In February of this year we issued a number of bulletins describing legislative changes coming into force in 2016 which will have a significant impact on estate planning. Two of these bulletins addressed the changes to the use of life interest trusts and changes to the charitable donation rules for estates. Among the issues addressed within these bulletins was the potential for inequitable shifting of tax liability triggered within life interest trusts to the beneficiaries of such trusts, and the mismatching of charitable donation credits and taxes arising as a consequence of death.

Organizations including the Society of Trust and Estate Practitioners (STEP) Canada, the CBA/CPA Canada Joint Committee on Taxation and the Conference for Advanced Life Underwriting (CALU), made submissions to the Department of Finance (“Finance”) outlining their concerns with these legislative changes. On November 16, 2015, Finance released a letter responding to these concerns. In the letter Finance acknowledges the concerns raised, identifies the policy objectives of the legislation, indicates its ongoing willingness to work towards a solution, and invites further comments and discussion. It should be recognized that Finance has not committed to legislative changes, and as the changes will come into force on January 1, 2016, those affected by the changes should obtain advice as to the impact of these changes.

Full text of the letter can be found here.