One such exemption is the <\/span>Lifetime Capital Gains Exemption<\/span><\/i> (LCGE)<\/span><\/i>, which shields some of the proceeds from the sale of a small business from tax. A <\/span>tax lawyer<\/span><\/b><\/a> can provide detailed advice and analysis as to whether you qualify for the LCGE or other exemption<\/span>.<\/span>\u00a0<\/span>\u00a0<\/span><\/p>\n T<\/span>his <\/span>article <\/span>is a brief overview of the <\/span>Lifetime Capital Gains Exemption<\/span><\/i> (LCGE)<\/span><\/i>, <\/span>and how it may provide protection for some <\/span>small business<\/span><\/i> owners or investors.<\/span>\u00a0<\/span><\/p>\n The Lifetime Capital Gains Exemption or LCGE is an <\/span>exemption from capital gains tax<\/span><\/i> specifically for the disposition of shares of a qualified small business corporation. The LCGE is designed for individual <\/span>taxpayers to protect their income from the sale of a qualified small business corporation share, farm or fishing property<\/span><\/i>.<\/span><\/p>\n For 2021, the LCGE – which is a lifetime limit, not an annual limit – is $892,218. Up to $892,218 in capital gains from selling shares in a qualified small business corporation may be entirely sheltered from tax. Each year, this amount may be expected to increase incrementally, as it is tied to the Consumer Price Index to account for inflation. The\u202f<\/span>Canada Revenue Agency<\/span><\/b><\/a>\u202fprovides a record of its pegged adjustments for the LCGE and other tax matters.\u202f<\/span>\u00a0<\/span><\/p>\n \u00a0<\/span><\/p>\n The LCGE is specifically an exemption from capital gains tax, the type of tax assessed on the portion of your income obtained from selling capital assets, including stocks, bonds, cars, boats, land or real estate. In Canada, 50% of realized capital gains are taxable. That is, half of the profit or capital gains you earned will be calculated as part of your income and taxed at your marginal <\/span>tax rate based on your overall income for the year, including your capital gains.\u202f<\/span><\/p>\n However, you can offset your capital gains tax with capital losses, when you sell an asset and lose money. All of your capital gains and losses can be calculated before applying them to your income for the year. In fact, you can carry forward capital losses indefinitely to offset future capital gains, or you can carry them back to the prior three tax years to offset past payments of capital gains tax.<\/span><\/p>\n The formula to calculate capital gains tax is<\/span><\/b>:<\/span><\/b><\/p>\n Capital gains – capital losses = annual realized capital gains<\/span><\/p>\n (Annual realized capital gains x\u202f.50) x your marginal tax rate = capital gains tax due.<\/span><\/p>\n However, this is just one way of limiting your exposure to capital gains taxes. The LCGE is another key option, especially for entrepreneurs, investors and business owners.<\/span>\u00a0<\/span><\/p>\n <\/p>\n <\/p>\n The LCGE is generally available only <\/span>available <\/span>to individuals, not corporations. You must be a resident of Canada for the entire tax year in which you intend to claim the exemption.\u202f<\/span><\/p>\n The shares you sold must have been part of a qualified small business corporation. In order to qualify, the following rules apply.<\/span>\u00a0<\/span><\/p>\n A <\/span>holding corporation<\/span><\/b><\/a> may qualify if it has over 90% of its investments in a qualified small business corporation or if it owns shares in a qualified small business corporation.\u00a0<\/span>\u00a0<\/span><\/p>\n Specifically:<\/span><\/b>\u00a0<\/span><\/p>\n You can only qualify for the LCGE if the small business shares involved meet these criteria, including the 90% and 50% thresholds for active business in Canada. A tax lawyer may work with a small business corporation to prepare for share sales that qualify for the LCGE.\u202f<\/span><\/p>\n To ensure that you and your small business are taking advantage of relevant tax laws and exemptions, <\/span>our<\/span> tax law firm<\/span><\/b><\/a> can <\/span>help <\/span>answer your questions and provide detailed advice<\/span> specific to your situation.<\/span>\u00a0<\/span><\/p>\n Contact <\/span>Sabbagh & <\/span>Associ\u00e9<\/span> to discuss the <\/span>L<\/span>ifetime <\/span>C<\/span>apital <\/span>G<\/span>ains exemption <\/span>specifically or for <\/span>any other <\/span>tax law<\/span><\/b> related <\/span>concerns.\u202f<\/span>\u00a0<\/span><\/p>\n NOTE:<\/i> This article does not constitute legal advice <\/i>from <\/i>or legal opinion. It is only used to inform <\/i>readers <\/i>about certain aspects of <\/i>tax<\/i> law.<\/i>\u00a0<\/strong><\/p>\n [\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section]<\/p>\n","protected":false},"excerpt":{"rendered":" Many people in Canada are interested in reducing their tax obligations and identifying the exemptions that can provide significant savings. Good tax planning involves understanding the exemptions you may qualify for and taking relevant actions to ensure that you remain qualified.\u202f One such exemption is the Lifetime Capital Gains Exemption (LCGE), which shields some of […]<\/p>\n","protected":false},"author":5,"featured_media":5430,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_et_pb_use_builder":"on","_et_pb_old_content":" Typically, when people think of a family inheritance or anything related to an inheritance people think about last will and testaments and the distribution of an estate. Many people assume that if there is a will in place, then everything will go according to the deceased\u2019s plans. That an executor will execute all of the commands as per the deceased\u2019s wishes in their will. \u00a0 It is less often that someone thinks about the possibility of someone contesting a will<\/em><\/strong>. This article will go over the main points that one should be familiar with if they find themselves asking how to contest a will or how to fight a contested will.. \u00a0 What many people don\u2019t typically think about, although should be aware of is when certain \u201ctitled\u201d individuals at the time of an inheritance feel they need to contest the will<\/em><\/strong> for one reason or another. \u00a0 Specifically, some people after learning the details of a deceased\u2019s will often ask themselves how to contest a will<\/em><\/strong> and what are the steps to take when contesting a will. \u00a0 When the wheels are in motion and it is obvious that will litigation will be taking place, whatever the reason, parties involved know that the dispute will be resolved in court, sometimes at the risk\u00a0of\u00a0impairment some family ties. \u00a0 Besides common problems related to a will (its form and structure or lack thereof), there are two main reasons for contesting a will<\/em><\/strong> or litigation of a will: lack of testamentary capacity and indue influence (captation). The Civil\u00a0Code of Quebec<\/em> assumes\u00a0that\u00a0every adult,\u00a0has the capacity to understand and sign a\u00a0will<\/a>.\u00a0This is the basic rule. \u00a0 Disability is the exception to this rule.\u00a0It is the burden or the person who is contesting a will or who alleges the person who wrote a will lacked testamentary capacity to prove their point and make their case. This is typically done in Canada with the legal assistance of an\u00a0estate lawyer<\/em><\/a>. \u00a0 A lack of testamentary capacity<\/em><\/strong> or\u00a0failure<\/em>\u00a0<\/strong>is characterized by an\u00a0altered mental\u00a0<\/strong>or\u00a0physical state<\/strong> of a person where they are no\u00a0longer able to take care of themselves, specifically from a judgement and decision point of view. \u00a0 A judge is ultimately the person who decides whether or not the person who wrote the will or decided what details went into the was of sound mind at the time of the writing of the will. A judge will be the one to determine whether incapacity has been properly demonstrated in court or not. \u00a0 The judge will often asses the testamentary capacity of the person who wrote the will by assessing if the person suffered from any of the following:<\/p> Signs that demonstrate to a judge that the person at the time of writing the will lacked testamentary capacity could be considered\u00a0as factors that prevented him\/her from signing a legal act due to lack of full possession of his\/her means.<\/p> If you are contesting a will, you will need to be familiar with the concept of the incapacity of the testator. In inheritance law, the\u00a0proof of the testator's incapacity\u00a0<\/strong>must clearly answer the following question: did the deceased possess all his intellectual faculties when signing his last will and testament and fully\u00a0understand\u00a0its scope? \u00a0 Initial presumption is that the deceased had their full capacity to write and understand the contents and implications of their will. However, as this person will have been deceased and so is no longer alive to testify about their condition,\u00a0it is the burden of the party pleading the incapacity of the testator<\/em><\/strong> to provide the proof. \u00a0 Consequently, an estate lawyer will collect concrete evidence to demonstrate the incapacity of the testator from relatives and doctors of the deceased to better litigate their case. \u00a0 As an example, a lawyer contesting a will on your behalf will make note of:<\/p> All that can explain and\u00a0prove the impairment of mental faculties\u00a0<\/strong>will be presented in the courts.<\/p> At the opposite side of the spectrum of facts involved in the contestation of a will, is the concept of the capacity of the testator. If you wish to maintain that the capacity of the testator was fully intact and defend the will as it was written at the time of the deceased\u2019s death, you will have to\u00a0prove\u00a0that the deceased was in fact of sound mind. \u00a0 We advise you to consult an estate lawyer with experience in inheritance law if ever you should find yourself defending the will of a loved one. \u00a0 In the same way as the opposing party, you will have\u00a0the burden of\u00a0providing proof that the person who wrote the will was of sound mind and judgement.\u00a0This will demonstrate that\u00a0the will was drawn up and signed at a time when the deceased was in full possession of his means. \u00a0 During the litigation steps of contesting a will and testament, it is also possible to demonstrate to the judge that the will is not abusive.\u00a0For\u00a0example, if\u00a0it\u00a0tends to favor the relatives of the deceased or causes that were notoriously precious to him.<\/p> \u00a0<\/p> If you feel you have the grounds to contest a will, then the second most common reason in will litigation is\u00a0undue influence<\/strong>. \u00a0 More insidious, this concept describes attempt(s) made by\u00a0certain people surrounding the deceased prior to the deceased\u2019s death to divert all or part of an inheritance their way. \u00a0 For undue influence to be proven, it needs to be shown there was deliberate attempt\u00a0to:<\/p>![\"Lifetime](\"https:\/\/www.sabbagh.ca\/wp-content\/uploads\/2021\/03\/Lifetime-Capital-Gains-Exemption-concept-in-tax-law-Sabbagh-Associe.jpg\")
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What Is the Lifetime Capital Gains Exemption (LCGE)?<\/h2>\n
What is the capital gains tax?<\/h2>\n
![\"Lifetime](\"https:\/\/www.sabbagh.ca\/wp-content\/uploads\/2021\/03\/Lifetime-Capital-Gains-Exemption-for-individual-taxpayers-business-corporation-Sabbagh-Associe.jpg\")
<\/p>\nWhat qualifies for the LCGE?<\/h2>\n
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Contesting a will \u2013 capacity versus incapacity<\/strong><\/h2>
![\"incapacity](\"https:\/\/www.sabbagh.ca\/wp-content\/uploads\/2020\/01\/contesting-a-will-incapacity-of-testamentary-photo.jpg\")
<\/p>Lack of testamentary capacity<\/strong><\/h2>
Prove the incapacity of the testator\u00a0...<\/strong><\/h3>
\u2026\u00a0Or on the contrary, prove the capacity of the testator<\/strong><\/h3>
![\"undue](\"https:\/\/www.sabbagh.ca\/wp-content\/uploads\/2020\/01\/contesting-a-will-undue-influence-photo.jpg\")
<\/h2>Undue influence or captation<\/h2>