welcome
play

Welcome Tax & Ecology Seminar presented by The Georgian Bay - PowerPoint PPT Presentation

Apr 27, 2023 •9 likes •549 views

Welcome Tax & Ecology Seminar presented by The Georgian Bay Land Trust There are significant income and capital gains tax benefits available for Georgian Bay land owners who want to help protect the bays wilderness. Is your

  1. Welcome Tax & Ecology Seminar presented by The Georgian Bay Land Trust

  2. There are significant income and capital gains tax benefits available for Georgian Bay land owners who want to help protect the bay’s wilderness.

  3. Is your property part of the 20,000 acres of private Georgian Bay land that are ecologically significant?

  4. If so……. There are things you should know

  5. Conservation Context logging circa 1885 505 Million ft. cut in 1880 alone G

  6. First biological field station on the great lakes GO HOME BAY 1902

  7. 1902 Conservation Begins

  8. Eastern Georgian Bay & Watershed A Very Important Place • Greatest biodiversity of reptile & amphibian populations in Canada • Greatest concentration of coastal habitats in the Great Lakes • World’s largest archipelago of freshwater islands

  9. Eastern Georgian Bay & Watershed A Very Important Place • Coastal length of over 5,300 km (mainland and islands) • Highest densities of globally and nationally rare species and vegetation communities in Ontario on the Shield • UNESCO Biosphere Reserve Designation

  10. Eastern Georgian Bay & Watershed A Very Important Place • Home to more than 1,100 native plant and animal species .

  11. It is a last refuge for 45 species at risk

  12. Seminal Studies on Biodiversity • NCC MNR GBLT Eastern Georgian Bay Project 2001-2005 • Great Lakes Terrestrial Conservation Blueprint • GBLT NCC Natural Area Conservation Plan

  14. Protected Property Size - 2 acres to 500 acres - Sandy & Ingersoll 500 acres

  15. Ways to Protect Habitat Conservation agreements Gifts of land Life-interest

  16. Protecting Habitat is a GIFT Capital Gains Relief Income Tax Relief

  17. Ecological Gifts Program

  18. Conservation Easement You keep ownership 10 Acres

  19. Non-Conservation Easement Portion You retain all building rights etc. 10 Acres

  20. Conservation Easement 85-90% of value of outright gift 10 Acres

  21. Conservation Easement Income Tax Credit Value 85-90% of outright gift 10 Acres

  22. Income Tax Credit carry forward and use for 10 years 10 Acres

  23. Conservation Easement Capital Gains Reduced by 85-90% 10 Acres

  24. Donation of Vacant Land 5 acres

  25. Donation of Vacant Land No Capital Gains 5 acres

  26. Donation of Vacant Land Income tax credit on full value of land 5 acres

  27. Income Tax Credit carry forward for 10 years 5 acres

  28. Case For Conservation Plant & Animal Inventory including species at risk Species Status S-Rank Blanding’s turtle Threatened S3,S4 (Emydoidea blandingii) Five-lined skink Special Concern S3 (Plestiodon fasciatus)

  30. .

  31. 21,000 acres of developable Ecologically important lands Official Plans Do Not Protect Long-term Land trusts – a vessel for choice Conserve Open Spaces & Wilderness Places – forever

  32. 1902 Log Boom Go Home Bay

  33. 1902 Conservation Begins

  34. Conservation Agreements All land owners can do A conservation agreement Retain full ownership Keep it wild forever

  35. Gifts of Vacant Lots Capital gains relief Income tax relief Protection forever

  36. Help keep it a special place!

  37. Thank you!

  38. Welcome Tax & Ecology Seminar presented by The Georgian Bay Land Trust

  39. There are significant income and capital gains tax benefits available for Georgian Bay land owners who want to help protect the bay’s wilderness.

  41. Ecological Gift • Gift of land (including a covenant or easement to which land is subject) • Fair Market Value must be certified by Ministry of Environment • Ministry of Environment must certify that it is ecologically sensitive land, the conservation and protection of which is important to the preservation of Canada’s environmental heritage

  42. The Rules: • Tax credit based on the fair market value of the land (or easement) donated; • Un-realized capital gain on property gifted is not taxable; • 10 year carry forward of donation credit available; • Not subject to normal 75% income limitation

  43. Example 1 – Sale vs. Donation • Property has a certified fair market value of $1,000,000 • Original cost to purchase property was $100,000 Owner of property has annual employment income of $150,000 which is expected to • continue for the next 10 years • Principal residence exemption would not be available on the sale of the property Analysis prepared using 2017 tax rates •

  44. Sale of Property – Example # 1 Proceeds of Sale 1,000,000 Cost of Property (100,000) Capital Gain on Sale 900,000 Taxable Capital Gain (50% of gain) 450,000 Tax on Capital Gain (marginal rates) 237,942 Employment Income - 11 years @$150,000 1,650,000 Tax on Employment income at marginal rates (current year) 47,772 Tax on Employment income at marginal rates (future years) 477,720 Total Tax on Employment Income and Capital Gain 763,434 Net After Tax Cash Realized 1,886,566

  45. Donation of Property – Example # 1 Fair Market Value of Property Donated 1,000,000 Cost of Property (100,000) Capital Gain That Would be Realized if Property was Sold 900,000 Taxable Capital Gain (0% of gain) - Tax on Capital Gain (marginal rates) - Employment Income - 11 years @ $150,000 1,650,000 Tax on Employment income at marginal rates (current year) 47,772 Tax on Employment income at marginal rates (future years) 477,720 Reduction in Tax due to Donation Credit (Current year) (45,674) Reduction in Tax due to Donation Credit (Future year) (443,491) Total Tax on Employment Income and Capital Gain 36,327 Net After Tax Cash Realized 1,613,673

  46. Example 2 – Sale vs. Easement • Property has a certified fair market value of $1,000,000 • Original cost to purchase property was $100,000 Value of Conservation Agreement (Easement) determined to be $850,000 • • Owner of property has annual employment income of $150,000 which is expected to continue for the next 10 years Principal residence exemption would not be available on the sale of the property • • Analysis prepared using 2017 tax rates

  47. Sale of Property – Example # 2 Proceeds of Sale 1,000,000 Cost of Property (100,000) Capital Gain on Sale 900,000 Taxable Capital Gain (50% of gain) 450,000 Tax on Capital Gain (marginal rates) 237,942 Employment Income - 11 years @$150,000 1,650,000 Tax on Employment income at marginal rates (current year) 47,772 Tax on Employment income at marginal rates (future years) 477,720 Total Tax on Employment Income and Capital Gain 763,434 Net After Tax Cash Realized 1,886,566

  48. Easement on Property – Example # 2 Fair Market Value of Easement 850,000 Deemed Cost of Easement (85,000) Capital Gain on Easement 765,000 Taxable Capital Gain (0% of gain) - Tax on Capital Gain (marginal rates) - Employment Income - 11 Years @ $150,000 1,650,000 Tax on Employment income at marginal rates (current year) 47,772 Tax on Employment income at marginal rates (future years) 477,720 Reduction in Tax due to Donation Credit (Current year) (45,674) Reduction in Tax due to Donation Credit (Future years) (376,397) Total Tax on Employment Income and Capital Gain 103,421 Net After Tax Cash Realized 1,546,579

  49. Example 3 – Partial Sale vs. Partial Easement • Property has a certified fair market value of $1,000,000 Land can be subdivided into two parcels. Parcel A has a value of $600,000. Parcel B has a value of $400,000 • • Value of Easement on Parcel B determined to be $340,000 • Original cost to purchase property was $100,000 • Owner of property has annual employment income of $150,000 which is expected to continue for the next 10 years • Principal residence exemption would not be available on the sale of the property • Analysis prepared using 2017 tax rates

  50. Partial Sale of Property – Example # 3 Proceeds of Sale 400,000 Cost of Property (40,000) Capital Gain on Sale 360,000 Taxable Capital Gain (50% of gain) 180,000 Tax on Capital Gain (marginal rates) 93,412 Employment Income - 11 years @ $150,000 1,650,000 Tax on Employment income at marginal rates (current year) 47,772 Tax on Employment income at marginal rates (future years) 477,720 Total Tax on Employment Income and Capital Gain 618,904 Net After Tax Cash Realized 1,431,096

  51. Partial Easement on Property – Example # 3 Fair Market Value of Easement 340,000 Deemed Cost of Easement (34,000) Capital Gain on Easement 306,000 Taxable Capital Gain (0% of gain) - Tax on Capital Gain (marginal rates) - Employment Income - 11 Years @ $150,000 1,650,000 Tax on Employment income at marginal rates (current year) 47,772 Tax on Employment income at marginal rates (future years) 477,720 Reduction in Tax due to Donation Credit (Current year) (45,674) Reduction in Tax due to Donation Credit (Future years) (150,981) Total Tax on Employment Income and Capital Gain 328,837 Net After Tax Cash Realized 1,321,163

Recommend

More recommend