Since the year 1941, the Canadian government imposed taxes pertaining to inheritance. This estate tax in Canada was imposed by the government when the property was passed on to the heir or the beneficiary. The tax levied was based not only on the size of the property the beneficiary is inheriting but also the relation shared between the donor and the donee. Age of the heir was also a factor, which was taken into consideration. The estate tax in Canada was imposed on the person who was inheriting the property and this tax was referred to as “Succession duty”. Prior to the implementation of the Estate Tax in Canada (revised), there was the concept of “succession duty”. In fact, the new Estate Tax Act substituted “Succession duty” in the country.
Features of succession duty:
Succession duty had several drawbacks. It did not generate much revenue for the then government in Canada. Four years before the implementation of the new Estate Tax Act in the year 1958, the Canadian government imposed tax on estates whose value was $371,985,000. The revenue earned by the government was approximately, $39,100,000. Compared to the estate tax in Canada, it was observed that other taxes earned more revenue for the Canadian government. For instance, in the same year (1954), revenues from personal income tax was recorded as $1,187,700,000. Income from imposing taxes on the corporations were recorded as $1,191,200,000.
Succession duty was replaced:
Later on there were changes in the estate tax in Canada and it was decided that the estate tax in Canada would be levied not on the beneficiary but on the property or the estate. The tax rate would be determined by the market value of the estate. In the year 1958, the Estate Tax Act was formulated in Canada. This Act was executed in the year 1959.
Norms differed in some of the provinces of Canada:
Provinces of Ontario as well as Quebec manifested a different trend. It was observed that these provinces were also imposing inheritance tax besides the estate tax in Canada.
Features of the Estate Tax Act:
The main advantage of the Estate Tax act was that the Canadian government had adopted a standard procedure to impose estate tax on the estate and not on the person inheriting the estate. This was beneficial not only for the heir but a uniformity was brought about in evaluating real estate property. It also proved to be beneficial to the authorities calculating the value of property. The reason being, considering the age, relationship, size of the property could have been quite cumbersome with regard to the estimation of a property. By adopting this method, a standard tool was obtained.
The Brisbane G20 Summit offered civil society groups an opportunity to renew demands for a financial transaction tax (FTT). But in the end it proved a missed opportunity to build international cooperation on financial reform.
Eric J. Gleacher Distinguished Service Professor of Finance at the Booth School of Business at the University of Chicago. IMF’s Chief Economist from September 2003 to January 2007. Inaugural recipient of the Fischer Black Prize.
Andrea Edwards has worked in marketing and communications all over the globe for 20 years, and is now focused on her passion – writing. A gifted communicator, strategist, writer and avid blogger, Andrea is Managing Director of SAJE, a digital communications agency, and The Writers Shop – a regional collaboration between the best business writers in Asia Pacific
James W. Harpel Professor of Capital Formation and Growth at the John F. Kennedy School of Government in Harvard University. Director of Program in International Finance and Macroeconomics at the National Bureau of Economic Research.