1. Slides prepared by Robert Kleinman, FCA & Troy McEachren, TEP

3. A chilling and eerie story of 4 real Canadians who just want to give away their
blessings
Parental guidance suggested
4 HORSEMEN OF THE AMT APOCALYPSE
Names have been changed to protect the innocent!

4. A portion of his shares of a public company will be monetized in a takeover
Gain $10m, wishes to donate $3m of the securities before the sale
4 HORSEMEN OF THE AMT APOCALYPSE: CONQUEST
Other facts: $400,000 salary, $20,000 carrying charges; $25,000 of other
donations
The Techie

5. In 2023 the full value of the marketable security gift of $3M is realized
No AMT in 2023
2024
AMT of $906,485 will be liable
Which is Federal – add a Provincial element
4 HORSEMEN OF THE AMT APOCALYPSE: CONQUEST
Techie: Results - Only Federal

6. Mrs. A sells the shares of her private
company to a REIT
Capital gain $40M; gift to university $10M
4 HORSEMEN OF THE AMT APOCALYPSE: WAR
Other info: Annual income $400,000
Sale of Real Estate Company

7. In 2023 no AMT effect
In 2024, $3,182,085 (about half re-gain and rest re-charity)
This is federal – add provincial $4-5M AMT
4 HORSEMEN OF THE AMT APOCALYPSE
Recoverable?
Two Results

8. Mrs. B, age 88, will donate an apartment building
to a low-cost housing charity
Other income: pensions, investment - $400,000
Other donations: $50,000
Value $5m ACB $1,000,000 UCC $400,000
Why?
4 HORSEMEN OF THE AMT APOCALYPSE: FAMINE
Gift of Apartment

9. In 2023 no AMT effect
4 HORSEMEN OF THE AMT APOCALYPSE
Apartment
In 2024 AMT of $500,585
Add provincial component
Because of use of donation carryforward, going to be
slow to recover the AMT

10. Mr. C owns preferred shares of Co. C
(children own common)
Donate shares to hospital; after,
shares redeemed for cash
Value $4M; ACB = 0
Other income: $300,000
4 HORSEMEN OF THE AMT APOCALYPSE: DEATH
Estate Planning

11. In 2023 - no AMT
4 HORSEMEN OF THE AMT APOCALYPSE: CONCLUSION
Results
In 2024, $476,335
Add provincial component

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WHAT IS THE AMT?
• AMT = Alternative Minimum Tax
• The AMT is “alternative” because taxpayers must calculate both the
amount of their AMT and their “ordinary tax”, and then pay whichever
figure is greater
• ITA contains provisions that higher-earners can use to lower income tax
burden
• Perceived unfairness in the 1980s lead to introduction of the AMT

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HOW IS THE AMT CALCULATED AT
PRESENT?
5 STEPS
Step 1: Calculate taxable income under the regular method and AMT
Step 2: Deduction of $40,000 from the adjusted taxable income
Step 3: Apply 15% federal rate and provincial rates (total approx. 20 to 25%)
Step 4: Certain deductions are permitted (far less than under the ordinary rules)
Step 5: Compare AMT with ordinary tax and pay the higher amount. Any excess (i.e.
AMT minus regular tax) may be carried forward for up to 7 years and used as a
credit against tax in any year where ordinary tax payable exceeds the AMT

14. 14
UNDER THE AMT, ADJUSTMENTS TO TAXABLE INCOME
INCLUDE:
• Losses due to capital cost allowance or interest/carrying charges on rental,
leasing, and film properties;
• Losses due to resource reductions
• 30% of the excess of capital gains over capital losses for the year
• 60% of stop option deductions
• Losses from united partnerships
• Losses from partnerships in which the taxpayer is a passive partner
• Losses from tax shelters
• Resource-related deductions

15. 15
UNDER THE AMT, PERMITTED DEDUCTIONS INCLUDE:
• 30% of business investment losses for the year
• Dividend gross-up
• Donation credits and nil capital gains from donation of
listed securities
Under the AMT, the credits exclude:
• Donations - O Capital Gains on Public Securities
• Credits transferred from others
• Pension and dividend tax credits
• Political tax credit
• Investment tax credit

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Broaden the AMT base by further limiting tax preference items, including:
• Adding 30% of capital gains on donations of publicly-listed securities, which under regular rules will
not be subject to any tax
• Only 50% of the donation tax credit will be allowed including cash donations
• Increasing the capital gains inclusion rate from 80% to 100% for AMT purposes
• Including 100% of the benefit associated with employee stock options, which under regular rules are
taxed at 50%.
• Increase the AMT from 15% to 20.5% - federal only – add provincial tax = about 32% minimum
2023 FEDERAL BUDGET

17. 17
2023 FEDERAL BUDGET
The AMT format suffers from additional deficiencies beyond complexity and
compliance burdens. It affects in complex ways the effective marginal tax rates on
various income and deduction items included in its computation, which will obscure
understanding of the net returns to various choices. The result is that tax incentives
for specific types of investment, such as…. resource flow-through resource shares,
will be blunted. Might it be preferable to insert limitations in those tax preferences
directly and thereby streamline the AMT? Often the ATM is justified as a feasible
way to satisfy the political imperative for optics that persons at high wealth are
paying sufficient tax. Simon Fraser University, Pathways to Reform Capital Gains Taxation in Canada,
March 2023
• 1998: 25.8% of tax filers gave to charity; 2021: 17.7% of tax filers gave to charity
• 1998: $4.3 billion; 2021: $11.8 billion: Due to large donations by wealthy
Canadians even after accounting for inflation

18. 18
WHAT SHOULD YOU CONSIDER DOING?
• Contact your accountant and tax advisors now to understand how the changes to AMT will
affect you
• Understand how the AMT will impact you, your family, and your philanthropic goals
• Consider accelerating your philanthropic plan prior to January 1, 2023
• Consider creating a Donor Advised Fund, which gives the donor some control over donations
• Contact your member of Parliament

19. 19
WHAT COULD YOU CONSIDER DOING?
• Consider accelerating taxable income in 2023
• Consider withdrawing RRIFs and RRSPs for purchase of FTS or cash donations (DAF) in 2023
• Consider maximizing CDA as interest-bearing loan from shareholder, deduction for CCPC on
interest paid, and shareholder can donate cash or purchase FTS
• Considering rolling publicly-listed securities into Holdco for future donations

20. 20
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