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September 25, 2017

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Page 2 September 25, 2017 • Law timeS regulation," she says. "I wanted the implementa- tion timelines to coincide. Un- fortunately, they have not." She says that the work on en- tity regulation needs to speed up, as otherwise the effective- ness of the initiatives to address diversity and inclusion will be "much diluted." LSUC Treasurer Paul Schabas says that entity regulation would certainly be helpful in the area but not necessary. In its 2016 report on systemic racism, the law society outlined five strategies and 13 recom- mendations to tackle the issue, which will be implemented in coming years, starting with the two obligations for 2017. Schabas says that these two new requirements are intended to "move the needle" and to push lawyers to think about issues such as unconscious bias. "I think these are two important steps," he says. "One of the most important things that came out of the report and recommendations is to edu- cate people and to make them aware of the need for a cultural shi in the profession so that we can address what we identified as systemic bias in the profession." Akazaki says entity regula- tion would let the law society impose quotas on firms with respect to their hiring practices and other sanctions to encour- age them to set targets for their demographic composition. "You can't have any form of policy initiative with respect to a composition of a group when you're only able to exercise con- trol over an individual," he says. "So, from a basic and logic- al perspective, if there is to be meaningful and real change that brings the legal profession up to the demographic realities of Canada in the 21st century, you are going to have to have entity regulation." Researchers and scholars say there has been a lack of consistent measurements and metrics available on the divers- ity of law firms in Ontario. Asher Alkoby, an associate professor at Ryerson Univer- sity's Department of Law and Business, says that while there is data that shows racialized indi- viduals are underrepresented in the profession as a whole, there is not a breakdown by firm. is means there is no way of telling which firms are leaders in di- versity, he says. Alkoby says transparency in such an area could be useful for attracting a diverse workforce, as well as clients who are committed to diversity. rough recent re- search, Alkoby has found that di- versity programs devised by law firms may have helped diversify the lower ranks of law firms, but they seem to have failed to ad- dress the barriers that racialized licensees are coming up against to advance through the ranks. "e hiring process, which is essentially a search for 'the right fit,' has worked to exclude marginalized groups for many years," he says. LT Transparency useful in attracting diverse workforce cause the new rules are effective as of July 18 of this year, when the proposed changes were an- nounced. In particular, Howard is con- cerned about how these changes will affect whether life insurance is paid into a capital dividend ac- count if a shareholder dies. "All those shareholder agree- ments out there are all set up to accommodate this corporate- owned life insurance," says Howard. Therefore, it may be more advantageous to change the policies to individual hold- ers instead, which wouldn't be subject to additional taxation. When asked about tax law- yers' concerns about these po- tential consequences, Finance Minister Bill Morneau told Law Times that, currently, a period of consultation about the changes is ongoing. "To the extent that people have concerns around language, around how the plans will work, we're going to listen because we want to get it right," says Mor- neau. "But, again, our objective is to make sure our system is fair." Brandon Siegal, principal of Siegal Tax Law in Toronto, says that the government's attempts to stop tax deferral will mean that there is less incentive to in- vest in the economy and that the resulting taxation on private corporation dividends would be double taxation, with rates up to 73 per cent. "It creates an environment where you are explicitly worse off making money through the corporation than you were be- forehand," says Siegal. Robert Kepes, partner with Morris Kepes Winters LLP in Toronto, says the new language with s. 246.1 mirrors a section, 247.1, that was taken out of the act in the mid-1980s with the in- troduction of the General Anti- Avoidance Rule. GAAR states that where transactions are only being at- tempted to reduce, avoid or defer taxes owing, they may be invali- dated by the Canada Revenue Agency. "I think one of the reasons they're bringing this in is be- cause there have been some court cases that have said there isn't a general policy in the In- come Tax Act against dividend stripping," says Kepes. "I think they're introducing 246.1 so that the government can point to it and say that there is a policy." The Canadian Bar Associa- tion says proposed tax changes deserve a longer and more thoughtful consultation period than the 75 days the govern- ment allotted. The association had come under fire from some members after it opposed the changes as part of the Coalition for Small Business Tax Fairness. "We have facilitated a process through which our members can express their views," says spokeswoman Katya Hodge. LT Could tax holding companies Continued from page 1 NEWS Continued from page 1 Visit our new website to find the latest in Ontario legal news, opinion, videos and expert commentary. Find the legal content you're looking for faster with enhanced navigation. A FRESH NEW LOOK Join our 55,000 monthly visitors and read respected content on any device. Untitled-2 1 2017-09-20 10:02 AM

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