Tax: Risks and tips

Trap

Sometimes lawyers don’t realize that potential GST implications exist. Here are some examples from lawyers acting on real estate transactions:

• A lawyer didn’t appreciate that, because his vendor client was in the business of buying and selling properties, GST needed to be collected from the purchaser and remitted to Canada Revenue Agency (CRA).
• A lawyer acted for the purchasers of a condominium that was part of a rental pool. The purchasers were pursued by the vendor after the vendor was assessed GST, and then claimed against the ­lawyer.

Lawyers providing other types of services have also missed the lurking GST issue. For example:

• A lawyer filed a builder’s lien for a subcontractor and forgot to include GST in the lien amount.
• A lawyer advised a director on a company’s liability risks but failed to warn about the risk of unpaid GST.

GST can also affect settlements, as seen by these reports:

• A lawyer negotiated a settlement of a client’s sales service contract that made the client liable for statutory payments, and later realized the client was liable for GST.
• A lawyer’s client was provided with a first mortgage as security for the settlement of a lien claim. CRA later claimed priority over the mortgage for unpaid GST, and the client claimed against the lawyer.
• As part of a settlement, monies owed to a lawyer’s client for royalties and other amounts under a licence agreement were set off against the client’s debt. The lawyer did not consider whether GST was payable on the set-off amounts and the client may be exposed to a claim by CRA.

In some cases, the Excise Tax Act also deems a settlement payment to include GST – a trap for the unwary litigator whose client may be liable to pay the GST portion of a hard-won settlement over to the government.

Tips

• GST will likely come into play in any matter in which property (goods, intangibles, realty) or services are exchanged, because conferring a right of any kind is a “supply” for GST purposes. However, because it may be relevant in other situations, ask yourself if there are any GST implications on every matter you act or advise on.
• If you practise regularly in an area of law, determine any GST implications in advance so that you can set up systems to ensure the issue is always flagged.
• Incorporate a GST query into your checklists.

Trap

Lawyers get caught giving the wrong advice on whether a matter attracts GST. Here are some examples from lawyers acting on real estate transactions:

• A lawyer acted for a vendor selling a newly constructed home and wrongly allowed his client to sign a GST exemption certificate on the basis that the property was “used residential.”
• A lawyer acted for a vendor claiming that the sale of vacant land was GST-exempt when it was not, as the land was subdivided. The vendor claimed against the lawyer.
• A lawyer acted for a purchaser of land from a corporate vendor, and wrongly advised that the transaction was GST-exempt as it was bare land. In fact, the exemption did not apply as the vendor was a corporate entity.

We receive reports from other areas of law, as well:

• A lawyer acted for a company that sells franchises, and gave preliminary, and possibly incorrect, advice about the applicability of GST to franchise fees.
• A lawyer acted for a tenant leasing property from the provincial government, and may have wrongly assumed that GST does not apply in the particular circumstances of the transaction.

Other times, the lawyer knows that GST is attracted, but is mistaken about how it operates:

• A lawyer acted for a developer of homes on land held pursuant to a long-term lease. The lawyer assumed that the GST operated as it would if the transaction involved fee simple sales, and wrongly structured the direct 99-year-subleases so that the “purchasers” were charged GST.
• A developer’s lawyer calculated a GST rebate. The purchaser assigned the rebate to the developer who submitted it and received a credit from CRA. CRA reassesses as the developer included extras in the statement of adjustments that were not considered by the lawyer in calculating the rebate, and is not entitled to the amount of the rebate claimed.

Tips

• Some areas of practice, such as real estate and commercial law, require a basic working knowledge of GST. If you practise in such an area, learn the law and keep up to date.
• Recognize the potential complexities of GST law. One lawyer attributed his mistake to “the complexity of GST issues when transferring shares of a company that holds land,” and another noted that “mixed use properties [here a small rural acreage] are difficult to determine in terms of whether or not GST is attracted.” Be realistic about what you know and, if you are not certain, do not guess. Research any area that you do not know cold or get the advice that you need. A lawyer whose report was prompted by “handling a GST issue when the client should have been advised to seek accounting or GST tax ­advice” recommends other lawyers avoid such mistakes by “knowing one’s limit of what you are comfortable in giving legal advice on.” Pass the risk to the client by clarifying what you are advising on and what you are not, and confirm it in writing.
• If you are acting only on part of a matter and GST implications might arise from related matters, clarify the limits on your retainer.
• Take the time you need to carefully think through all the GST issues. As one lawyer noted, “e-filing, working to deadline, etc., leaves precious little time to properly digest and process the nature of property conveyances.”

Trap

Make assumptions about your client’s circumstances or knowledge of GST at your peril. We see reports in which lawyers get the GST issue wrong because they didn’t adequately canvass all the facts relating to a transaction with their client:

• A lawyer acted for both parties on a conveyance and assumed that the transaction was GST-exempt. In fact, the vendor was in the business of property development and GST may be applicable.
• A lawyer acted for the vendors of recreational property who were registrants and had claimed an input tax credit for the GST payable on their purchase –commonly referred to as a “GST deferral.” As a result, their sale was subject to GST, and they didn’t ensure that the purchasers paid the GST. The vendors were reassessed by CRA and blamed the lawyer.

Lawyers can also find themselves targeted if they rely on a client’s (incorrect) advice about whether or not GST is attracted. For example:

• A lawyer allowed his vendor client to sign a GST exemption certificate sent (inappropriately) by the purchaser, based on the client’s assurance that no GST was payable. The lawyer later discovered that his client based his understanding on the contract term stating that GST was the purchaser’s responsibility.
• A lawyer acted on the sale of a residential property on acreage, held by a family company. The son advised that he had investigated the matter and the transaction was GST-exempt. In fact, it was not, but the lawyer had nothing in writing to confirm the son’s advice.

Tips

• As one lawyer noted, the problem she faced was caused by “not adequately canvassing the GST issue with the client.” Spend the time you need with your client, gathering information and explaining your advice.
• Do not assume a higher level of legal knowledge simply because a client is more sophisticated or business-savvy. One lawyer noted, “I may not have clearly explained to the clients the potential applicability of GST to their real estate purchase,” and recommends dealing clearly with the issue through a “thorough initial reporting/retainer” letter.
• Be careful before you accept a client’s assurance that GST is – or is not – payable. Appreciate that your client may not really understand how the GST operates, or has perhaps misinterpreted a contractual term. And if it’s appropriate to rely on your client’s advice, confirm in writing that you are doing so. Pass the risk and responsibility for the advice back to the client, where it belongs.

Trap

Sometimes, mistakes are made simply because lawyers don’t carefully review contracts or related documents. For example: 

• A lawyer acted for a client selling equipment and understood that the purchaser would be liable for the GST, but overlooked a term in the contract providing that the vendor was liable.
• A lawyer acted for the purchaser of residential property and misinterpreted the agreement of purchase and sale. Contrary to the terms of the contract, the lawyer proceeded on the basis that the purchaser, if not entitled to the GST rebate, was required to pay the developer an amount equivalent to the rebate.
• In a real estate conveyance in which the purchaser assumed liability for self-assessing the GST, the vendor’s notary placed the lawyer on an undertaking to provide the purchaser’s GST registration number. The registration number was never provided and, in fact, the purchaser was not registered.  

Tips

• Carefully review the contract for any provisions that may change the party liable for GST. The contract may be silent, or it may spell out an agreement between the parties as to who will take it on. If silent, case law currently supports the view that the purchaser will pay the tax in addition to the purchase price.
• As with any document, take it slow – take the time you need to properly and thoroughly review the contract. As one lawyer caught out in a real estate conveyance advised, “ensure that information is fully reviewed prior to completion.” It will also help you avoid breaching an undertaking that you simply overlooked.

Trap

The Excise Tax Act requires a vendor of real estate to collect GST unless the purchaser is registered for GST purposes (for most types of sales). Generally, purchasers who sell taxable goods and services can recover GST paid on real estate purchases by registering before closing, then self-assessing and claiming input tax credits. They do not pay GST, nor are the vendors required (or able) to collect and remit GST. Lawyers should note that the Act requires such purchasers to be registered, not registrants. However, they are commonly referred to as “GST registrants,” and we use that term in the descriptions below. The concept is a trap for lawyers, with a number of triggers.

The first is the GST registration process itself:

• A lawyer allowed a purchaser client to sign the GST registrant certificate when, in fact, it had not yet taken the necessary steps to become a registrant.

Lawyers also get caught wrongly assuming that a party is – or is not – a GST registrant:

• A lawyer acted for a vendor selling property that was listed at a certain price, plus GST. The purchaser advised that it was a GST registrant and provided a GST registration number, so the lawyer did not include GST in the purchase. In fact, the purchaser was not a GST registrant and had no valid certificate.
• A lawyer for a vendor relied on the ­purchaser’s GST certificate and did not collect GST. The purchasers were not registrants, but the lawyer relied on other lawyers and notaries whose clients appeared to have lied to them.
• A lawyer acted for purchasers who paid GST that the vendors remitted to CRA. In fact, the purchasers were GST registrants who should not have paid the GST to the vendors. CRA could assess the purchasers to pay the tax a second time since they have not discharged their statutory obligation to self-assess or pay the government directly. If assessed, they will blame the lawyer.

Wrong assumptions can also lead to problems when the vendor is not resident in Canada. In that case, the purchaser must pay the GST directly to CRA, regardless of its registration status. Failing to do so leaves the purchaser open to assessment.

The GST registrant status of one ­party can also distract a lawyer from digging ­further:

• A lawyer acted for a vendor selling commercial real estate and the purchaser took title as bare trustee for another company that acquired the beneficial ­interest. As the purchaser was a GST registrant, no GST was collected. The vendor was later reassessed for failing to collect and remit GST as the lawyer had overlooked that it is the beneficial owner as opposed to that holding bare legal title that must be a GST registrant.

And finally, timing can be everything when it comes to GST registration. In corporate reorganizations, for instance, the “newco” acquiring taxable assets may have no right to recover applicable GST if it registers after the transfer.

Tips

• As noted, the purchaser must be GST registered. It is not enough for the purchaser to be a GST registrant because this includes people who are required to be registered but are not registered. And it is not enough simply to accept the purchaser’s provision of a number. You must be satisfied that it is valid on the closing date. If you act for a vendor:
  • Obtain the purchaser’s GST number and confirm that the purchaser is registered under the number on CRA’s website. Print the confirmation for your file.
  • Obtain a Certificate of GST Registration Status signed by the purchaser. 
• Don’t mistake the CRA business number for a GST registration number. While the nine-digit business number is the root of the GST registration number, a person is not registered until the GST account has been activated under the business number, and the suffix RT0001, RT0002, etc. is added to the number.
• Don’t assume. One lawyer who failed to determine that the purchasers were GST registrants and could have self-assessed said, “clearer client communication could have helped avoid this mistake.” See the tips above to avoid communication breakdowns.
• And if you do make a mistake and the transaction proceeds on the basis the purchaser was GST registered and it was not, report to us immediately. Not only are you obliged to do so, but we deal with very experienced counsel who may be able to rectify the matter.

Trap

Sometimes, a lawyer is targeted when a problem develops out of a GST matter that the lawyer understood the client or the client’s accountant was handling. For example:

• A lawyer acted on a mortgage transaction. The borrower was buying out his partners in a property and part of the deal was the transfer of an interest in another property. The parties were handling the matter of GST themselves, thinking they would not have to pay any. In fact, they did, and may turn on the lawyer for not providing them with proper advice.
• A lawyer acted for purchasers who were denied a GST rebate because one of the purchasers did not occupy the property as a primary residence. The lawyer had assumed that the clients were dealing with the rebate issue themselves.
• A lawyer acted for a group of companies in relation to a mixed residential and commercial development. The clients’ accountants created the corporate structure pursuant to which the project would be completed, and various GST issues have now arisen. The lawyer may be at risk for not clearly confirming that the GST issues fell entirely to the accountants, and that he was simply following their direction.

Tips

• Appreciate that, if something goes wrong, you may be targeted simply because, as one lawyer noted, “my client got audited for GST and simply ‘needed’ someone to blame for the audit.” Help us defend you. Be very clear with your client about what you are and are not doing, and confirm it in writing. At a bare minimum, keep notes of advice to your client.
• Remember that if your client has asked you to advise on “tax” — the term covers not only income tax, but GST and the myriad of other federal and provincial taxes imposed in Canada.
• A comprehensive interim reporting letter clearly defines the scope of your retainer and alerts clients to potential problems of which they might not be aware.
• If accounting advice is required, say that and, if appropriate, help your client by offering some choices of accountants (with appropriate disclaimers). Set out clearly in your retainer letter what each professional is doing, and confirm your understanding with the accountant.

Trap

In many reports, the lawyer knows exactly what needs to be done in terms of the GST issue but somehow a step is overlooked. For example:

• A lawyer acted for the vendor of a hardware store business. The parties agreed there would be no GST payable, a permissible election in the circumstances. However, the lawyer never noticed that the purchaser forgot to provide an election form. CRA is now seeking payment of GST, and the vendor is claiming against the lawyer.
• A lawyer assumed that a purchaser had a GST registration number and would provide the usual certificate. It seems that the issue completely slipped the lawyer’s mind, and neither a certificate nor number was provided.
• A purchaser was entitled to a GST rebate, but her lawyer missed the deadline for filing the rebate application.

Tips

• The invaluable checklist. Not only do checklists make practice more efficient and economical and ensure you take all necessary steps, they are useful for confirming advice and instructions. (An unhappy client’s memory may be ­selective.)
• Use firm-wide systems for limitations and deadlines so required steps are taken in a timely manner — see tips 1 through 22 in Beat the clock: Timely lessons from 1600 lawyers.  And recognize that, because the GST ball might be in the other side’s court, you may need to track it there as well. For example, if you act for a vendor on a deal in which the parties have elected not to pay GST, the purchaser needs to file the election form and on time. Otherwise, your vendor client can be assessed for the tax.
• Appreciate that work and personal circumstances may make you more ­susceptible to oversights. Don’t procrastinate, and seek help if you need it. And if you cannot take care of the matter because of workload, personal stress or any other reason, transfer the file to someone who can.

• “Stay within your comfort [competency] zone.” – a lawyer who failed to appreciate that a tax free share transfer from father to son’s company required transferring the shares first to the son personally.
• “Consult specialists where appropriate.” – a lawyer caught by an estate freeze that unintentionally triggered income allocation back to his client.
• “Read and re-read the fine print in the Income Tax Act and other legislation.” – suggested by a number of lawyers with tax as their preferred area of practice.
• “This problem was caused by a little known policy change by the CRA on how to interpret a very old section.” – a lawyer who provided estate planning advice on setting up trusts that contravened the Income Tax Act. Three capital gains exemptions were lost. Not surprisingly, she now suggests “Continuing legal education.”
• “Do a careful review of advice given by another lawyer in the firm.” – a lawyer who relied to his detriment on a colleague’s advice.

Each year, three or four lawyers report that they have discovered their tax advice was just plain wrong. For example:

• In dealing with a capital dividend election on behalf of a corporate client, a lawyer mistakenly believed that the dividend could be paid out at any time. In fact, the dividend could only be paid after the client’s fiscal year end. Adverse tax consequences result.

Nothing good comes of dabbling. Be realistic about what you know and, if you are not certain, do not guess. And if you are comfortable acting, research any area you do not know cold or get the advice that you need. Even if tax is your preferred area of practice, you are at risk. Read legislation very carefully. Keep current in the law. Complex tax transactions may also involve several lawyers working on the matter, an issue if you rely on a colleague’s erroneous interpretation of the Income Tax Act.

• “The rules are so dense. Be very, very careful to review the anti-avoidance rules in every re-organization, even when there is no apparent application.” – a lawyer who prepared a trust structure without appreciating that unrelated trusteeships triggered capital gains.
• “Just more review.” – several lawyers caught short not carefully considering how the law would apply in a particular situation.

A significant risk relates to lawyers simply not thinking through all the legal issues, or the strategy needed to achieve the desired tax result. For example:

• Lawyer acted for a client in the setup of an immigrant trust. His opinion on the appropriate termination date for the trust was not well analyzed. CRA is now assessing additional tax on the basis that the trust was not terminated in time.

Carefully consider all the angles and possible issues (particularly challenging in the tax arena).

• “Tax implications are not always predictable, when the services rendered are not tax-driven.” – a lawyer who was taken by surprise when a tax issue arose in a property transfer.
• “Keep a detailed paper trail of your advice to clients that you are not providing tax advice, if that is the case, and urge them to speak to their accountant. Confirm your advice in writing.” – a lawyer who acted for a shareholder who, after realizing that her transfer of shares in a settlement triggered a capital gain, claimed that the lawyer had assured her that there would be no tax consequences.

Many transactions have unintended and undesirable tax consequences that could be avoided if a lawyer is cognizant of the potential tax implications. An example:

• Lawyer acted for the vendor selling shares in a company to another shareholder. When the deal was revised to sell the shares to the company, rather than the shareholder, the lawyer did not recommend tax advice or raise the possibility of tax implications. Unwelcome tax consequences resulted.

Tax is pervasive. Recognize that there will be tax consequences arising out of many corporate/commercial transactions, or situations in which property or funds change hands.

Alert your client to the possibility of tax consequences and confirm that you are not giving tax advice. Make sure this limitation is clearly reflected in your written retainer, and ask your client to sign to acknowledge their understanding. Such a document in your file will help us halt claims in their tracks. And since timing can be, and often is, everything from a tax perspective, caution your client about the limits of your retainer at an early stage.

• “Too often, failing to nail down residency is the one flaw in an otherwise sound transaction.” – a LIF staff lawyer.

Residency is a wild card in the tax scenario, giving rise to two mistakes that we see with some regularity.

In the first, lawyers miss the requirement to withhold tax when dealing with non-resident clients or with clients making payments to non-residents:

• In acting for claimant, lawyer failed to advise non-resident partners to seek waivers from CRA for business income to avoid the imposition of withholding tax. CRA has now assessed and will charge interest.

These claims can also arise when tenants pay rent to non-resident landlords and when purchasers pay sale proceeds for property or shares to non-resident sellers.

In the second scenario, lawyers fail to consider the effect of residency in the transaction:

• Lawyer advising clients on section 85 rollover under the Income Tax Act did not know that certain of the clients were US citizens. She failed to explain the consequences of the reorganization for non-residents, and the family incurred US tax, interest and penalties.

Both types of mistakes are avoidable if lawyers flag residency as an issue; always find out if a non-resident is involved in a particular transaction or tax plan. And remember that tax consequences may be triggered by the residency status of a wide range of individuals and entities, including directors, recipients of dividend payments and vendors of shares.

• “Clearly delineate responsibilities.” – a lawyer targeted after the client’s accountant missed a step.
• “It is important that lawyers make it clear to clients that, when a plan is conceived by the accountant or tax advisor, such accountant or advisor is responsible for its conception. It is also important that the tax advisor review draft documents before finalization.” – another lawyer, also targeted.
• “Maintain notes as to the work/analysis to be done by the accountant (as I did), and confirm it in writing (as I should have done to better protect myself).” – a lawyer reporting because the documentation relating to a matter did not include a necessary capital gain adjustment.

The need for both legal and accounting advice in dealing with a tax matter is another source of risk for lawyers. When the scheme goes sideways, clients usually throw both of their professional advisors into the mix and let them sort out who is at fault.

Sometimes, a lawyer is simply “papering” a tax-driven scheme conceived of by an accountant:

• In acting for claimant in a section 85 rollover, lawyer failed to transfer all of the common shares of a company. Lawyer maintains he is simply following the instructions of the company accountant.

Other times, the lawyer’s role is even more limited:

• Lawyer witnessed client’s signature on documents relating to tax planning vehicle conceived of by accountant that was ultimately not accepted by CRA. Client may blame lawyer.

And still other times, it is the accountant’s role that is more limited:

• Lawyer represented client in tax appeal and signed a consent to judgment after forwarding it to the client’s accountant for review. The judgment was missing an adjustment to a particular capital gain resulting in a potential tax liability to the client.
• Lawyer prepared non-resident trusts for claimants, but the proper non-resident filings were not made with CRA and late filing penalties may now be imposed. Lawyer assumed accountant responsible for the filings.

In these reports, despite the accountant’s involvement, the client asserted a duty on the part of the lawyer to protect him or her.

Help us defend you. Define responsibilities, and put them in writing. Set out clearly in your retainer letter what each professional is doing, and confirm your understanding with the accountant. At a bare minimum, keep notes of advice to your client. And if you want to take on a function that falls more to an accountant, appreciate that your lack of familiarity with the process may create a problem. Better to leave it where it belongs.

• “Use the available systems.” – a lawyer who didn’t.
• “If two or more lawyers are working on one file, every lawyer on the file should be required to record the doomsday (limitation) dates, otherwise one lawyer might assume the other lawyer has attended to the matter.” – a tax lawyer.
• “Deal with problem files. Do not procrastinate — ask for help if you need it.” – another tax lawyer.

As with every area of practice, sometimes the ball just gets dropped. The lawyer might forget to do something, or do it too late:

• In the course of executing a section 85 rollover, the lawyer forgot to issue shares in the transferee corporation to the taxpayer in consideration for the taxpayer’s transfer of property. As a result, a tax deferral may be lost.
• In acting for a taxpayer, the lawyer failed to provide information requested by CRA in a timely manner. CRA denied the tax relief being sought, allegedly based in part on the lawyer’s delay. 

And sometimes “too late” means missing a deadline, most frequently the 90-day limitation period for filing a notice of objection, limitations for tax appeals (including those set by court order) and limitations for claiming scientific research credits. How can you keep all those balls airborne? Use firm-wide systems for limitations and deadlines, and checklists and personal systems to ensure you take all necessary steps in a timely manner. For a comprehensive list of requirements for effective systems to prevent missing deadlines, see Beat the clock: Timely lessons from 1600 lawyers.

Simple clerical mistakes in drafting documents also lead to reports:

• Lawyer acting for company inadvertently assigned shares with the wrong par value, which led to a deemed dividend far in excess of what was intended.

Avoid these errors by reminding yourself, and your staff, to take a thorough second — or third — read-through of any document before it is finalized.

Appreciate that work and personal circumstances may make you more susceptible to oversights. Don’t procrastinate, and seek help if you need it. And if you cannot take care of the matter because of work overload, personal stress or any other reason, transfer the file to someone who can.

“This was a result of poor communication with my client” – a lawyer who missed the deadline for appealing an assessment by CRA.

Make assumptions about your client’s circumstances, interests or understanding at your peril. Some examples:

• Client instructed lawyer to hold off on filing a notice of objection to a CRA audit, but the lawyer failed to advise the client of the implications of delay. CRA refused an extension.
• Lawyer successfully negotiated a significant reduction of client’s reassessed income tax. Given the excellent result, the lawyer didn’t ask if the client wished to appeal those amounts still left in income. After the deadline passed, client advised that he expected an appeal.

Spend the time you need with your client gathering information and explaining your advice. Do not assume a higher level of legal knowledge simply because a client is more sophisticated or business-savvy. And remember always to seek informed instructions from your client. Not only do you owe this duty to your client, but by doing so, you pass the risk and responsibility of a wrong decision back to the client, where it belongs.

Although the $1 million policy limit offers generous financial protection for the majority of lawyers, it may not be enough to protect you if you give negligent tax advice. Excess insurance, available on the commercial market, extends the policy limit. Buy it if you are at risk.

The Act provides for exemptions for certain property transfers undertaken to subdivide land, if the original owners have the same proportionate share of the fair market value of the land both before and after the subdivision. Briefly, the provisions relating to these exemptions are as follows:

• Subdivision of a single parcel - sections 14(3)(j) and 3(3.2) of the Act and exemption code 34.
• Subdivisions of two or more adjacent parcels - sections 14(4)(k) and (k.1) of the Act and exemption code 10.

The exemption provisions are complex and the requirements of the Act must be followed precisely. A failure to meet the requirements can result in tax being payable with respect to the transfer of all of the parcels in the subdivision, even though the variation of proportions after subdivision may be slight.

In most situations involving a subdivision, an advance ruling from the Property Transfer Tax Branch is highly recommended. The website contains information on how to satisfy subdivision requirements and how to obtain an advance ruling.

Under the Act, the tax payable on the registration of a lease modification agreement, which extends the term of a lease, is treated differently from the registration of the original lease. A lease that is registered in the Land Title Office at a point in time when less than 30 years remains on the term, including all renewals and extensions, is eligible for an exemption from tax under section 14(4)(o) of the Act and exemption code 17.

However, the number of years remaining on the term of a lease is not relevant when it comes to registration of a lease modification agreement. In other words, if the term of the lease is 30 years or more when adding together all of the original term, any potential renewal or extension in the original lease, and any additional term or renewal or extension option under the lease modification agreement, then tax will be attracted when registering the lease modification agreement: see sections 9(1) and (2), and 10(1) to (3) of Regulation 74/88, as amended; in particular, see section 10(2)(a), which provides that, when calculating the term of the lease modification agreement, the unexpired portion of the term of the lease is not relevant.

In certain circumstances, the Act allows for the exempt transfer of principal residences and some farm properties between related individuals. In particular on fulfilment of certain other conditions, section 14(3)(d) of the Act allows for an exempt transfer from a trustee under a registered trust to a beneficiary of the trust, if the settlor and the transferee beneficiary are related individuals. Generally, for property transfer tax purposes, a person cannot be "related" to him or herself; thus, in the ordinary course, the settlor and the beneficiary cannot be the same person and still qualify for the exemption.