were that the proposed tax measures were designed to “improve the fairness of Canada’s tax system by closing tax loopholes and amending existing rules to ensure that the richest Canadians pay their fair share of taxes and that people in similar circumstances pay similar amounts of tax”. The July 18 Proposals were roundly criticized by the tax and business communities, with town hall meetings, conferences and consultations held across the country. In addition, over 21,000 written submissions were made to the Federal Government during the consultation period, which ended October 2, 2017. The key elements of the July 18 Proposals were based on changes to the following 4 key areas: Lifetime Capital Gains Exemption (“LCGE”) The LCGE exempts holders of qualified small business corporation shares and holders of qualified farm or fishing property from tax on capital gains of up to million arising from a sale or disposition. The Federal Government was concerned that methods to multiply the LCGE, using family trusts, for example, unfairly permit more than one taxpayer to claim the LCGE and thereby reduce the tax payable on the disposition of private company shares, or qualified farm or fishing property. The July 19 proposals sought to significantly restrict the availability of the LCGE. Income Splitting Income splitting refers to the practice through which income earned through a corporation is “sprinkled” among family members, rather then all paid to one individual. This practice allows a taxpayer to reduce his family’s overall tax bill by shifting income from higher-income taxpayers to lower-income taxpayers. Passive Investment Income Active business income earned in a corporation is taxed at a much lower rate than employment income earned by an individual. Because of the tax deferral available when retained earnings are kept in a corporation, there is more after-tax income available to invest in a corporation than if that same amount of income was earned personally. As such, Finance perceives this to be an inherent unfair “advantage” to private company shareholders. Converting Income into Capital Gains The Government’s proposals seek to address certain transactions that they consider to be abusive, specifically certain post-mortem transactions, which convert income which would otherwise be taxable at higher corporate tax rates to capital gains, which are taxed at significantly lower rates. On October 3, 2017, the Department of Finance issued a Press Release, in which Finance Minister Bill Morneau acknowledged the concerns regarding the July 18 Proposals raised by the public, the tax community, and business owners, and suggesting that the Government may take steps to make amendments to the proposed legislation based on feedback Finance had received. On October 16, 2017, the Department of Finance issued an announcement of changes to the July 18 Proposals in light of the consultations and further to its October 3rd announcement. The highlights of the proposed changes are: 1. Reduction in the federal small business tax rate from 11% to 10% effective January 1, 2018 and to 9% effective January 1, 2019. 2. No changes to the LCGE. Finance stated that “the Government will not be moving forward with the measures that would limit access to the Lifetime Capital Gains Exemption”. 3. Income Shifting. Finance confirmed that it will continue with its proposals to terminate income shifting to lower-income family members who do not contribute to the business. However, Finance stated that it will introduce “reasonableness tests” for adult family members who will be asked to demonstrate their contribution to the business. On October 18, 2017, the Department of Finance issued a further announcement targeting passive income earned within private corporations. In this Press Release, the Government stated that it will continue with its intended measures to limit the tax-deferral opportunities related to passive investments; however, it will provide some relief by allowing business owners to build savings for business purposes or for retirement. The Government has announced that businesses can continue to save for contingencies or future investments based on a threshold of $50,000 of passive income per year. Any income above this threshold will presumably be subject to higher rate of taxation as set out in the July 18 Proposals. Draft legislation implementing these proposed changes will be released as later this fall or as part of Budget 2018. We can help. Tax planning opportunities are available to assist Canadian taxpayers in optimizing their affairs to obtain a favourable tax outcome. Contact DSF’s Tax Planning Group for advice and assistance. “This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situation and needs.” By Fauzan SiddiquiBlog, TaxOctober 19, 2017July 5, 2023
September Home Prices and The National Index There has been a lot of discussion lately around the recent slow downs to the real estate markets in Toronto and surrounding areas. A number of factors can be said to be contributing to the changes in these previously hot markets, including a number of measures introduced by the Ontario government earlier in the year intended to have just such an effect. These include the new foreign buyers tax – under the Non-Resident Speculation Tax (NRST) there is now a 15% tax on the purchase or acquisition of an interest in residential property located in the Greater Golden Horseshoe Region by individuals who are not citizens or permanent residents of Canada or by foreign corporations and taxable trustees. Changes to the mortgage market introduced last year have also affected the market by increasing the qualification requirements for buyers with a down payment of less than 20%, effectively reducing the size of mortgage that these buyers are able to qualify for. Changes to the financing market have also hindered the ability of many non-bank lenders to compete in the mortgage market, thus stifling overall competition in the financing sphere. We have also seen increases to interest rates offered by lenders in conjunction with the recent Bank of Canada rate increases. The icing on the cake appears to have come today with OSFI releasing its revised final guidelines setting out new mortgage qualification requirements which are set to take effect January 1, 2018 and will affect all borrowers. Details can be found here. With so many recent changes factoring into the market in a relatively short period of time, it is difficult to predict how the market will react in the longer term. There has not been enough time to adjust to one change before the next one is being implemented, making it impossible to gauge how significant the cumulative effect will be. For now however, the market in Toronto (and surrounding areas) has clearly cooled off and the national composite house price index has suffered due to the falling home prices in Toronto. According to the Toronto Star, the national index fell 0.8% compared with the previous month – the largest month over month drop since September 2010. In the month of September the price indexes of the 11 cities included within the national index moved as follows: Toronto (fell 2.7%) Quebec City (fell 2.3%) Hamilton (fell 1.9%) Halifax (fell 0.4%) Ottawa-Gatineau (up 0.3%) Calgary (up 0.7%) Montreal (up 0.3%) Winnipeg (down 0.3%) Victoria (flat) Vancouver (up 1.3%) Edmonton (up 0.2%) Devry Smith Frank LLP has experienced Real Estate lawyers in Barrie. If you require a real estate lawyer or have any questions, call us directly at 705-812-2100. “This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situation and needs.” By Fauzan SiddiquiBlog, Real EstateOctober 17, 2017June 18, 2020
Ontario Legislature moves to regulate Life Leases in bid to protect Seniors Bill 155, introduced in the Ontario Legislature on September 20, 2017, proposes a new law to regulate, so-called, ‘life leases’, a type of lease arrangement that lasts for no less than 50 years. Life leases are a form of leasing arrangement that has become increasingly popular in Ontario thanks to a rapidly growing seniors population. A life lease is similar in concept to condominium ownership, whereby a group of people own units in a community or building and pay fees for the use of common areas and maintenance. Unlike a condominium however, a life lease does not confer an ownership stake in the property; rather, the lessee owns an ‘interest’ in the property that allows them the right to live in the unit. A prospective lessee typically enters into a life-lease by paying a lump-sum up front followed by monthly fees for amenities and maintenance. This is an attractive arrangement for seniors, who can still live independently but are not able to maintain a single family home. The Bill proposes certain payments in respect of life leases and requires the disclosure of information relating to life leases. Under the proposed rules, the landlord is required to disclose to a prospective tenant the estimated entrance fee, the projected completion date, information regarding governance and management of the residential complex, the estimated amount of other fees, including monthly occupancy fees, and the estimated refund that a tenant would receive upon termination of the lease. Landlords are also required to maintain a reserve fund to pay for any unforeseen major repair to or replacement of assets of the complex, and to hold adequate insurance for such. It is unclear what effect the rules this will have on the life lease market, but new regulations could well increase costs that are ultimately passed on to seniors. The Bill’s sponsor, MPP Ann Hoggarth, said: “This bill provides that life leases be given protection, similar to renters and condo owners, by providing clear disclosure to leaseholders and improving communication with their sponsors”. Are you thinking of purchasing or selling a life lease? We can help. If you are in need of a real estate lawyer, please visit our real estate page and contact one of our lawyers today. For any other legal services or inquiries, please contact Devry Smith Frank LLP directly at 416-449-1400 or visit our website for more information. By: Stuart Clark, Student-at-Law “This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situation and needs.” By Fauzan SiddiquiBlog, Real EstateOctober 16, 2017June 18, 2020