Edited by Prairie Fighter Team Wen Jing
The weekly program “Blue Maple Law” was broadcast on G-TV. This program was hosted by Mr.Jing Xiu Zhong Hua and Ms. Ting Lan, also participating in the broadcast on Saturday, April 24 were special guests Mr. Gong Du and Ms.Rachel on Saturday.
The first topic was about Canadian law — in particular wills.
“Does today’s topic also consider the wills used in the VOG case?” Host Ms. Ling lan asked.
“Yes. We need to prepare for the situation when many G-series investors will become rich. Wills are primarily a matter of planning ahead.” Rachel said.
Tinglan expressed the view that: “in Chinese tradition, wills are taboo, but they are very common in the West.”
“In fact, a will is the expression of a person’s desires. A testator, a person who makes a will, records how his or her property will be distributed after his or her death. Note: spoken words don’t count, even if they are recorded, so it must be a written legal document. The legal document of the will must be effective after the death of the person who made the will, and it is not enforceable while the individual is still alive.”
“A power of attorney. A document that gives the other party the right to act on your behalf. The delegator can give the delegate a wide range of rights to represent the delegator in matters such as finance, property, or health. Or it can be limited to specific things, like authorizing the disposal of a particular property, depending on the situation, specifying the timing, etc.” Ms. Rachel further explained the difference.
“The executor of a will and the person to whom the power of attorney is granted are both persons appointed to help the signatory of a will or attorney manage his or her finances and affairs in the event that he or she is unable to perform his or her own affairs. The biggest difference between the two: a will comes into effect after the death of the person who made the will; a power of attorney is only useful as long as the authorizer is still alive.” Rachel says.
“If I’m in china, if I sign a power of attorney, for example, for the VOG thing, the POA can handle everything I give to POA without asking me for any advice, is that right?” Ting lan asked.
Rachel answered: “I’m not sure about the law of wills in China. If he’s in Canada, if he’s signing a will, it’s not going to take effect until he dies. If he wishes to change his will in Canada, he can do so at any time, and the old will is automatically void. Fellow fighters do not worry, for any of you who fraudulently asked to sign a will by the nine-finger-demon, the will can be challenged in court. Most fellow fighters who were cheated into signing a will should be able to successfully challenge this in court. The will should be found to have no legal effect.”
“So, if our fellow fighters in the VOG case were deceived, they can have the will annulled by getting a professional lawyer to help them deal with it.” Ting Lan had more questions about this issue.
Should fellow fighters consider doing will planning? A Canadian survey considered the prevalence of wills. Generally speaking, more than 55% of people have wills and 40% have power of attorney. Only 22% of people below the age of 35 have a will, and 19% had drafted a power of attorney. More than 62 percent of people aged 35 to 64 have wills, and 42 percent have a power of attorney. The vast majority (92 per cent) of people over 65 have a will, and 68 per cent have a power of attorney. The survey also highlights a concern the government has for the over-65s: that some people’s wills or power of attorney may no longer reflect that person’s wishes. The questionnaire, revealed that 53% had not updated their will in the last five years. 57% did not renew their authorization.
The survey reflects the need for inheritance planning as people age and accumulates wealth.” Rachel said
Following the interview there was a conversation hosted by Mr. Jing Xiu Zhong Hua
“A side note: in the case of death without a will, the distribution of property is handled according to the laws of each province. Some people might say, “Well, the legal distribution is fine. I won’t have to make a will.” But that’s not the case. For example, if you die and you have a spouse but no children, Ontario law says your spouse inherits everything, but only to a legally (married) spouse. Without a will, unregistered cohabitants (common law) cannot inherit. Inheritance laws vary from province to province for a variety of reasons, including whether or not you have children and how many children you have. We’ll talk more about that in the next programme.” Mr. Gong Du commented.
“Our fellow fighters have long experience in finance and taxation. Our main purpose is to share experience, not to consult. If our fellow fighters have problems, you must consult professionals.”
“Together cross the other shore: this program with the imminent deadline of 2020 tax returns is not meaningful, mainly to buy 2021 bonded useful.”
“ Look back at the past few episodes of Blue Maple Law Programme. The fellow fighters were interested in the content of the fellow fighters. If you have any questions, feel free to ask them.
The main point of today’s talk is how traditional wealth is treated in the current tax system for families and individuals. Income tax, becoming non-residents and the inheritance of wealth, including how to deal with the wealth tax on the way. Why do we talk about tax in the law program.” Mr. Zhong Hua asked.
“The Tax Law is a complex area of law, and has big implications for families and individuals, as well as for the operation of the national government. As I said before, money is second only to oxygen.”
“I’ll talk about it from two perspectives: the tax code is a complex area; and the place of tax law in the judicial system.
“Money is a problem when money is not available. Having money brings new problems. With money comes the problem of tax. With any money there will be tax. How much money you can keep, is the key.”
“The most important part of the tax code, the income tax, is the combined federal and provincial tax rates for individuals and businesses. The top combined individual tax rate is the highest in Ontario at 53.53%. In addition to income tax, there are other laws, such as CPP, EI, OAS and other taxes.
In addition to income tax, there are other tax laws, such as sales tax and property tax, which are levied jointly by the provincial and municipal governments. The three levels of government – federal, province, city – each collect taxes. Personal income tax is the biggest chunk. For example, a person making $50,000 has an average tax rate of 21.5 percent and a marginal tax rate of 30 percent. A person earning $100,000 has an average tax rate of 27% and a marginal tax rate of 43%; It’s progressive. Top tax rate: 53.53 percent on income above $220,000. A person with income of $300,000 faces an average tax rate of 42% and a marginal tax rate of 53%, that is, money above $220,000 will pay 53.53% tax.”
“So for the G series, if you have a million dollars of income in the future, the average tax rate is 50 percent.In the Canadian Court system, the Tax Court of Canada is second only to the Federal Court. The government cannot survive a day without taxes.” Gong Du explained.”
“Mr. Zhong Hua, “You once said that Western countries, Canada, Australia and European countries all have similar tax systems. Could you talk about it?”
“The Income Tax Act states that Canadian tax residents must pay tax on all income (both in Canada and overseas), except for certain income, during the year. Non-residents may not need to pay taxes. Special circumstances: 1.) There is no capital gain after the appreciation of a principal residence; 2.) In life insurance, there is no tax on claims paid after a person dies in certain circumstances. 3.) Money in a TFSA (tax-free) account is not taxable, but the allowed amount is relatively small, with a total of more than the equivalent of 70,000 yuan per person. Everything else has to be taxed.”
“Canada taxes individuals based on their residency and their world-wide income. In the United States, people are taxed based on citizenship. Unlike in the United States, Canadian citizens can become non-resident and then they are no longer subject to Canadian taxes. In Western countries, the concept is similar.” Explains Gong Du.
There were more question from Zhong Hua: “Although the Blue Maple Law is only applicable to Canada, it can also be used as a reference for other western countries in terms of taxation?”
“In terms of tax, Canada, New Zealand and Australia are very similar. Especially in corporate structures and trusts. The United States is quite different.
Income taxes affect families the most. For families, tax is the largest expense, before deducting various deductions, such as credits and deductions.
Next slide, Government of Canada tax revenue by classification, 2017-18. 49% comes from personal income and 2.5% from non-residents; Corporate income tax accounts for 15.2%. Overall, more than 90 percent of taxes come from individuals and corporations.” Gong Du says,
“Income tax is different based on income type, tax rates are different, aren’t they, Zhong Hua asked?
“Wages, post-investment capital appreciation, etc., are subject to tax. Tax-free accounts, lottery tickets (lottery tickets are not taxable, but the income generated by the lottery is), and death claims for life insurance are not taxable. Note: registered retirement pensions RSP’s are not immediately subject to tax. Tax on RSP’s is deferred,to be paid later. You do not avoid taxes on RSP’s. Most gifts and inheritances are not taxed, but the situation is complicated. We will get to that later. When I mention this, I have noticed that some people have listened to this method and try to manage it on their own – but it’s not that simple. For example, a gift is generally tax free. It is OK to give to adults, but gifting to minors is more complex. Moreover, succession planning is a complex area and there are specialized lawyers for this.
Historically, inclusion rates are based on revenue source. So what are the various inclusion rates? There are three kinds: 1.) 100% of regular income is taxed, such as wages, interest, income from a house, small business owner income, income in a limited company. 2.) For dividends 75% is taxed. This one is a little bit more complicated. 3. For capital gains the inclusion rate is 50%.”
Zhong Hua asked:“Is this a door for the rich? Inherited money pays 50%; but all migrant workers have to pay taxes.
“Not really. Before the 1970s, yes. But after 80 years of universal investment, with a lot of pension money into the stock market, buying and selling stocks is capital appreciation or income? For example, laojiang cast, buy sell, 1 million income, it is to press 100% or 50% go up tax, explain by tax bureau.”
Mr.Zhong Hua asked: “there was a Chinese person who used TFSA to trade stocks frequently and the tax bureau asked him to pay more taxes. Later, he won the appeal.”
“In practice all the money in a TFSA is tax-free.
With respect to the G-serie there is no Dividend for now. We’re talking about the top marginal tax rate, and then on top of that, capital gains are taxed at 25%, and income is taxed at 50%.
Why are the Canadian tax rates so high? Last week a fellow fighter asked: “will there be a future effort to abolish income tax, or at least lower it?” Government spending determines the amount they have to tax. For a family the income determines the amount that can be spent.
If government taxes are to come down, we need to monitor government spending by actively electing members at all levels, from city to provincial to federal, who will limit or reduce spending. It requires active participation in the political process to control government spending. A prime example is CPP, which as it stands, will go bankrupt. So you have to control government spending, you have to control tax rates.”
“What is the non-resident income tax?”
Gong Du: “Leaving Canada is considered becoming a non-tax resident. Overseas, the largest Canadian community is in Hong Kong, with 300,000 people. These people came back to Hong Kong in the 1990s. Of course, if you leave Canada to work in another country, you don’t have to pay taxes in Canada. Some people pay taxes in two countries, mainly in terms of how much connection you have to Canada economically. For example, if your children and spouse live in Canada, your children study in Canada, you own a home in Canada, or you work in Canada, and have income in Canada. They are not considered non-residents.
If his wife and children are in Canada and he works in another country, he should file both tax returns. After paying taxes in other countries (host country), the tax should be filed for the difference in Canada.”
Reference link: G-TV broadcast April 24