Bahamas Hosted Networking Social

SAVE THE DATE & RESERVE YOUR SPOT

BAHAMAS HOSTED NETWORKING SOCIAL

Taking Your Business International

Monday, October 23th, 2017 (6:00 PM)

With 12 Great Hosts to Help You Network

Join our MetroActive hosts and members for an evening towards overcoming your personal and business challenges. Take advantage of individual business introductions, socializing, and networking.  Enjoy the company of a diversified group of individuals with common interest of networking and overcoming challenges in their work, business or personal life.

Add gusto to your networking activities in a social environment which combines the atmosphere of business success with personal development and relationship building.

The evening will begin by focusing on business networking with the assistance of MetroActive hosts who will help make introductions. Partly through the evening Baldo Minaudo will provide a 5 minute introductory experience to help expand your network. Then the hosting team members will be briefly introduced to all the guests.

Later in the evening, you can relax to the background music and atmosphere as you continue to build your new relationships with like-minded and like-spirited professionals.

This is a great opportunity to touch base with acquaintances and to make new friends (don’t forget your business cards). So feel free to bring along your friends and colleagues interested in advancing their career, growing their business, building their network or making new friends.

Reserve your admission today. MetroActive’s events are usually sold out and we often have to turn away dozens of individuals who didn’t buy tickets far enough in advance. Don’t delay!

ATTENTION

Now Accepting Applications for HOSTS

Looking for Event SPONSORS and DOOR PRIZES

 

FOR DETAILS: www.MetroActive.org

Shakeyra Dean, Attorney

Email: sdean@MetroActive.org

FALL 2017 Bahamas Hosted Networking Social Flyer

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“Dear Leader” shakes markets out of summer doldrums

With second quarter earnings season winding down and little in the way of major new economic data, attention this week focused squarely on increasing tensions between North Korea and the United States. After the United Nations imposed its toughest sanctions yet against the North Korean regime, an exchange of bellicose threats between the “Hermit Kingdom” and the Trump administration jolted the CBOE Volatility index (VIX), a popular measure of equity market volatility often referred to as the fear index, to its highest level since Trump’s election. Virtually all major equity markets suffered losses. Most safe-haven assets such as gold, the Japanese Yen, and U.S. Treasuries moved higher, but the U.S. dollar, perhaps the most traditional safe haven, was pressured by soft inflation data.

Canadian equity markets were closed Monday for a civic holiday; but once open, they succumbed to the global risk-off environment. The benchmark S&P/TSX Composite slid 1.5%, led by information technology and health care where corporate news added to the market pressures. Energy names also experienced broad weakness. Crude oil prices fell as the International Energy Agency (IEA) cut its demand forecast, despite declines in U.S. stockpiles, a growing crisis in Venezuela, and OPEC moves to bring production in line with previously agreed targets. West Texas Intermediate (WTI) dropped 1.6%. As is often the case, the Canadian dollar fell alongside oil. The Loonie dropped a fifth of a cent to 78.8 cents U.S. after briefly peaking above 80 cents in late July. Precious metals names stood out on the upside as beneficiaries of safe haven flows. Spot silver and gold prices jumped 5.2% and 2.5% respectively. The yellow metal has now climbed 12.5% ($US) year-to-date.

Both the S&P 500 Composite and Dow Jones Industrial indexes set new all-time highs on Monday before rolling over. For the week, the S&P 500 gave up 1.4% led by resources and financials. The financial sector, while still outperforming the broad market year-to-date, is facing headwinds from lower inflation and bond yields. This week saw lower-than-expected readings for producer (PPI) and consumer prices (CPI) and unit labour costs. Aided by safe haven flows into sovereign bonds, the inflation data pushed U.S. 10-year Treasury yields down 7 basis points to 2.19%. Earnings reports continued to be responsible for top individual equity movers, both to the upside (e.g. Michael Kors Holdings, Perrigo) and the downside (Macy’s, Dentsply Sirona).

European stock markets were even weaker than North American ones, with Germany’s DAX down 2.3% and London’s FTSE 100 off 2.7%. European bank stocks, which had been rallying this year on talk of European Central Bank “tapering,” were hit hard by the drop in bond yields as North Korean tensions mounted. Major Asian markets rolled over with their western counterparts, but not before touching a new 10-year high (MSCI AC Asia Ex-Japan) early in the week. Hong Kong’s Hang Seng slipped 2.5% while Japan’s Nikkei 225, under additional pressure from the stronger Yen but closed on Friday for a holiday, dropped 1.1%.

 

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Federal Department of Finance proposes tax measures affecting tax planning using private corporations

On July 18, 2017, Finance Minister Bill Morneau released draft legislation and other proposals, currently put forward for consultation, outlining changes with respect to tax planning using private corporations. The purpose of the proposed legislation is to close perceived loopholes and deal with tax planning strategies that are only available to certain taxpayers, namely shareholders of private corporations.

Income sprinkling and multiplication of the capital gains exemption

Income sprinkling is a tax arrangement which, but for the arrangement, would result in an individual reporting more income, dividends or capital gains. However, due to the arrangement, such income is reported by a lower-income individual, often a family member of the high-income individual.

Currently the Income Tax Act includes rules which limit the use of income sprinkling. With respect to salaries, such salaries are deductible to the private corporation only if they are reasonable based on work performed. Additionally, attribution rules will attribute income back to an individual who has transferred or loaned property to a non-arm’s length person at terms less than fair market value. Additionally, there is a tax on “split income” which applies when dividends and certain capital gains are allocated to minor children, also known as the “kiddie tax” rules. When the split income rules apply, the top marginal personal tax rate applies to such income (and most personal tax credits do not apply), thus eliminating any benefit of that income being earned by the minor.

The above provisions are not effective against income sprinkling with adults who have acquired their interest in the private corporation by appropriate means. As such, the government is proposing several measures to restrict the ability to income sprinkle. The main proposal involves extending the tax on split income provisions. The tax will now also apply to certain adult individuals who receive split income which is deemed to be unreasonable based on the labour or capital contributions made by the individual. These tests will be more rigorous for those aged 18-24.

Another restriction will be on the ability to claim the lifetime capital gain exemption. The key changes are:

  • An age limit – an individual can no longer claim the lifetime capital gain exemption if they are under the age of 18, nor can they claim it on gains accrued while they were under the age of 18;
  • No claim is available to the extent that the split income rules apply to the taxable portion of the capital gain; and
  • Individuals can no longer claim the LCGE in respect of gains that accrue while a trust held the property (this will exclude spousal or alter ego trusts).

Holding a passive investment portfolio inside a private corporation

More than one approach is being considered to reduce or eliminate the tax deferral currently available when private corporations retain active business income and invest those funds corporately in passive investments. The tax deferral available when active business income is earned within a corporation provides that corporation with more after-tax dollars available for investment. Even though passive income within a private corporation is aggressively taxed (through the refundable tax regime), there are more funds available for the initial investment, thus corporate investing will result in more accumulated savings than if the investment had occurred personally.

The government is considering several approaches which will accomplish the following objectives:

  • Preserve the intent of lower tax rates on active business income, to encourage growth and job creation; and
  • Eliminate the tax-assisted financial advantages of investing passively through a private corporation.

At this time, no specific proposals have been provided and the government is requesting input from stakeholders prior to drafting proposed legislation on passive investments held within a private corporation.

Converting a private corporation’s regular income into capital gains

The ability to extract corporate surplus (generally considered to be accumulated after-tax earnings plus unrealized corporate net value) via a capital gain rather than through a dividend or a salary is generally referred to as surplus stripping. Currently there are provisions in the Income Tax Act which prevent surplus stripping in certain situations involving non-arm’s length parties; however, not all surplus strip transactions are caught by these rules, particularly when the lifetime capital gain exemption has not been claimed. The proposed changes would expand the rules currently contained within subsection 84.1 of the Income Tax Act to prevent individual taxpayers from using non-arm’s length transactions to create a stepped-up cost base of shares of a corporation, which can allow for the ability to strip surplus from a corporation at a preferential rate.

These proposals may also impact certain post-mortem planning strategies which seek to eliminate double taxation which can occur when the shareholder of a private corporation dies and the corporation is subsequently liquidated and wound up.

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Soaring Loonie dampens S&P/TSX gains

For the first time in two years, the Canadian dollar climbed this week to above 80 cents U.S – powered by a strong economy, rising interest rates, and a weak U.S. currency. The Loonie’s strength weighed on Canadian stocks, pressing the S&P/TSX to a loss of 0.4%. South of the border, the second quarter earnings reporting season got into full swing, powering all major U.S. stock indexes to new record highs before they rolled over late in the week. Government bond yields in both countries gained for the week, despite a brief dip on the Fed rate announcement, with the Canada-U.S. spread narrowing on the Loonie strength.

Canada’s Gross Domestic Product (GDP) for May was reported on Friday to have grown at a stronger pace than forecast, posting the highest year-over-year gain in 15 years. Just days earlier the International Monetary Fund (IMF), in its latest World Economic Outlook, predicted Canada would lead G7 growth this year. An improving Chinese outlook sparked large gains in miners, such as Lundin Mining Corp. and Hudbay Minerals Inc., as copper prices hit two year highs. Energy names drew strength – first from a report Saudi Arabia would cap its exports at a lower level, and then from EIA (the U.S. Energy Information Administration) data showing a crude oil draw more than double what was predicted. West Texas Intermediate (WTI) oil jumped over 8% on the week. None-the-less, the Canadian stock benchmark struggled under pressure from the rising dollar. Adding to the negative sentiment was the cancellation of Petronas’ plans for a liquefied natural gas terminal in British Columbia. S&P/TSX decliners were led by gold producers, railroads, and financials.

In the U.S., strong corporate earnings were backed up by mostly solid economic numbers, including GDP, consumer confidence, durable goods orders, and the manufacturing PMI (purchasing managers index). Fresh index highs mid-week came on big name moves in response to earnings – Facebook in particular for the NASDAQ Composite, and Boeing and Verizon Communications for the Dow Jones industrials. Health care was the main laggard group, thanks to uncertainty in Washington’s reform efforts. Stocks pulled back mid-day Thursday as traders and investors continued to digest Wednesday’s Federal Reserve statement, suggesting they were in no rush to raise interest rates with inflation remaining below target, but that its balance sheet reduction (unwinding of QE, or quantitative easing) could begin “relatively soon”. The S&P 500 Composite was virtually unchanged for the week.

European economic news was mixed with disappointing PMIs in France and Germany, bringing to an end the Eurozone PMI’s 11-month streak of gains. This was followed just the next day by Germany’s IFO business climate index unexpectedly climbing to a new record high. Many European indexes closed the week in the red, pressured (like Canada) by a stronger currency. U.S. dollar weakness, commodity strength, and the improving China growth expectations boosted many emerging markets and pushed the MSCI EM index to a three-year high. But in Japan, the dollar weakness pushed the Yen to its highest level since mid-June, pressuring stocks and leaving the Nikkei down 0.7%.

 

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Passing on the Family Cottage

If you wish to leave your cottage to your children, plan ahead to get everyone on board and avoid misunderstandings.

Discussing present and future plans for the family cottage is crucial as family members age and grown children might have varying levels of interest in maintaining the property.

If some of your children want the cottage, and others do not, the issue may become how to equalize the estate. If the cottage will form a large part of your estate, life insurance may help fill the gap for the other children. If you are not interested in paying the insurance premiums, perhaps your children will be, if the insurance policy is the solution to keeping the property.

If several children want the cottage, you should consider a co-ownership agreement. It sets out how the cottage will be used, who will pay for it, and who will be responsible for its upkeep. The agreement should also specify how the parties can be bought out in case of disagreement, and what happens upon the death of one of the siblings.

There can be a lot of emotions wrapped up in the family cottage. It’s important to plan how it will be passed to the next generation before that day arrives.

Your estate: the next generation

How you choose to pass your assets on to your children is a personal decision and can be done in a variety of ways. It’s often beneficial to discuss your plans with your kids, so you clearly convey your intentions, develop a philosophy regarding the family legacy, discuss any concerns about protecting their inheritance and maintain family harmony.

Once your estate plan and will are in place, review them every few years to make sure that if your family’s circumstances have changed, your current situation and wishes are reflected.

Estate planning for blended families

If you have a blended family, where some or all of the children are not the natural or adopted children of both spouses, a standard will may not be appropriate if you want to ensure that children of both spouses receive part of the combined estates.

Possible options include spouse or common-law partner trusts, dividing the assets between the spouse and children, and using life insurance to satisfy all beneficiaries.

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