Page 9 - Newcom

tions of many EU member states, he explains, legislators in those states see a legitimate public interest in mak-
ing trusts part of the public record. Meanwhile, in the EU’s common-law jurisdictions, legislators recognize that privacy has been a central trust feature for hundreds of years.
While Oosterhoff acknowledges the debate makes for an interesting aca- demic discussion, he says it won’t change much for most Canadians. “Brussels, [for instance], does not have jurisdiction over private Canadian trusts,” he says. “There are always [tax] issues [with]
beneficiaries living all over the place. But for the typical Canadian family trust, I don’t think it’s a big concern.”
And what about the big question: Could something like the original EU proposal one day be introduced here in Canada?
“I would think not,” Oosterhoff answers emphatically. “There are always incremental changes in the rules—in tax [rules] especially. And certainly, as far
as charitable trusts are concerned, there are disclosure requirements. But beyond that, I really can’t see significant changes coming down the pike.”
He adds, “There would be a huge uprising if trusts were to be made public, because it just runs counter to every- thing we’ve always known about trusts. Trusts are meant to be private, and should be kept private.”
Oosterhoff points to the fallout from the withdrawal of tax-advantaged status from income trusts as roughly analo- gous. Back in 2006, faced with mounting revenue losses as more corporations converted to income trusts, the Con- servative government announced a new 34% tax on trust distributions. “The
announcement caused much consterna- tion and criticism,” he recalls.
So, Oosterhoff says, the fallout resulting from any change to trust law would be even more disruptive, and subject to more serious opposition from both professionals and the general pub- lic, because the existing trust structure has been around for centuries.
No place to hide
O’Sullivan agrees the European pro- posals are unlikely to be adopted here anytime soon. “[For] people managing their affairs in a proper way”—fully compliant with legal and tax regula- tions—“I don’t think there are huge [implications] going forward,” she says.
However, she says the EU disclosure debate reminds us that financial privacy is increasingly under siege. “Perhaps we can’t be quite as confident that trusts are essentially private arrangements—a piece of paper and nobody has any right to disclose it,” she muses.
“The lesson is that in this world that we [live] in, there’s no place to hide. There’s no place where you can keep things secret.” AE
April or May 2015
Proposed changes to the AMLD will be voted on and ratified by the full European Parliament, and by the EU member states’ Council of Ministers.
2016-2017
Member states will transpose the fourth AMLD into their national laws.
www.advisor.ca
05 2015 AE 9
HOW TO TALK ABOUT TRUST DISCLOSURE
If your clients have European- domiciled trusts, they may be wonder- ing what the new EU trust disclosure laws mean for them. Here are some topics to address:
1 Explain what’s public (and what’s not public)
Providing an overview of the differ- ence between corporate benefici- aries (public) and trust benefici- aries (private) will strengthen the argument that trusts are still part of a sound estate plan.
2 Suggest a tax and/or estate review Now is the time to go over the tax implications of the new disclosure requirements on the client’s current finances.
3 Warn about further evolution
The AMLD has evolved consider- ably over time. While the issue of trust disclosure has been settled for now, it’s possible the issue will be re-opened in the future.