Liderazgo pedagógico del director escolar

When an individual dies during a taxation year, that individual is deemed to have disposed of all capital property owned at fair market value immediately prior to death. Transfers of property to a spouse or to a trust for the spouse are carried out at tax cost to the deceased taxpayer unless an election is made for the transfers to take place at fair market value. If the deceased taxpayer has a Canadian tax liability in his year of death, a tax return is required to be filed on his or her behalf.

7.6 Gifts and loans to non-arm’s length parties

To discourage or minimise the benefit of transferring or lending income-producing assets to a spouse or to a minor, Canada enforces a number of rules known as the ‘attribution rules’. Generally, gifts that are made to someone other than a spouse are deemed to take place at fair market value at the time of the gifting. As noted in the section ‘death of a taxpayer’, rollover treatment is available for transfers of property to a spouse or to a spousal trust. Income, gains or losses from property that was previously transferred without payment of full consideration (for example, fair market value at the time of transfer) is taxable or deductible in the hands of the transferor.

Similar treatment applies to loans between non-arm’s length parties. Income earned on an investment made by an individual using funds borrowed from a non-arm’s length person is subject to attribution if one of the main reasons for the loan was to reduce or avoid tax by having the investment income tax deducted through the lower-income borrower.

7.7 Canada Pension Plan (CPP) and Employment Insurance (EI)

As outlined in section 6, employers are required to withhold CPP and EI from wages paid to employees in respect of employment in Canada. Benefits received under the CPP or EI are required to be included in the income of the recipient.

7.8 Provincial and territorial tax

Individuals are liable for provincial or territorial tax in the taxpayer’s province or territory of residence. Tax is generally based on taxable income for federal purposes, with some

adjustments for provincial credits. The rate of tax varies by jurisdiction.

Provincial and territorial personal income taxes are administered by the CRA. As a result, provincial and territorial returns are filed along with the federal T1 return and are subject to the same filing deadlines. The 2014 provincial tax rates are illustrated on the table on the following page.

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Provinces / Territories Rate(s)

Newfoundland and Labrador 7.7% on the first $34,254 of taxable income, + 12.5% on the next $34,254, +

13.3% on the amount over $68,508

Prince Edward Island 9.8% on the first $31,984 of taxable income, + 13.8% on the next $31,985, +

16.7% on the amount over $63,969

Nova Scotia 8.79% on the first $29,590 of taxable income, +

14.95% on the next $29,590, + 16.67% on the next $33,820 + 17.5% on the next $57,000, + 21% on the amount over $150,000

New Brunswick 9.68% on the first $39,305 of taxable income, +

14.82% on the next $39,304, + 16.52% on the next $49,193, + 17.84% on the amount over $127,802

Quebec 16% on the first $41,495 of taxable income, +

20% on the next $41,490, + 24% on the next $17,985, +

25.75% on the amount over $100,970

Ontario 5.05% on the first $40,120 of taxable income, +

9.15% on the next $40,122, + 11.16% on the next $433,848, + 13.16% on the amount over $514,090

Manitoba 10.8% on the first $31,000 of taxable income, +

12.75% on the next $36,000, + 17.4% on the amount over $67,000

Saskatchewan 11% on the first $43,292 of taxable income, +

13% on the next $80,400, + 15% on the amount over $123,692

Alberta 10% of taxable income

British Columbia 5.06% on the first $37,606 of taxable income, + 7.7% on the next $37,607, +

10.5% on the next $11,141, + 12.29% on the next $18,504, + 14.7% on the next $45,142, + 16.8% on the amount over $150,000

Yukon 7.04% on the first $43,953 of taxable income, +

9.68% on the next $43,954, + 11.44% on the next $48,363, + 12.76% on the amount over $136,270 Northwest Territories 5.9% on the first $39,808 of taxable income, +

8.6% on the next $39,810, + 12.2% on the next $49,823, +

14.05% on the amount over $129,441

Nunavut 4% on the first $41,909 of taxable income, +

7% on the next $41,909, + 9% on the next $52,452, +

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8. Double taxation agreements

Canada has entered into various agreements with foreign governments to help individuals and businesses avoid incurring double taxation on the same income. Benefits under an agreement can generally be obtained only if the person or entity is a qualified resident of one of the treaty countries.

Most agreements provide for a reduction in the normal 25% Canadian withholding rate for the dividends, interest and royalties received by a person or an entity resident in the treaty country. Provincial and territorial governments generally respect the tax treatment under double taxation agreements, with some exceptions.

The permanent establishment concept embodied in the Canadian agreements requires a substantial presence in Canada before a business entity or an individual is taxed on business profits.

Canadian agreements normally state that individual services are taxable in the country where the work is performed. Some exemptions are available. For example, several agreements contain special provisions for both director’s fees and the income of public entertainers or athletes. Many also grant exemptions to teachers, students and

government employees.

Capital gains are generally only taxed by the country of residence. However, this tax

exemption usually does not apply to the disposal of real property or business assets situated in the taxing country.

Arbitration is usually available under the agreements, should there be a double taxation dispute between two countries. Most treaty agreements state the countries will exchange taxpayer information in order to carry out the provisions of the applicable agreement and to prevent tax fraud or evasion.

Certain situations in which treaty relief is being sought may be required to be reported. Local tax providers should be consulted to determine if a transaction is subject to reporting requirements.

8.2 Withholding tax rates

Withholding tax is generally applicable at a rate of 25% (unless a lower rate is provided by an agreement) of Canadian-source income. These include dividends, interest, rents, industrial or copyright royalties and other fixed or determinable annual or periodic

payments paid to a non-resident of Canada. The withholding tax is applied to gross income without allowance for deductions.

Interest paid to third parties is generally exempt from Canadian withholding tax.

The following table shows the applicable withholding tax rates for payments of dividends, interest and royalties to non-resident Canadian sources under all tax agreements, as of

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December 1, 2013. For simplicity, explanations of various restrictions and qualifications have been omitted.

Due to the frequent changes in agreement provisions, local enquiries should be made to obtain the current status of any of the agreements mentioned.

8.3 Treaty Rates

Country Interest Dividends Royalties Annuities

Algeria 15% 15% 15% 25% Argentina 12.5% 15% 15% 25% Armenia 10% 15% 10% 25% Australia 10% 15% 10% 25% Austria 10% 15% 10% 25% Azerbaijan 10% 15% 10% 25% Bangladesh 15% 15% 10% 25% Barbados 15% 15% 10% 25% Belgium 10% 15% 10% 25% Brazil 15% 25% 25% 25% Bulgaria 10% 15% 10% 25% Cameroon 15% 15% 15% 25% Chile 15% 15% 15% 25%

China, People's Republic 10% 15% 10% 25%

Colombia* 10% 15% 10% 25% Croatia 10% 15% 10% 15% Cyprus 15% 15% 10% 25% Czech Republic 10% 15% 10% 25% Denmark 10% 15% 10% 25% Dominican Republic 18% 18% 18% 25% Ecuador 15% 15% 15% 25% Egypt 15% 15% 15% 25% Estonia 10% 15% 10% 25% Finland 10% 15% 10% 25% France 10% 15% 10% 25% Gabon 10% 15% 10% 25% Germany 10% 15% 10% 25% Greece 10% 15% 10% 25% Guyana 15% 15% 10% 25% Hong Kong 10% 15% 10% 25% Hungary 10% 15% 10% 25% Iceland 10% 15% 10% 25% India 15% 25% 20% 25% Indonesia 10% 15% 10% 25% Ireland 10% 15% 10% 25% Israel 15% 15% 15% 25% Italy 10% 15% 10% 25% Ivory Coast 15% 15% 10% 25%

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