Nicholas Niarchos is 58 years old. He has two sons: Chris and Lucas. Nicholas has owned Spindrift Constructiona Canadian-controlled private corporation (CCPC)for 27 years. In recent years, Nicholas has been reducing his involvement with the company; in fact, he is ready to transfer the operation of the company to his sons. Nicholas envisions selling the company to his sons and then retiring. He will keep himself available as a consultant to assist Chris and Lucas.

Earlier this year, Spindrift construction was appraised at $3 million. The adjusted cost base (ACB) of Nicholas' shares is $200,000. Nicholas has never used a capital gains exemption.

Nicholas is also married and has an extended family. He is working on his estate plan and he is considering gifting assets now before he dies so that he can see the fruit of his labour go to good use. He is contemplating the following transactions.

1. Giving his 2010 Toyota Corolla worth about $5,000 to his nephew, George.
2. Giving $100,000 to his wife, Martina, for her to invest in non-registered investments.
3. Giving $6,000 to his wife, Martina, for her to put in her TFSA.
4. Giving $50,000 each to his sons, Chris, and Lucas, for them to invest in portfolio of stocks and bonds.
5. Giving $50,000 to his brother, Omar, to pay for the post-secondary education of his niece, Joanna, to attend four years of university.
6. Giving $20,000 to his sister, Elizabeth, to pay for the post-secondary education of his nephew George, to attend three years of college.
7. Giving $5,000 for his wife, Martina, for her to go on a shopping spree.
8. He has provided his wife a $300,000 loan for value to Martina for her to start her own business.

Questions

1. The annual income of a CCPC may be eligible for the small business deduction (SMABUD). If the net income of the business for federal tax purposes is expected to be higher than the SMABUD limit, what strategy can Nicholas employ?

1. What strategies can Nicholas employ to transfer Spindrift Corp. to Chris and Lucas?

1. What would be the potential tax implication for Nicholas when he transfers the corporation to his sons? Please show your work.

1. Of the eight gifting and lending transactions that Nicholas would like to undertake, which ones would be subject to the income attribution rules and why?

1. Name five ways that Nicholas can income split with Martina