A Message to our clients and Friends

The worldwide concern with the impact of the COVID-19 virus, the collapse of oil prices, and transportation disruptions have combined to produce a major decline in the leading financial markets.  The drop in the markets is cause for concern among investors, but particularly those planning for retirement, considering succession arrangements for their businesses or trying to put an estate plan in place.

Despite the present market uncertainties and the general feeling of gloom and doom there may be opportunities to do some tax planning.  Such opportunities may include:

• Taxpayers (individuals and corporations) who realized capital gains in any of the three preceding years could liquidate some “loser” securities, trigger a capital loss and carry that loss back against capital gains in the three preceding years, thereby recovering some of the tax paid in prior years.

The “superficial loss” rules prevent you from repurchasing that security within 30 days of loss sale transactions.  However, you could repurchase within the same market sector.  For example, if you sold CIBC shares to trigger a loss, you could repurchase another bank stock to retain your position within the financial sector of the market.

• Clients considering an “estate freeze” as part of their overall estate plan will be able to “freeze” at much lower values than would have been the case a few weeks. Freezing at a reduced value will reduce capital gains tax on death and allow a greater portion of the recovered value to be realized in the hands of the successor owners.

• Clients who have completed “freeze” transactions could “re-freeze” at lower values.

• Clients looking to embark upon succession planning (e.g. sale of the family business to other family members or sale to key employees) will be able to do so at reduced values.
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  We would be pleased to discuss these matters with you.