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Category : Estate Litigation

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New British Columbia Societies Act

In the spring of 2015, the new Societies Act (British Columbia) (the “New Act”) was passed which will replace the current Society Act (British Columbia) (the “Current Act”). The New Act will come into force on November 28, 2016, at which time societies will have two years to transition from the Current Act to the New Act by filing a transition application containing a Constitution and Bylaws.

Despite this transition period, many provisions of the New Act will become immediately applicable on November 28, 2016 and any Bylaw provisions that are inconsistent with the New Act will not be enforceable. Therefore, societies will need to review their Constitution and Bylaws prior to November 28, 2016 to determine whether changes need to be made immediately upon the New Act coming into force. The following are some of the significant changes that will come into effect:

Constitution

The Constitution of a society will only be able to contain the name of the society and its purpose. If a society has any other provisions in its constitution, these will need to be moved into the Bylaws to ensure compliance with the New Act.

Increased Disclosure for Charities and Publicly Funded Societies

The New Act contains increased disclosure obligations for publicly funded societies – societies that obtain funding from the government or public in excess of an external funding threshold set by the regulations to the New Act – and charities. Members of charities and publicly funded societies will have access to all corporate records, but the Bylaws may restrict access to director’s meeting records and accounting records. Further, charities and publicly funded societies must disclose the remuneration paid to the directors and the ten highest paid employees or contractors receiving at least $75,000 in wages per annum. This disclosure can pool salaries being disclosed together and list positions rather than personal names.

Directors

The New Act will make significant changes pertaining to directors.
A director must be at least 18 years old (subject only to the exceptions set out in the regulations). If the society is a charity or publicly funded society, the majority of a society’s directors must not be employees or contractors of the society. In addition, societies will be prohibited from remunerating directors unless authorized to do so by the Bylaws.

New Corporate and Governance Procedures

The New Act will include corporate and governance procedures substantially similar to those in the Business Corporations Act (British Columbia) and other corporate legislation for companies. For instance, the threshold to pass a special resolution will be reduced from 3/4 of votes cast by voting members to 2/3, unless the society’s Bylaws create a higher threshold; voting by proxy will be allowed if it is written into the society’s Bylaws; and the existing requirement that non-voting members outnumber the voting members will be removed.

Senior Managers

The concept of non-director “senior managers” – individuals who oversee the activities of the whole or a principal unit of the society or perform a policy-making function – is introduced in the New Act. Senior managers can either be appointed by the society or deemed to be such by operation of the legislation. Senior managers are deemed to have fiduciary duties and other liabilities similar to directors, despite not actually sitting on the Board of the society.

Electronic Filing System

Concurrently with the coming into force of the New Act, the Registrar of Companies will implement a mandatory electronic filing system for incorporation, Bylaw changes and other filings at the corporate registry. This electronic filing system will allow the corporate registry to maintain a single database of societies and society Bylaws. Additionally, when existing societies transition from the Current Act to the New Act, they will be required to input their constitutions and Bylaws into an electronic database.

The above changes are designed to allow for flexibility and greater ease in how societies operate. Upon the coming into force of the New Act on November 28, 2016, Societies must begin making the necessary transitions and attention must be given to the foregoing changes. It is important to start considering how the New Act will impact the structure and organization of your society.

 

By: Juliet Sadr

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Death, Taxes, and the IRS

Benjamin Franklin once observed that “in this world, nothing is certain except death and taxes”, but recent developments with the Foreign Account Tax Compliance Act (“FATCA”) have led to considerably less tax certainty for U.S. citizens resident in Canada.

Under U.S. law, all U.S. citizens form part of the U.S. tax base, even if their connection to the U.S. is tenuous or non-existent. While FATCA does not change this state of affairs, it does create a new requirement for financial institutions outside the U.S. to actively gather bank account information for U.S. citizens and provide this information to the Internal Revenue Service (“IRS”). While FATCA technically requires banks outside the U.S. to report directly to the IRS, an intergovernmental agreement (“IGA”) between Canada and the U.S., which became effective July 1, 2014, allows Canadian financial institutions to instead report to the Canada Revenue Agency (“CRA”), which in turn forwards the account information to the IRS.

While Canadian-U.S. dual citizens with non-U.S. accounts exceeding $10,000 in aggregate are already required to annually file FBAR” (Foreign Bank Account Report) forms, FATCA will result in the IRS receiving a lot more information about who exactly is required to file such forms, leading to increased concerns about the application of potentially onerous penalties under U.S. law reserved for U.S. citizens who fail to make required tax filings.

THE DEADLINE UNDER THE IGA FOR THE CRA TO PROVIDE INFORMATION COLLECTED FROM CANADIAN FINANCIAL INSTITUTIONS ON ACCOUNTS OF U.S. CITIZENS IN CANADA TO THE IRS WAS SEPTEMBER 30, 2015, AND THE CRA HAS NOW REPORTEDLY COMPLIED WITH THIS DEADLINE.

In a September 25, 2015 Federal Court of Appeal Affidavit, Sue Murray of the CRA’s Compliance Programs Branch commented on the information to be provided to the IRS as follows: “I have reviewed the information which has been provided by Canadian financial institutions and is to be sent to the IRS. The package consists of approximately 155,000 information slips. Each slip represents one account and one account holder”.

In light of the fact that the IRS now has access to a lot more information about U.S. citizens with bank account holdings in Canada that may require FBAR compliance, it is a particularly good time for U.S. citizens residing in Canada to speak to a qualified tax accountant about the very specific U.S. tax filing requirements that may apply to them. While there is a cost to complying with the U.S. filing requirements, a qualified accountant can provide crucial advice about how to best ensure compliance and minimize risk of incurring penalties under U.S. tax laws.

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Court Varies Will and Awards 5.5 Million

The British Columbia Supreme Court has released reasons in the case of Wilson v. Lougheed Estate. This was an action by Kelly Wilson for an order varying her mother Norma’s will in her favour pursuant to the Wills Variation Act. The executor of the will was Kelly’s adoptive father William Lougheed, and he made a counterclaim on behalf of the Estate against Kelly for unpaid loans made during Norma’s lifetime. The net worth of the estate was nearly $26 million.