Four Robertson Stromberg Lawyers Recognized as Litigation Stars

Robertson Stromberg LLP is proud to announce that four of our lawyers have been recognized by Benchmark Litigation as Litigation Stars.

Lawyers M. Kim Anderson, Q.C., Jennifer D. Pereira, Q.C., Sean M. Sinclair and Gary D. Young, Q.C., have been identified as four of the preeminent litigation practitioners in Canada.

Benchmark Litigation is a definitive guide to leading litigation firms and lawyers. The guide provides law firm and lawyer rankings based on interviews with litigators, dispute resolution specialists and clients, as well as analysis of the legal market’s most important cases and firm developments.

Our senior litigation partner M Kim Anderson, Q.C. focuses his practice on the areas of banking and finance, insolvency and restructuring, insurance, and municipal governance and regulation.

Our partner Jennifer D. Pereira, Q.C. participates in all aspects of the litigation process, with a particular focus on insurance coverage and defense, transportation, and commercial litigation.

Our partner Sean M. Sinclair has experience in most areas of civil litigation but focuses on family law, professional regulation, estate litigation and media law. He is also recognized as a family law arbitrator.

Gary D. Young, Q.C. is a senior litigation lawyer. His practice emphasizes corporate, commercial and construction litigation, insurance law, professional negligence, product liability, and general negligence law.

 

As a full-service Saskatchewan law firm, our roots and values are evident in everything we do. Robertson Stromberg is grounded, pragmatic and progressive. Backed by experience and buoyed by national reach, our lawyers are committed to providing reliable solutions to our clients in all aspects of the law.

 

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6 Robertson Stromberg Lawyers recognized by their peers in the Canadian Legal Lexpert Directory for 2021

Congratulations to Melvin A. Gerspacher, Q.C.,  Leslie W. Prosser, Q.C., M. Kim Anderson, Q.C., Gary D. Young, Q.C., Scott D. Waters, Q.C., and Christopher J.H. Donald, Q.C., who have been acknowledged by their peers in the Canadian Legal Lexpert Directory for 2021.

Lexpert publishes this guide based on extensive peer surveys in the Canadian legal community.

Robertson Stromberg ranked by Chambers Canada

Chambers Canada is an independent research company that delivers rankings and insight into the world’s leading lawyers.

Leslie Prosser Q.C., Melvin A. Gerspacher, Q.C., and Christopher J.H. Donald, Q.C. have been recognized by Chambers Canada as reliable and effective lawyers in the area of Corporate
Commercial Law
. Congratulations!

Lawyers from Robertson Stromberg recognized in 15th edition of The Best Lawyers in Canada.

Robertson Stromberg is proud to announce the selection of Misty S. Alexandre, Christopher J.H. Donald, Gary D. Young, Allan M. Haubrich, Jared D. Epp, Leslie W. Prosser, Jennifer D. Pereira, Tiffany M Paulsen and Kenneth K.E. Ziegler, by our peers, for inclusion in the 15th edition of The Best Lawyers in Canada.

Best Lawyers is the oldest and most respected peer review publication in the legal profession, and recognition in Best Lawyers is widely regarded by both clients and legal professionals as a significant honour, conferred on a lawyer by his or her peers. Congratulations!

Tax Aspects of Dividends Paid by Corporations

Private corporations pay dividends of various kinds, often in order to achieve a particular result for the purposes of the Income Tax Act (Canada).  

The Business Corporations Act (Saskatchewan) distinguishes between a dividend (which, under corporate law, means the distribution of an equal amount, per share, of money or other property to the holders of all shares of a particular class of shares) and the payment of the value of a particular share by the corporation to the holder of that share upon the redemption or purchase for cancellation of the share. Nevertheless, the Income Tax Act (Canada) deems that, generally, the excess of the amount paid to the shareholder (upon redemption or purchase of a share for cancellation) over the paid-up capital of that share is also a dividend for income tax purposes. Any of the following references in this memo to a dividend includes a deemed dividend. Dividends and deemed dividends must be authorized by a resolution adopted by the directors of a corporation.

Canadian-controlled private corporations are generally eligible for a low rate of corporate income tax on active business income. In Saskatchewan, the combined rate of such federal and provincial tax is 11%. If all of the taxable income reported by a corporation was subject to that low rate of tax, the only kind of dividend that the corporation can pay is a taxable “non-eligible” dividend. Such dividends do not require any form of designation or election by the corporation.  In the hands of a recipient that is a Canadian resident individual, such dividends qualify for a dividend tax credit that reduces the combined federal and Saskatchewan marginal rate of income tax on the dividend to as little as 6.87% and to no more than 40.37% (depending on the amount of other income reported by the recipient).

If a Canadian-controlled private corporation earns active business income that is in excess of the amount that is eligible for the low rate of corporate income tax, it must pay tax at a higher rate. In Saskatchewan, the combined rate of such federal and provincial tax is 27%. Having paid that higher rate of tax, however, the corporation can add 72% of such active business income to its general rate income pool (“GRIP”). If the corporation makes a designation (which it does by informing the recipients of a dividend in writing), it can pay an eligible dividend to a maximum of the balance in its GRIP as of the end of the current taxation year. (Eligible dividends paid by such a corporation are deducted from its GRIP and any eligible dividends received by such a corporation are also added to its GRIP.)  Since a public corporation must pay income tax at the combined rate of 27% on all of its business income, a public corporation can designate any amount of dividends as eligible dividends.

In the hands of a recipient that is a Canadian resident individual, eligible dividends qualify for an enhanced dividend tax credit that reduces the combined federal and Saskatchewan marginal rate of income tax on the dividend to as little as 0% and to no more than 29.64% (depending on the amount of other income reported by the recipient).

Some of the federal income tax paid by a Canadian-controlled private corporation on investment income (which includes taxable capital gains), to the extent of 30 2/3% of that income, is refundable if the corporation pays dividends. A private corporation resident in Canada (regardless of whether it is Canadian-controlled) also pays refundable Part IV tax at the rate of 38 1/3% on all dividends that it receives (other than on dividends received from a connected corporation on which no tax refund was received by the payer thereof). Part IV tax paid on eligible dividends received is tracked by way of the eligible refundable dividend tax on hand (“ERDTOH”) account, and is refundable (at the rate $0.38333 per $1.00 of dividends paid) upon the payment of either an eligible or non-eligible dividend. All other refundable tax paid is tracked by way of the non-eligible refundable dividend tax on hand (“NERDTOH”) account, and is only refundable (at the same rate as above) upon the payment of a non-eligible dividend.

Certain sources of income are tax-free. Common examples are one-half of a capital gain and a death benefit received by the beneficiary of a life insurance policy. A private corporation resident in Canada (regardless of whether it is Canadian-controlled) tracks in its capital dividend account (“CDA”) the tax-free half of capital gains that it realizes plus the excess of any death benefits that it receives from a life insurance policy over the adjusted cost basis of the policy, minus one-half of any capital losses that it realizes. The corporation may elect (by filing form T2054 with the Canada Revenue Agency) to pay a capital dividend to a maximum of the corporation’s current balance in its CDA. A capital dividend is tax-free to a Canadian resident recipient. A private corporation decreases its CDA in respect of any capital dividends that it pays and increases its CDA in respect of any capital dividends that it receives.

The provisions of the Income Tax Act (Canada) related to dividends are more complicated than the simplified description set out in this memo. You should only pay eligible dividends or capital dividends after obtaining advice from a tax accountant or a tax lawyer. Melvin Gerspacher is a tax lawyer. You can contact him at [email protected] or at 306-380-5753.

LawyersMelvin A Gerspacher