What a great night out that was! I owe you $100 for my concert ticket, and you owe me $150 for dinner and drinks. Why don’t you just give me $50 and we’ll call it even Steven? While most people don’t think twice about settling their debts this way, parents who owe each other child […]
As a result of a recent collaboration between the Canadian Bar Association, Justice Canada, the Canada Revenue Agency and Finance Canada, two Tax Matters Toolkits have been developed. Both of the Toolkits are designed to assist with understanding the tax laws that can apply on separation or divorce, which can be complex and difficult to […]
When a company’s financial situation becomes turbulent, it might be tempting for directors to ensure that creditors are paid before remitting source deductions (i.e. income taxes, GST, employment insurance premiums, and Canada Pension Plan contributions) to the government. To discourage this reprioritization of the company’s resources, directors can be held personally liable for the corporation’s […]
Should consumers be charged GST on marihuana? Yes, according to the Tax Court of Canada in Hedges v. The Queen, 2014 TCC 270, because marihuana is legally available for purchase without a prescription and without a Ministerial exemption. Most goods and services are subject to a 5% GST. Some supplies, like basic groceries and prescription […]
The door has opened a bit more for taxpayers to hold Canada Revenue Agency (“CRA”) and its agents accountable for the mistreatment of taxpayers. In Leroux v CRA, 2014 BCSC 720, a recent case of the British Columbia Supreme Court emerging from the Prince George registry, Mr. Irvin Leroux took on the CRA in an […]
For the purposes of determining tax liability, taxpayers are categorized into two groups: residents (of Canada) and non-residents (of Canada). Generally, taxpayers who are Canadian residents are subject to tax on all worldwide income; however, taxpayers who are not Canadian residents are generally only subject to tax on income tied to Canadian sources.1 Therefore a […]
Under the Income Tax Act (the "ITA") of Canada, Canadian residents are subject to income tax on all worldwide income. On the other hand, non-residents are only subject to tax on income tied to Canadian sources. Although this may sound straightforward, determining your liability and extent of liability can be complicated and the consequences for failing to comply can be significant. Here is a list of some important considerations:
If you are self-employed or a professional or you own a business, you are probably already doing tax planning each year to minimize the tax you pay. Let’s see what is the best thing to do in British Columbia, Canada. Even though no changes were included in the February 11, 2014 Federal Budget or the February 18, 2014 B.C. Budget, the previous changes announced in the February 19, 2013 B.C. Budget and the March 21, 2013 Federal Budget [...]
As part of the Minister of Finance’s effort to crack down on offshore tax evasion and aggressive tax avoidance, on January 15, 2014 the Canada Revenue Agency launched the Offshore Tax Informant Program. The program provides for informants to be paid a percentage of the tax collected by the Canada Revenue Agency as a result of the information provided. The press release and further details can be found at: news.gc.ca/web/article-en.do.
On September 23, 2013, the Canada Revenue Agency announced the prescribed interest rates for the fourth quarter. These interest rates are set by the Canada Revenue Agency every quarter for a variety of items, including interest on overdue taxes and interest on overpayments of tax, among other things.
One of the quandaries many people face when making an estate plan is what to do with the family cottage or vacation property. The family cottage is often a beloved family asset – a place where several generations have shared many happy memories – and there is often a strong wish to keep the cottage in the family. The best way to accomplish this is one of the more challenging issues in estate planning.
Tax rates are going up, but there is some good news!The recent BC Government Budget on February 19, 2013 and the Federal Government Budget on March 21, 2013 weren’t particularly pleasant when it comes to tax rates. The tax rates for dividends are going up substantially and in BC we will have a new higher tax bracket of 45.8% for individuals who earn more than $150,000 per year.
In a recent Legal Alert article, I wrote about the exemption from property transfer tax when a family farm is transferred. One of the potential problems with claiming this exemption is that it is more difficult to claim the family farm exemption upon a person’s death than it is if that person transferred the property during his/her lifetime. An expansion of this exemption was announced as part of the 2013 British Columbia budget.
On October 2, 2012 the Tax Court of Canada released its decision in Guindon v. R., 2012 TCC 287 (“Guindon”).This decision has dramatic implications for any Canadians who have been assessed third party penalties pursuant to section 163.2 of the Income Tax Act (the “Tax Act”). If you have been assessed a penalty pursuant to section 163.2 or such an assessment has been proposed by a Canada Revenue Agency auditor, [...]
Family farms have historically received favourable tax treatment under several different taxing statutes. For policy reasons, legislators have sought to facilitate transfers of the family farm amongst family members. One such taxing statute that provides favourable tax treatment is British Columbia’s Property Transfer Tax Act.
On November 13, 2012, Canada Revenue Agency announced new disclosure obligations for developers and builders which require particular information and statements to be included in purchase and sale agreements and statements of adjustments for the purchase and sale of new housing. This announcement is CRA GST/HST NOTICE 276 entitled “Elimination of the HST in British Columbia in 2013 – Transitional Rules for Real Property Including [...]
On August 1, 2012 the Supreme Court of Canada released its decision in Canada v. Craig, 2012 SCC 43 (“Craig”).It’s good news for farmers, especially those farmers that need to work off the farm to make ends meet.Mr. Craig’s horse racing business incurred losses of $222,642 in 2000 and $205,655 in 2001. Mr. Craig is also a lawyer. He reported the farm losses and used them to reduce his taxable income from [...]
The Board of Directors of a company are responsible for making decisions for the company. The directors manage or supervise the management of the business and affairs of the company.The directors are elected by the voting shareholders of the company to fill this important role.With the role come certain responsibilities and potential liabilities.
On February 17, 2012 the B.C. Ministry of Finance announced that the PST will be re-implemented effective April 1, 2013. The Ministry also announced the introduction of: 1. an Enhanced New Housing Rebate during the transition period; 2. the B.C. Transition Tax and Transition Rebate; 3. Builder Disclosure Requirements for the Transition Period (including penalties […]
Taxpayers have to be attentive to tight timelines when managing a tax dispute with the Canada Revenue Agency.Deadline for Objecting to a ReassessmentAfter the CRA issues a Notice of Assessment or Reassessment the taxpayer has a right to object. The right to object must be exercised within 90 days of the date the Notice of Assessment or Reassessment was mailed to the taxpayer. The right to object is exercised by filing a Notice of [...]
A Mortgage Investment Corporation, commonly referred to as a “MIC,” is given preferential tax treatment under the Income Tax Act. MICs appear to be quite popular with investors. They often generate a reasonably good rate of return and also are taxed favourably.
Many clients ask, “How long can the Canada Revenue Agency assess me for?” Or put another way, “How long until I am safe from a CRA reassessment for any given year?” See Matthew Kraemer’s blog for the answer: http://taxdisputehelp.ca/2011/12/how-far-back-can-the-cra-go-to-reassess-me/
Taxpayers who are reassessed by the Canada Revenue Agency are often shocked when they see the amount of the penalties that they have been hit with. There are a number of different types of penalties that can be assessed by the CRA. Gross negligence penalties are one type of penalty that is commonly assessed by the CRA.
When a person resident in Canada dies, the Income Tax Act deems that person to have disposed of and reacquired all of his or her property for fair market value immediately before death. The result of this deemed disposition and reacquisition is that the person (subject to some exceptions) will be required to pay tax on the increase in value of his or her property that accrued since he or she initially purchased such property. The [...]
In Canada, a common way of owning property is in joint tenancy. Frequently, a husband and wife will own real estate, such as a home, in joint tenancy. In the right circumstances, such ownership can be an excellent estate planning strategy: on the death of the first spouse, the property transfers automatically to the second spouse without triggering any income tax, property transfer tax or probate fees. However, if the property is located in [...]
It’s that time of year again when property tax assessment notices are arriving in our mailboxes. For several years, British Columbia’s Land Tax Deferment Act and its associated Regulations have allowed those over the age of 55 and persons with a disability to defer payment of property taxes. The Ministry of Small Business and Revenue has now extended this deferment option to families with children under the age of 18.
As discussed in previous articles, the combination of Canadian income tax consequences that arise on death in respect of foreign real property and foreign taxes that may apply in respect of that same property may result in double-taxation. Also as discussed in a previous article, one way that such double-taxation may be mitigated or eliminated is by the application of a tax treaty. Another way that such double-taxation may be mitigated [...]
As discussed in a previous article, the combination of the Canadian income tax consequences that arise on death in respect of foreign real property and the foreign taxes that may apply in respect of that same property may result in double-taxation. One way that such double-taxation may be mitigated or eliminated is by the application of a tax treaty.
As a result of recent economic circumstances, owning foreign real estate such as homes in California or Arizona has become an attractive proposition. But what are the tax implications of owning a foreign home upon death?The Canadian Income Tax Act deems a taxpayer to have disposed of his or her capital property immediately before death, and to have received proceeds for that disposition equal to fair market value. There are some [...]
Tax is often one of the largest expenses for any individual or business. Our Tax Law Team approach your tax needs and disputes with expertise, creativity and practicality. The Tax Law Team is comprised of Tom Fellhauer and Matthew Kraemer. Together they provide a wide array of skills and experience to serve our clients and […]
Many taxpayers respond to a reassessment by the Canada Revenue Agency by saying, “prove it”. This response is usually based on an understanding that in our justice system a person is innocent until proven guilty. Unfortunately tax law does not operate on this same principle. In fact it is just the opposite. In a tax […]
Most successful family-owned small to medium sized businesses will run reasonably well and will continue to be reasonably profitable as long as the founder is directly involved. However, very few businesses thrive or even survive after the death of the founder. Yet most business owners ignore this reality and fail to develop effective and realistic business succession plans.Most of my practice involves advising business owners. [...]
On October 22, 2010, the Canadian Department of Finance announced that it is entering negotiations towards Tax Information Exchange Agreements with Vanuatu and the Cook Islands. Canada currently has signed Tax Information Exchange Agreements with 9 countries. Canada is negotiating Tax Information Exchange Agreements with a further 16 countries. Tax Information Exchange Agreements are intended to facilitate the exchange of information [...]
Fatme Charafeddine’s children were abducted by her former spouse in Lebanon in 2004. Fatme stayed in Beirut and fought to get them back for over one year. In September of 2005 Fatme returned to Canada but did not give up and fought for the return of her children using the Canadian legal system.While her battle for her children waged on, she was forced to battle with the Canada Revenue Agency.The Canada Revenue Agency [...]
Our lawyers specializing in income tax matters recently appeared in Federal Court in Vancouver on an application challenging certain actions taken by CRA against a client/taxpayer. They were successful not only on the application but also in getting an award of costs against the federal government. Read more: http://www.nationalpost.com/todays-paper/Taxman+chided+fast+seizure/3583362/story.html#ixzz10lQrZneO You can also read the […]
Fraudulent emails claiming to be from the CRA have been making the rounds recently. The emails make reference to the person being owed a refund and then ask them to click on a link to access the refund form. The link then redirects the user to a phishing website where the user may be tricked […]
Two recent Tax Court of Canada cases are extremely relevant to the use of trusts in estate and tax planning. Combined with recent audit activity of the Canada Revenue Agency, advisors and taxpayers are wise to understand the implications of the decisions and consider how they could affect trusts that have been established or will be established.Garron et al v. the Queen, 2009 TCC 450 (Garron)
Aggressive CRA Enforcement Activity and Increased International Cooperation Make the Voluntary Disclosures Program An Important Option to ConsiderThe Canada Revenue Agency (the “CRA”) has been increasing its efforts to pursue taxpayers who fail to report all of their worldwide income. Tax amnesty offered under the Voluntary Disclosures Program is often the most attractive alternative for those who are potential targets of [...]
Airline tickets. Tuition costs. Meals and entertainment. Hotel rooms. Individually, these expenses don’t add up to much. Collectively, however, fraudulent reimbursement of common expenses accounts for 20% of cash misappropriation workplace fraud cases in Canada. No free lunch, a new white paper from Grant Thornton can help you understand and avoid some of these adverse […]
It has recently come to light that the Canada Revenue Agency has begun a special project of auditing inter vivos domestic trusts. There is information that certain Canada Revenue Agency offices in Ontario have begun audits of inter vivos domestic trusts. In particular, it appears that the Canada Revenue Agency is targeting trusts that have […]
In light of recent happenings in the United States, tax amnesty programs have been receiving considerable media attention. On August 19, 2009, the United States Internal Revenue Service (the “IRS”) and the United States Department of Justice reached a settlement with the Swiss Confederation. Pursuant to the settlement the IRS will receive from UBS, Switzerland’s largest bank, information regarding approximately [...]
Toronto, Ontario, May 28, 2007... The Honourable Carol Skelton, Minister of National Revenue, joined by the Honourable Jim Flaherty, Minister of Finance and Regional Minister for the Greater Toronto area, today announced two new initiatives, a Taxpayer Bill of Rights and a Taxpayers' Ombudsman, to ensure Canada Revenue Agency (CRA) is more accountable to Canadians.
The Children's Fitness Tax Credit provides a tax credit on up to $500 of expenses incurred by parents to provide for participation of their children in supervised physical activities. Generally, the credit applies to children under the age of 16 except where the child qualifies for the disability tax credit, in which case the limit is 18 years of age. The expense incurred must be an "eligible fitness expenses", which [...]
Attributes of Estate Freeze Preferred Shares (CRA Doc # 2008-0285241C6)The CRA has published an answer to a question posed during the Round Table on Federal Taxation held at the APFF – 2008 Conference (Association de Planification Fiscale et Financière) regarding the attributes that must be attached to estate freeze preferred shares.
The Home Renovation Tax Credit (“HRTC”) was introduced in the federal budget tabled on January 27, 2009, and provides a tax credit for renovations to “eligible dwellings” (note that the HRTC is technically a budget proposal and does not yet have the force of legislation, nor have we seen proposed legislation at this time, although it is expected to pass).
A new property tax deferment program for B.C. residents is available for the 2009 and 2010 tax years. The program is called the B.C. Financial Hardship Property Tax Deferment Program and is different from the B.C. Property Tax Deferment Program offered in previous years and still offered. B.C. residents are encouraged to determine which program provides greater benefit given their individual circumstances.