Saturday, February 1, 2014
Sas Ansari (Osgoode Hall Law School) recently published an article entitled, Death and Taxes: The Nature of a Deceased’s ‘Estate’, its Relationship to the Deceased, and Practical Implications for Reassessments, Wills, Trusts, & Estates Law eJournal Vol. 10, No. 4 (Jan. 31, 2014). Provided below is the abstract from SSRN:
Why are we born? Where do we come from? What is the meaning of life? What happens after we die? Though Canadian tax law concerns itself with the life and death of individual taxpayers, the concern is not with big questions of human existence – all that matters for tax purposes is the fact of existence. There appears to be one overlap between tax law concerns and humanity’s big questions – both attempt to address the question of what happens after an individual dies, though for differing reasons. One blessing – and one instance where tax law can be seen as simpler than life – is that, unlike trying to determine what comes after death in the metaphysical sense, tax law can provide definitive answers.
The Canadian Income Tax Act ("ITA") draws tax-significant distinctions by relying on various circumstances or statuses so as to superimpose taxation measures onto real life occurrences. Alas, not only is life stranger than fiction, but life also does not fit neatly into the boxes created by the ITA's tax-significant distinctions. One reason for this overlap-failure is that real life is continuous and multifaceted. Although the ITA aims for clarity when delineating the boundaries between various relevant groupings of events/circumstances, it does not always succeed.
In this paper, I propose to deal with a rarity in life – an instance where the natural line of demarcation appears clear and unambiguous. Nature draws its line at death. Whether seen from the perspective of the ITA or that of nature, death is a significant event that has significant consequences for the deceased as well as for other third parties. However, unlike nature, the ITA is particularly concerned with the manner and tax effects of the passage of property from the deceased to other persons. Despite nature’s clear line, when considering the passage of property from the deceased to others we encounter those aforementioned muddy waters. It is my hope that this paper will bring some clarity to this issue.