The following text may have been generated by Optical Character Recognition, with varying degrees of accuracy. Reader beware!

(0) Aggregate value of the estate; (c) Proportion of the aggregate value passâ€" ing to the beneficiary. Again, as with the estate tax, to calculate the aggregate value of the estate it IS necessary to include the total farm business (real estate, machinery, livestock, supplies and value of quotas), plus any other real state, bonds, stocks, insurance, pensions, etc. However, With succession duties, there are some dependants‘ allowance as shown by the following table. TABLE 2 DEPENDANTS’ ALLOWANCE Dependents Surviving Dependant’s Allowance Widow only . . . . . . . $75,000 Widow and dependant child or children .. $75,000 + $15,000 for each child Dependant orphan children . . . . . . . . . . $25,000 for each child Infirm husband only . Nil Infirm husband and dependant child or children . . . . . . . . . . $75,000 + $15,000 for each such child Example As an example, if a farmer has an estate valued at $150,000 and, on his death he leaves his wife life interest in the farm business, while on her death, the farm business valued at $125,000, goes to their son and $25,000 to their daughter. Both son and daughter are non~dependenL To arrive at the total death tax payable, it is necessary to calculate both estate tax and succession duties. (A) Estate Tax For an estate of $150,000, the estate tax rate payable can be found from the previous table. By simple calculation, we find the amount of estate tax payable on an estate of $150,000 would be $29,700. Because in Ontar- io we still have Ontario Succession Duties, the rate of estate taxes is reduced by 50%, to ac- tual estate tax payable $14,850. In ordinary cases, the estate tax must be paid within six months after the death of the deceased. How- ever, there are exceptions and executors can elect to pay tax in a maximum of six equal consecutive annual instalments, at a prescribed interest on the amount deferred. (B) Ontario Succession Duties Succession duties are not as straight forward to calculate as estate tax as there are special conditions and exceptions. However, in the above example, we know that duty payable 34 here would likely be in the $10,000 range This amount of duty would be payable to the Provincial Treasurer of Ontario whim, 6 months of the death of the deceased. (C) Total Death Taxes When both the estate tax and sucoessii. , my ties are added together, we find the total math taxes payable on this estate of $150,000 nuld be $25,000 or 1/6 of the value of the rm As the value of an estate increases from i) m 200 or 300 thousand, the death taxes m, my become a larger sum, but the ratio ol ‘ Mi] taxes to the total estate is also higher. Gifts Certainly one approach which can n my to transfer the farm business and redu the amount of death taxes payable on an Ex, - is by using gifts. Financial gifts work two v A. Gifts can be used to gradually rct, - a farmer's estate so a to lessen the effect A- tate tax and succession duties. B. Gifts also enable the young man t, 1.111 assets to begin farming. There are three sex of gifts which a farmer is eligible to 1ch without paying a gift tax and they are a al- lows: 1. All straightforward gifts between ‘I.\- hand and wife will be completely exem of gift tax. 2. Gifts to other individuals will be en upl up to $2,000 per annum to each recipient. 3. A once-inâ€"aHlifetime gift of farming , ip- erty up to $10,000 from a farmer to his M is exempt of gift tax if the following eond, in: are met: (a) The gift is of an interest in real pr cr- ty. Chattels such as farm machinery or xe- stock would not apply nor cash with win 10 buy real property. (b) The gift is to be to the donor’s chi ci- ther alone or jointly or in common wit: ihc donor. (c) The property must be used for far mg operations carried on by the child or b. llL‘ child and donor. d) Neither the donor nor his wife had re- viousiy made a similar gift which was non 4“ ject to tax. Thus, we can see that by using gifts 0 i: a period of ten years, a farm could trs LN $30,000 ($10,000 + ($2,000 x 10) = $30 H?! worth of the farm business for himself tv his son without paying gift tax. However, to a W9 these gifts excluded from estate tax and MC‘ cession duties it is necessary that the giii he made 3 and 5 years respectively, previor. [0 the deceased's death. Because of the rat: of gift tax and the manner in which gift tan 18 HOME AND COUNTRY