FIND ANSWERS TO QUESTIONS FREQUENTLY ASKED BY OUR CLIENTS FROM ALL AREAS OF PRACTICE.
What is Land Transfer Tax? Who has to pay it and are there any exemptions?
The Ontario Land Transfer Tax Act (the "Act") provides that every person who registers a conveyance of land in Ontario must pay a tax at a graduated rate of the value of the consideration. The City of Toronto also levies its own tax for transfers of land in Toronto. This land transfer tax (or "LTT") is paid at the time of (or prior to) electronic registration, and is automatically debited from the trust account of the registering solicitor. The general rule is that LTT will be 2% for properties outside Toronto and 4% for properties in Toronto.
LTT is also payable on unregistered dispositions of land. For example, land is sometimes held by one person in trust for another. The Act covers a disposition of this nature by making LTT payable by every person that acquires a beneficial interest in land as a result of a disposition. This rate is equal to the tax on a registered transfer, but is payable on a deferred basis via certified cheque. The Act permits some exemptions to the rules for unregistered dispositions. The Act provides several exemptions from LTT payments, for example when shares of a corporation which owns land are sold, or when land is transferred between affiliate corporations.
By: David Di Gregorio
LTT is also payable on unregistered dispositions of land. For example, land is sometimes held by one person in trust for another. The Act covers a disposition of this nature by making LTT payable by every person that acquires a beneficial interest in land as a result of a disposition. This rate is equal to the tax on a registered transfer, but is payable on a deferred basis via certified cheque. The Act permits some exemptions to the rules for unregistered dispositions. The Act provides several exemptions from LTT payments, for example when shares of a corporation which owns land are sold, or when land is transferred between affiliate corporations.
By: David Di Gregorio
Does your corporation's bankruptcy affect your personal credit?
The short answer is no; your corporation's bankruptcy does not affect your personal credit.
Your corporation is a separate legal entity. It has its own debts, its own contracts, and its own credit. Your corporation's bankruptcy does not affect your personal credit and the fact that a corporation that you were a shareholder, director, or officer of made an assignment will not show on your personal credit report.
But the longer answer is more nuanced. There are corporate debts that can become your responsibility and, if those debts are not paid, then your personal credit can be affected. Two common examples of this are personal guarantees and directors' liabilities for unremitted source deductions and H.S.T.
The Income Tax Act requires a corporation that has employees to withhold the income tax that the employee owes and to remit it to the government. Similarly the Excise Tax Act usually requires a corporation that sells goods or services to collect Excise Tax (H.S.T.) and to remit it to the government. If a corporation that you are a director of withholds income taxes or collects H.S.T. and fails to remit these amounts then you may be personally liable for the payments. Similarly if you personally guarantee your corporation's obligations, such as the payments under a lease or the corporation's loans, and the corporation fails to pay these amounts, then you will be personally responsible for the payments.
In both of these cases if the corporation makes an assignment in bankruptcy then there will not be enough money to pay the debts which means you will become personally responsible. If you are unable to pay the debt then this will have an effect on your credit.
In these specific circumstances the bankruptcy of your corporation can have an effect on your personal credit but the general rule is that your corporation's bankruptcy will not affect your credit.
By: Wojtek Jaskiewicz
Your corporation is a separate legal entity. It has its own debts, its own contracts, and its own credit. Your corporation's bankruptcy does not affect your personal credit and the fact that a corporation that you were a shareholder, director, or officer of made an assignment will not show on your personal credit report.
But the longer answer is more nuanced. There are corporate debts that can become your responsibility and, if those debts are not paid, then your personal credit can be affected. Two common examples of this are personal guarantees and directors' liabilities for unremitted source deductions and H.S.T.
The Income Tax Act requires a corporation that has employees to withhold the income tax that the employee owes and to remit it to the government. Similarly the Excise Tax Act usually requires a corporation that sells goods or services to collect Excise Tax (H.S.T.) and to remit it to the government. If a corporation that you are a director of withholds income taxes or collects H.S.T. and fails to remit these amounts then you may be personally liable for the payments. Similarly if you personally guarantee your corporation's obligations, such as the payments under a lease or the corporation's loans, and the corporation fails to pay these amounts, then you will be personally responsible for the payments.
In both of these cases if the corporation makes an assignment in bankruptcy then there will not be enough money to pay the debts which means you will become personally responsible. If you are unable to pay the debt then this will have an effect on your credit.
In these specific circumstances the bankruptcy of your corporation can have an effect on your personal credit but the general rule is that your corporation's bankruptcy will not affect your credit.
By: Wojtek Jaskiewicz
Do I really need permission to travel with my own child(ren)?
Travelling with your own child(ren) for the purposes of vacationing does not always have to be a contentious issue, especially given the fact that courts often view it as being in the child(ren)'s best interests. Notwithstanding, there are situations in which a court is asked to determine whether a child(ren) should be permitted to travel at all. When tasked with making such a decision, the court will consider a number of factors. These factors may include:
1. The risk of non-return;
2. the location of the trip;
3. the length of the trip;
4. prior planning;
5. the potential benefits to the child(ren); and
6. at times, one parent's criminality.
When making its determination, the court must weigh the benefits of travelling against the plausible risk(s). This weighing process is extremely fact specific.[i] Decisions permitting or disallowing travel are made on a case by case basis and are entirely dependent on all of the circumstances of the case.
[i] Purushothaman v. Radhakrishnan, 2014 ONCJ 300 at para 18.
By: Nav Shokar
1. The risk of non-return;
2. the location of the trip;
3. the length of the trip;
4. prior planning;
5. the potential benefits to the child(ren); and
6. at times, one parent's criminality.
When making its determination, the court must weigh the benefits of travelling against the plausible risk(s). This weighing process is extremely fact specific.[i] Decisions permitting or disallowing travel are made on a case by case basis and are entirely dependent on all of the circumstances of the case.
[i] Purushothaman v. Radhakrishnan, 2014 ONCJ 300 at para 18.
By: Nav Shokar
WHAT IS TITLe Insurance? do i need it in a commercial transaction?
There are two types of title insurance available in commercial transactions; an owner's policy, which will protect a buyer from losses related to the property's title or ownership, and a lender's policy, which protects the lender's investment in respect to the same.
For a one-time premium, a title insurance policy can provide protection from a variety of title-related issues which can affect your ability to sell, mortgage, or lease a commercial property.
For example, title insurance would protect against; unknown title defects, existing liens on the property (ie. unpaid utility bills or property taxes by the previous owner), title fraud, and errors in surveys or public records.
However, title insurance will not protect you from known title defects which existed when you purchased the property or anything not related to title. Furthermore, commercial title insurance policies often only insure risks that exist, whether known to the insured or not, at or before the date of the policy. This is in sharp contrast to residential policies, which normally cover future risks as well.
While purchasers are not required to take out title insurance in Ontario, it is certainly a good idea to do so. Title insurance simplifies the closing process, reduces legal fees, but also may even be required as a condition of the loan. All parties with stakes in a commercial transaction will want to insure over any potential title issues given the high risks and dollar amounts involved in these types of deals.
Whether title insurance is a requirement for the transaction or optional, it is something that you should discuss with your lawyer – it's worthwhile protecting one of your largest investments for a relatively small additional cost.
By: Jennifer Labrecque
For a one-time premium, a title insurance policy can provide protection from a variety of title-related issues which can affect your ability to sell, mortgage, or lease a commercial property.
For example, title insurance would protect against; unknown title defects, existing liens on the property (ie. unpaid utility bills or property taxes by the previous owner), title fraud, and errors in surveys or public records.
However, title insurance will not protect you from known title defects which existed when you purchased the property or anything not related to title. Furthermore, commercial title insurance policies often only insure risks that exist, whether known to the insured or not, at or before the date of the policy. This is in sharp contrast to residential policies, which normally cover future risks as well.
While purchasers are not required to take out title insurance in Ontario, it is certainly a good idea to do so. Title insurance simplifies the closing process, reduces legal fees, but also may even be required as a condition of the loan. All parties with stakes in a commercial transaction will want to insure over any potential title issues given the high risks and dollar amounts involved in these types of deals.
Whether title insurance is a requirement for the transaction or optional, it is something that you should discuss with your lawyer – it's worthwhile protecting one of your largest investments for a relatively small additional cost.
By: Jennifer Labrecque
Can condominium corporations prohibit occupants from smoking cannabis or growing cannabis plants?
The blunt answer is yes.
Smoking in the common elements of any condominium is prohibited by provincial legislation. However, whether it is also prohibited (along with production) in the specific units themselves will be at the discretion of the Board of Directors of the condominium corporation.
The Cannabis Act permits condo occupants over the age of 19 to use recreational cannabis in a unit or common element space, and to grow up to four plants per residence (the unit itself). However, The Smoke-Free Ontario Act prohibits smoking of any kind in any indoor common area of a condominium. Furthermore, the Condominium Act gives a condominium corporation the power to make or amend rules or the condominium's declaration to restrict the use and/or production of cannabis.
Although the Cannabis Act permits unit owners to smoke or grow cannabis, it does not mean that there are not other pieces of legislation that forbid the same activities, or allow condominiums to restrict such activities as well.
By: Brian Jenkins
Smoking in the common elements of any condominium is prohibited by provincial legislation. However, whether it is also prohibited (along with production) in the specific units themselves will be at the discretion of the Board of Directors of the condominium corporation.
The Cannabis Act permits condo occupants over the age of 19 to use recreational cannabis in a unit or common element space, and to grow up to four plants per residence (the unit itself). However, The Smoke-Free Ontario Act prohibits smoking of any kind in any indoor common area of a condominium. Furthermore, the Condominium Act gives a condominium corporation the power to make or amend rules or the condominium's declaration to restrict the use and/or production of cannabis.
Although the Cannabis Act permits unit owners to smoke or grow cannabis, it does not mean that there are not other pieces of legislation that forbid the same activities, or allow condominiums to restrict such activities as well.
By: Brian Jenkins
are minute books important?
In short, yes, but here is why.
Whether a corporation is incorporated federally under the Canada Business Corporations Act (the "CBCA") or provincially under the Business Corporations Act (Ontario) (the "OBCA"), a corporation is required to maintain copies of certain corporate records, including but not limited to: the articles and by-laws of the Corporation, including amendments, minutes of meetings or resolutions of the shareholders of the Corporation, minutes of meetings or resolutions of the directors of the Corporation, registers listing the corporate directors, officers and shareholders and a securities register.
For OBCA corporations, a register of ownership interests in land and a copy of any unanimous shareholder agreement known to the directors is also required to be maintained. For CBCA corporations, effective June 13, 2019, a securities register that lists all individuals with "significant control" or who can "control in fact" by owning 25% of the shares (voting or outstanding), must also be maintained.
The CBCA and the OBCA each have provisions to ensure that directors and officers are personally liable for non-compliance with their respective record keeping provisions. For example, under the CBCA, directors and officers open themselves up to a "fine not exceeding $200,000 or to imprisonment for a term not exceeding six months, or to both", if on summary conviction, they are found to knowingly authorize, permit or acquiesce in the contravention of the above register keeping requirements.
In addition, minutes or resolutions of the shareholders and directors are required annually to approve the financial statements and confirm the directors, officers and auditors (and/or waive of audit rights, if applicable). A minute book is a one-stop spot for these corporate records to be located. A well-established process for staying on top of these requirements is the best way to remain compliant. We at KMB would be happy to assist you with staying ahead of the curve.
By: Kevin Fernandes
Whether a corporation is incorporated federally under the Canada Business Corporations Act (the "CBCA") or provincially under the Business Corporations Act (Ontario) (the "OBCA"), a corporation is required to maintain copies of certain corporate records, including but not limited to: the articles and by-laws of the Corporation, including amendments, minutes of meetings or resolutions of the shareholders of the Corporation, minutes of meetings or resolutions of the directors of the Corporation, registers listing the corporate directors, officers and shareholders and a securities register.
For OBCA corporations, a register of ownership interests in land and a copy of any unanimous shareholder agreement known to the directors is also required to be maintained. For CBCA corporations, effective June 13, 2019, a securities register that lists all individuals with "significant control" or who can "control in fact" by owning 25% of the shares (voting or outstanding), must also be maintained.
The CBCA and the OBCA each have provisions to ensure that directors and officers are personally liable for non-compliance with their respective record keeping provisions. For example, under the CBCA, directors and officers open themselves up to a "fine not exceeding $200,000 or to imprisonment for a term not exceeding six months, or to both", if on summary conviction, they are found to knowingly authorize, permit or acquiesce in the contravention of the above register keeping requirements.
In addition, minutes or resolutions of the shareholders and directors are required annually to approve the financial statements and confirm the directors, officers and auditors (and/or waive of audit rights, if applicable). A minute book is a one-stop spot for these corporate records to be located. A well-established process for staying on top of these requirements is the best way to remain compliant. We at KMB would be happy to assist you with staying ahead of the curve.
By: Kevin Fernandes
social media concerns in the workplace
Since social is becoming integral to business activities, employers have a responsibility towards employees and the public of preventing workplace harassment, abuse, health and safety violations, and human rights violations through social media.
When employees and employers use social media accounts to communicate among each other and the public, their social media accounts also become a part of their workplace. Anything employers and employees post about or between each other can be considered a potential workplace issue.
To address social media concerns in the workplace, employers should have a social media policy in the workplace. Some things to consider including in a social media policy are:
By: Hani Shamsi
When employees and employers use social media accounts to communicate among each other and the public, their social media accounts also become a part of their workplace. Anything employers and employees post about or between each other can be considered a potential workplace issue.
To address social media concerns in the workplace, employers should have a social media policy in the workplace. Some things to consider including in a social media policy are:
- Prohibiting employees from sharing profane or abusive messages via a social media plat form (ie: Twitter, or Instagram) or posting offensive photos or videos regarding their co-workers, customers, or the general public;
- Offensive messages, photos, videos and comments following the offensive content employer discretion;
- Creating a safe place for employees to address workplace violations via social media;
- Clearly state that the employer does not condone abusive or profane social media use in the workplace and employee conduct will be investigated if social media misconduct has been alleged;
By: Hani Shamsi
