Feb 2023


Law Over Borders Comparative Guide:

Private Client


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Contributing Firm


Canada is a bilingual, bi-juridical and multi-cultural country. It is a parliamentary system within the context of a constitutional monarchy comprising one federal Parliament, ten provincial legislatures and three territorial legislatures. The division of powers to govern matters is set out in the British North America Act 1867. The legislatures in each province and territory have exclusive rights to make laws in relation to property rights, marriage and matrimonial regimes, but divorce is within the legislative authority of Parliament. Estates and trusts are within the jurisdiction of the provinces and territories. The federal government legislates on tax matters but the provinces and territories also tax income on the same basis as the federal government, except Quebec which has a separate taxation system that is generally harmonized with the federal system. In the area of private law, there are two systems of law in Canada, that is, the civil law in Quebec and the common law prevailing elsewhere in Canada. 


1 . Tax and wealth planning

Canada is one of the largest countries in the world and also one of the wealthiest. There are three main types of taxes in Canada: income tax, sales tax and property tax. 

Canada uses a self-assessment tax system. Under this system, an individual is responsible for filing a tax return by April 30th of each year, or by June 15th for self-employed persons and spouses. 

The basis for income taxation in Canada is residency. Canadian residents are taxed on their worldwide income and non-residents only on Canadian-sourced income. An individual is deemed to be a Canadian resident if 183 days or more are spent in Canada. 

There are both federal and provincial tax rates which are determined separately and the combined marginal rates for individuals may be as high as approximately 54%. The tax system for individuals is progressive or graduated. 

There is a federal sales tax of 5% on goods and services (GST). Some provinces (but none of the three territories) also levy a sales tax (PST), ranging from 6% to 9.975%. Some provinces combine their sales tax with the federal sales tax into a single harmonized sales tax (HST). 

Property taxes are levied by local municipalities on land and buildings. 

There are no estate, succession, inheritance, gift or wealth taxes in Canada. Instead, Canada has a capital gains regime: there is a deemed disposition at fair market value resulting in capital gains taxes payable by the person making a gift or by the estate of the deceased who is deemed to have disposed of capital property immediately before death. 

The deemed disposition rules do not apply to assets transferred to a spouse or common-law partner. The deceased is deemed to have disposed of the assets at their adjusted cost base and the spouse assumes that cost base. No capital gain is triggered until the spouse disposes of the assets, either during their lifetime or at death. This rollover is also available to a testamentary spousal trust that respects certain tax requirements. 

There is also a principal residence exemption from capital gains tax. This exemption is only available to a narrow range of trusts who hold a principal residence as part of the trust property. 

Canada imposes a “departure tax” on persons relinquishing residency. 

Corporations are also subject to tax on their worldwide active business income at combined federal and provincial rates. 

Trusts are widely-used vehicles in estate and wealth planning. Personal trusts may be inter vivos or testamentary. Qualified alter ego, joint partner and spousal trusts allow for a deferral of tax on any unrealized capital gains in the trust until the death of the income beneficiary or the surviving income beneficiary in the case of a joint partner trust, unless the assets are disposed of earlier. 

The top marginal tax rate applies to both inter vivos and testamentary trusts, including estates (which are deemed to be trusts for tax purposes). However, graduated rate estates (a maximum duration of 36 months) and qualified disability trusts are taxed at graduated rates. 

Except for qualified alter-ego, joint partner and spousal trusts, the 21-year deemed disposition rule applies to trusts. The rule deems a trust to have disposed of all its capital property on the 21st anniversary of the creation of the trust and every 21 years thereafter. Capital gains tax is applicable on the deemed disposition date. Certain planning methods are available to minimize or eliminate the tax.


1.1. National legislative and regulatory developments

Trust reporting requirements 

On January 14, 2022, the Government of Canada announced that the legislation proposed in July 2018 expanding the reporting requirements for trusts would be delayed. Following the 2022 Fall Economic Statement, released on November 3, 2022, the new requirements will apply to trusts’ taxation years ending after December 30, 2023.These requirements are intended to improve the collection of beneficial ownership information respecting trusts and to enable the Canada Revenue Agency (CRA) to assess tax liabilities for trusts and their beneficiaries. 

Speculation and vacancy tax 

In response to escalating home prices in urban areas, low rental vacancy rates and high rental prices, British Columbia enacted, in 2018, a speculation and vacancy tax on residential properties in major urban areas. 

Luxury tax 

The federal government released and approved the Select Luxury Items Tax Act for a new luxury tax regime applicable to certain sales and imports of vehicles, boats and aircraft, which came into effect on September 1, 2022. 

Draft tax proposals

On February 4, 2022, the federal government released a package of draft tax legislation, including some announced in the 2021 federal budget. 

The proposed mandatory disclosure rules contained in the Income Tax Act address aggressive tax planning through audits and legislative changes and will focus on “reportable transactions”, and “notifiable transactions” (such as the avoidance of the deemed disposition of trust property pursuant to the 21-year rule) and uncertain tax positions. 

2022 Federal budget highlights

To help individuals purchase their first home, a new Tax-Free First Home Savings Account, an increase to the Home Buyers’ Tax Credit, and also a new “anti-flipping” residential real estate tax were announced. On June 23, 2022, Parliament passed the Prohibition on the purchase of residential property by non-Canadians Act which came into force on January 1, 2023.

Personal tax changes were also announced, among which modifications to the existing intergenerational business transfer rules to prevent an individual shareholder from converting dividends into lower-taxed capital gains where there is no genuine intergenerational business transfer, and a new minimum tax regime for wealthy individuals in the 2022 fall economic update. 

The budget increases the disbursement quota rate for charities to 5% (from 3.5%) for the portion of property not used in charitable activities or administration that exceeds CAD 1 million.

On June 23, 2022, Canada’s Bill C-19, Budget Implementation Act, 2022, No. 1, received Royal Assent and became enacted. It implements certain tax measures announced in the 2022 and 2021 federal budgets, as well as various other measures. 

Amendments were made to improve access to the disability tax credit (DTC) and other tax-related measures that require a DTC certificate. 

There is an expansion of allowable charitable disbursements by allowing charities to provide resources to organizations that are not qualified donees (charitable partnerships), provided certain conditions are met. 

Canada’s federal income tax rates for 2023 Tax Year 

Tax rateTax BracketsTaxable Income
15%on the first CAD 53,359CAD 53,359
20.5%on the next CAD 53,359CAD 53,359 up to CAD 106,717
26%on the next CAD 106,717 CAD 106,717 up to CAD 165,430
29%on the next CAD 165,430CAD 165,430 up to CAD 235,675
33%on any amount of taxable income exceeding CAD 235,675



1.2. Local legislative and regulatory developments

Provincial and territorial governments develop their own tax laws and policies, but they are generally harmonized with the federal tax legislation. However, the CRA collects and administers income taxes on behalf of the provinces and territories, except for Québec. 


1.3. National case law developments

The Supreme Court of Canada granted leave to appeal in Attorney General of Canada, et al. v. Collins Family Trust, et al., 2022 SCC 26, overturned the British Columbia Court of Appeal decision ordering rescission of dividends paid in 2008 and 2009 that became taxable as a result of a subsequent change in case law. The Supreme Court ruled that companies cannot undo transactions that later cause them unintended taxes. The effect of the ruling was that the family trust owed taxes on the dividends. 

On December 16, 2021, the Supreme Court of Canada ended nearly six years of legal challenges by refusing leave to appeal from the Federal Court of Appeal’s judgment in Blue Bridge Trust Company Inc. v. Canada (National Revenue), 2021 FCA 62. The CRA had issued requests for information to Blue Bridge Trust Company Inc. (Blue Bridge) which was the trustee of some opaque Canadian trusts enabling several wealthy French families to save nearly EUR four billion in wealth tax. The Federal Court of Appeal upheld the Federal Court’s finding that the requirements for issuing a compliance order under the Income Tax Act had been met and, consequently, Blue Bridge had to provide disclosure to the French tax authorities. 


1.4. Local case law developments

In Menard v. Agence du revenue du Québec, 2021 QCCQ 3891, the Quebec tax authority denied the taxpayers the capital gains tax exemption in the context of a tax planning device utilizing a discretionary family trust for multiple capital gain exemptions for family members, including minor children. 


1.5. Practice trends

The last three years have seen significant changes in tax legislation for private family businesses. Due to the introduction of the tax on split income (TOSI) rules in 2018, the income-splitting benefits of a trust have primarily been eliminated. 

A trust continues to be an effective instrument to multiply the lifetime capital gains exemption (LCGE), because trusts can sell shares of corporations that qualify for the qualified small business corporation exemption. The tax payable is minimized as the gain may be shared among the beneficiaries of the trust (multiplication of LCGE).

Trusts continue to be frequently used in succession planning to transfer wealth to future generations in a tax-efficient manner and can result in a deferral of capital gains.

The use of a trust within the context of a private corporation allows for several benefits, including the control of trust assets (i.e., the shares of a private corporation), the reduction of taxes upon death, and the distribution of trust assets to beneficiaries on a tax-deferred basis. 

Although the perception about trusts is that they are only created to achieve tax savings, it is critical to note that trusts can offer significant other non-tax benefits, such as:

  • avoiding probate fees;
  • protecting assets; and
  • maintaining confidentiality.

1.6. Pandemic related developments

For COVID-19 benefits received in 2021, such as the Canada Recovery Benefit (CRB), Canada Sickness Recovery Benefit (CSRB) or Canada Recovery Caregiving Benefit (CRCB), a T4A slip was issued. Any one-time provincial payments to help through COVID-19 will not be taxable. 


2 . Estate and trust administration


2.1. National legislative and regulatory developments

Estate and trust matters are not regulated federally, but fall within the jurisdictional purview of the provinces and territories. 


2.2. Local legislative and regulatory developments

Ontario’s Succession Law Reform Act, R.S.O. 1990, c.S. 26 (SLRA) was amended to expedite and facilitate the probate procedure in Ontario courts by streamlining the probate application process for small estates under CAD 150,000 and allowing electronic filing of probate. 

Many of the SLRA amendments affect spouses, such as the increase in spousal entitlement on intestacy: the preferential share has been raised from CAD 200,000 to CAD 350,000. Prior to the amendments, only testamentary dispositions made to a former spouse (because of divorce or annulment of the marriage) were revoked by the death of the testator. If the spouses were merely separated, the bequests or gifts to the separated spouse remained valid and enforceable. The amendments remove the entitlement of a separated spouse under the will, as well as under an intestacy. 

As an antidote to the phenomenon of predatory marriages, the repeal of the SLRA provisions that provide for the automatic revocation of a pre-existing will on marriage is a timely measure. This also brings Ontario in line with similar legislative provisions in Quebec, British Columbia, Saskatchewan and Alberta. 

In Alberta, the law on non-revocation of a will by marriage also extends to an adult interdependent partnership or common law relationship.

Similarly, in Saskatchewan, The Wills Act, 1996, SS 1996, c W-114.1 was amended effective March 16, 2020 to provide that a will is not automatically revoked if the testator entered into a new spousal relationship (marriage or continuous co-habitation for two years) unless the will’s terms explicitly provided otherwise. 

Finally, but possibly the most significant Ontario legislative amendment concerns substantial compliance for the validity of wills. The Superior Court of Justice is authorized to validate a defective document purporting to be a will when the statutory requirements for formal validity or proper execution have not been respected. Priority is given to testamentary intention. 

Manitoba enacted the first validating power in Canada and was copied in most common law provinces. Quebec’s validating power is a partial compliance provision, giving priority to fulfilment of essential requirements over testamentary intention. 

The Legislative Assembly of Alberta updated its current Trustee Act on April 29, 2022 to render the creation and management of trusts more efficient. 

All provinces and territories in Canada, except Quebec and Manitoba, have probate fees and their own formula for calculation of the fees. The Manitoba government eliminated probate fees effective as of November 6, 2020, as well as provincial sales tax on the preparation of wills. 

In all provinces and territories, a dependant can claim support from the deceased’s estate if they have a status recognized by law, such as a spouse or child or was receiving support at the time of death, such as a former spouse. 

In Leblanc v. Cushing Estate, 2020 NSSC 162, the Nova Scotia court considered a de facto spouse as a dependant if the domestic partnership was registered.

De facto spouses have limited and varied rights across Canada. On January 1, 2020, Alberta enacted the Matrimonial Property Act, RSA 2000, c M-8 which provides that property division rules apply equally to married couples and couples in a relationship of interdependence. 


2.3. National case law developments

On rare occasions, the Supreme Court of Canada (SCC) grants leave to appeal in estate matters. 

In the Threlfall v. Carleton University, 2019 SCC 50, the SCC ordered restitution of pension payments amounting to half a million dollars made by Carleton University to a retired professor, resident of Quebec, who went missing for six years but was to found to have died shortly after his disappearance. 

In Sherman Estate v. Donovan, 2021 SCC 25, the SCC ruled that the open court principle may be limited to protect privacy but only in exceptional circumstances. In a high profile case, a couple were found dead in their Toronto home. The estate trustees obtained sealing orders of the probate files of their respective estates in order to protect the privacy and dignity of the deceased individuals and their family. An investigative journalist successfully appealed the sealing orders, which the Ontario Court of Appeal set aside and which the Supreme Court of Canada upheld. If the protection of an individual’s personal information meets the “high bar” required to obtain a confidentiality order, then the constitutional guarantee of open courts may yield to the extent necessary to prevent a serious risk of harm to the individual’s dignity. 


2.4. Local case law developments

An important accounting issue was before the court in Duhn Estate, 2021 ABQB 3, that was affirmed by the Alberta Court of Appeal, 2022 ABCA 360, holding that a competent testator’s right to keep pre-death financial affairs private and confidential. Absent a sufficient evidentiary basis for potential abuse, death does not expose a testator’s pre-death decisions to scrutiny by the beneficiaries. 

The Saskatchewan decision in Vance (Re), 2021 SKQB 320, is a reminder of the importance of updating wills as well as re-affirming the principle of non-retroactivity of legislation. 

The Ontario Court of Appeal confirmed the modern approach to cost awards in estate litigation with the release of its decision in McGrath v. Joy, 2022 ONCA 119, reinforcing a trend in other provinces. 

Fitzgerald v. Fitzgerald Estate, 2021 NSSC was a welcome decision released by the Nova Scotia Supreme Court that reaffirms the primacy of beneficiary designations. 

The British Columbia Supreme Court considered the issue of the validity of a bequest to a witness to a will in Wolk v. Wolk, 2021 BCSC 1881; under the applicable legislative provision, the court considered testamentary intention to decide in favour of the validity of the gift. 

In Unger Estate (Re), 2022 BCSC 189, the British Columbia Supreme Court in the context of a son guilty of murdering his mother and thus disqualified from inheriting, the court determined that his share of the estate passed to his daughter as an “alternate beneficiary” and not to the charities named in the will as alternate beneficiaries, relying on the testatrix’s intention in making the will. 

The British Columbia Supreme Court in Bowling Estate (Re), 2022 BCSC 369, reduced the legal fees claimed by a dilatory executor with respect to delivering accounts. 

The decision in Pinsonneault v. Courtney, 2022 BCSC 120 concerned the doctrine of unconscionable procurement which is meant to protect gift-givers from abuse. The court applied the presumption of resulting trust. The recipients failed in rebutting the presumption that the gift-giver did not intend to make the gift. 


2.5. Practice trends

The most common devices prevailing in estate planning continue to be trusts, holding companies and multiple wills and situs wills. 

While the changes in 2016 to the trust tax rules (for example, TOSI) have significantly eroded the attraction of trusts for estate planning purposes, trusts still serve desirable purposes. Discretionary trusts continue to be used in estate freezes and provide a degree of asset protection against matrimonial and creditor claims. Trusts, such as the “alter ego” or “joint partner”, also serve as will substitutes, and avoid probate fees and a lengthy probate process. They also provide an effective alternative to a power of attorney in case of incapacity and are useful in planning for disabled beneficiaries. 

Holding companies continue to be used to earn investment income at a lower tax rate. Care must be taken to implement appropriate post-mortem tax planning to avoid double taxation on death. 

Multiple wills strategies enjoy popularity in some provinces such as Ontario and British Columbia where probate fees are high. Nova Scotia’s probate legislation has rendered this strategy ineffective. 

With a great number of wealthy clients owning property in several jurisdictions, the need for situs estate planning has grown exponentially. 

In Quebec, practitioners are increasingly using marriage contracts as situs will substitutes. Since gifts mortis causa, which are assimilated to testamentary dispositions, may be made in a Quebec notarial marriage contract, spouses whose domicile or nationality is not that of Quebec, may make mutual gifts of both movable and immovable property. 

Increased real estate values has prompted two initiatives. One concerns the need for farmers to re-evaluate the division of their assets to avoid an inequitable estate plan and the other is the incentive to provide for lifetime gifts to children to enter the real estate market. 

The interest in digital currencies such as bitcoin has created new challenges for estate planners. 

The digitization of the law and the adoption of new technologies spurred on by COVID-19 reactions are new and continuing phenomena in the estate and trust practice. 

Charitable giving has become more prevalent in clients’ estate plans whether because of increased wealth or favourable tax benefits or both. A popular option is a gift of publicly traded securities with accrued unrealized gains. 


2.6. Pandemic related developments

During the COVID-19 pandemic, most of the provinces and territories, except Nova Scotia, Prince Edward Island, Yukon, Northwest Territories and Nunavut, implemented temporary execution of wills and powers of attorney by audio-visual communication technology. Ontario, Saskatchewan, Manitoba and British Columbia have made remote execution of estate documents permanent.

Quebec was one of the first jurisdictions to authorize the remote execution of notarial acts, such as a will. 

British Columbia is the first Canadian jurisdiction to allow electronic wills to be signed and stored completely digitally without need for a printed original paper copy or a wet signature. 


3 . Estate and trust litigation and controversy


3.1. National legislative and regulatory developments

Estate and trust matters are not regulated federally, but fall within the jurisdictional purview of the provinces and territories. 


3.2. Local legislative and regulatory developments

See Section 2.2 Estate and trust administration: Local legislative and regulatory developments.


3.3. National case law developments

In S.A. v. Metro Vancouver Housing Corporation, 4 SCC 2019, the SCC affirmed the principle that a discretionary trust interest does not count as an asset of the beneficiary receiving government financial assistance. 

In Yared v. Karam, 2019 SCC 62, the SCC ruled on the interaction of the Quebec rules governing the trust patrimony with the mandatory rules on the “family patrimony”. 


3.4. Local case law developments

Two cases in British Columbia, Waslenchuk Estate, 2020 BCSC 1929 and Quinn Estate v. Rydland, 2019 BCCA 91 concluded that “pour over” clauses in British Columbia wills are invalid, illustrating the pitfalls that cross-border situations may engender. Yet, in MacCallum Estate, 2022 NSSC 34, the Nova Scotia court held that the pour-over to an amendable secret trust was valid. 

In Walters v. Walters, 2022 ONCA 38, the Court of Appeal had the opportunity to clarify the limits on powers of an estate trustee granted by the term “absolute discretion”. The British Columbia Court of Appeal in Pirani v. Pirani, 2022 BCCA 65, overturned the lower court decision that interfered with the trustees’ decisions because they were not made in good faith.

Traditionally, both in the common law and the civil law, courts do not interfere in cases where trustees are granted powers to be exercised in their discretion unless the trustees fail to act fairly and in good faith which includes the consideration of extraneous factors. Quebec courts have reinforced the judicial non-interventionist policy with respect to the exercise of discretion by trustees: Moore v. Moore, 2021 QCCS 11 and Corbin v. St. Pierre (succession de Lelièvre), 2021 QCCS 911.

Peripherally related to the jurisprudence on discretionary powers is Greenstein v. Mutch, 2021 QCCS 4228. The issue was whether capital gains resulting from the disposition of shares held by the testamentary trust be considered as capital or revenue. The Superior Court of Quebec concluded that civil law is controlling with regard to trust administration, not tax law. For trust law purposes, capital gains constitute capital while for tax law purposes, they constitute revenue. While the terms of the will conferred upon the trustees a discretionary power to derogate from these generally applicable rules by determining what is to be treated as capital or revenue, the trustees had declined to exercise this discretionary power. 

The family paradigm is the centerpiece of Quebec succession law. Recent judicial pronouncements, in the context of divorce and de facto spouses, have endorsed the shift in the family paradigm to reflect today’s society. The Quebec Court of Appeal in Succession de Charpentier, 2022 QCCA 660, recently overturned the lower court’s decision that subsidiary legacies to family members of a former husband had lapsed by virtue of Article 764 of the Civil Code of Québec which provides that a legacy to a spouse is revoked by divorce. The holding of the Court of Appeal served to enhance the principles of freedom of willing and actual testamentary intention.

The Superior Court of Quebec in Succession de Spiric, 2022 QCCS 3849, on appeal, ruled that a Costa Rican notarial will in Spanish of a Quebec domiciliary was valid and enforceable and had the effect of automatically revoking a prior Quebec notarial will, without the need for any express mention of revocation in the former will. The fact that the testator had not mastered the Spanish language, his comprehension of the language was sufficient and did not affect the validity of the will. 


3.5. Practice trends

See Section 2.5 Estate and trust administration: Practice Trends. 


3.6. Pandemic related developments

See Section 2.6 Estate and trust administration: Pandemic related developments.


4 . Frequently asked questions

1. What are the most important considerations for estate planning for a blended family to ensure my second spouse and my children from my first marriage will receive sufficient inheritances and prevent litigation? 

First, consider the economic aspects of interest rates and inflation measured against longer life expectancy. Second, appoint neutral or independent executors and trustees. Consider a professional even though costs may be higher, but not as much as litigation expenses would be. 

2. Is it more tax efficient to leave my estate to my adult children in trust rather than outright? 

Prior to January 1, 2016, taxable income earned in a testamentary trust (that is, a trust created on the day a person dies and the terms of which are established in the deceased person’s will) was subject to the same graduated tax rates as an individual taxpayer. Since the beginning of 2016, testamentary trusts are now subject to the highest marginal tax rate that applies to most inter-vivos trusts, subject to two exceptions: a graduated rate estate (an estate that so designates itself will be subject to graduated rate taxation for the first 36 months of its existence) and a trust for a disabled individual who is eligible for the federal Disability Tax Credit where the trust and the qualifying beneficiary have jointly elected for the trust to be a “qualified disability trust” for a particular taxation year. 




Craig MacIntyre
Grace Quinn


Adriane Pacheco
Beatriz Martinez
Humberto Sanches
Juliana Cavalcanti

England & Wales

Bethan Byrne
Patrick Harney


Line-Alexa Glotin


Dr. Andreas Richter
Dr. Katharina Hemmen


Matt Guthrie


Lyat Eyal


Camilla Culiersi
Gian Gualberto Morgigni
Giovanni Cristofaro
Raul-Angelo Papotti


Tomoko Nakada


Sarajane Kempster


Johannes Gasser


Bilal Ajabli
Ellen Brullard
Eric Fort
Guy Harles


Mark McKeown
Paul Macaulay


Florentino Carreño


Ruth Bloch-Riemer
Tina Wüstemann

United States

Jonathan Byer
Joshua S. Rubenstein

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