I lost my battle with the CRA, but I won the war

27 November 2019

Credit: Mondaq

My law firm cannot make the claim that we have won all of our cases in the Tax Court of Canada, but what we can tell you is that every single case we have won in tax court — either in trial or a settlement — was lost at the CRA objection stage. And in many cases, besides losing our tax assessment objection, we were also unable to convince a CRA auditor of our client’s position. In these types of cases, two different Canada Revenue Agency departments had thought we were wrong before we were able to convince a judge otherwise. So before a win or settlement in tax court, the taxpayer often has to lose twice.

Why taxpayers cannot rely on advice from the CRA: A Canadian tax lawyers perspective

18 November 2019

Credit: Mondaq

It should come as no surprise to anyone who has ever regularly dealt with the Canadian Revenue Agency (“CRA”) that the CRA isn’t always right when it comes to tax Law. That’s why the Tax Court of Canada exists. However, in cases where a taxpayer relies on incorrect information provided by the CRA to detrimental consequences, one would think that that taxpayer would be able to obtain some relief from the courts or the CRA.

Man ‘moves’ to Ottawa in canoe to make a point. Canada Revenue accepts his expenses

14 November 2019

Credit: National Post

When John Konecny was called “near treasonous” in court, he knew it was time to test the government.

He packed his belongings and moved from Whitby, Ont., to Ottawa — in a canoe — and had the government deduct his expenses.

“This was 35 years of frustration with the Canada Revenue Agency (CRA),” the recently-retired, 55-year-old teacher said in a phone interview.

Canada shares almost a million bank records with the IRS under FATCA

14 November 2019

Credit: International Investment

The number of financial records of Canadian residents being shared with the IRS has risen steadily since the information sharing agreement began — from 150,000 in 2014 to 300,000 in 2015 and 600,000 for the 2016 tax year.

Since 2014, details of over 2.6 million bank accounts have been sent from Canada to the US under FATCA for the purpose of the IRS finding out who could be subject to US taxes.

Condo flipping: A Canadian tax lawyer’s perspective

13 November 2019

Credit: Mondaq

In recent years, the Canada Revenue Agency (the “CRA”) has become more critical of real estate transactions claiming tax non-compliance has contributed to increasing housing prices. One category of transactions the CRA is examining more closely is condo flipping. CRA has had a condo flipping audit project for several years. CRA routinely contact condo developers for a list of purchasers and follows up with all of those purchasers to see if they sold the condo or are living in it.

CRA found more than $1B auditing smaller businesses last year

11 November 2019

Credit: Advisor’s Edge

The Canada Revenue Agency identified $1.185 billion from audits of small and medium-sized enterprises (SMEs) last year, said CRA officials speaking at the Canadian Tax Foundation’s Ontario Tax Conference held in Toronto in late October.

For fiscal year 2018-19, the CRA found $625 million from audits of small businesses, and $560 million of audits of medium-sized businesses, said the CRA during an audit update panel at the conference.

Airbnb tax payments do not compensate for short-term rentals’ harmful impact on B.C. housing marketing, experts say

10 November 2019

Credit: The Globe and Mail

British Columbia’s rental housing crisis goes far beyond factoring the impact of short-term rentals, according to housing experts who say more building is needed to help families find affordable homes.

Recent data from Airbnb Canada say the short-term rental company collected almost $43-million in provincial, municipal and regional taxes over the past year, which will be provided to the provincial government, regional districts and the City of Vancouver to fund housing and tourism initiatives.

20 Tax audit triggers

30 October 2019

Credit: Mondaq

Sometimes a taxpayer is randomly selected for an audit. It’s like winning the worst lottery in the world, and there’s nothing you can do to change that. But apart from a random tax audit, the odds of being targeted for an audit are dependent on a variety of risk factors.

In short, the odds of being audited depends on who you are, where you are, what you do, what types of expenses you have, and so on. Various pieces of a taxpayer’s profile may help uncover risk factors.

Canada Revenue Agency scam still roping in victims

27 October 2019

Credit: NetNewsLedger

Scam artists seem to be targetting Northwestern Ontario and Manitoba. Keeping your money and identity safe means being aware.

The Rainy River District Ontario Provincial Police (OPP) want you to confirm who you’re dealing with before sending any money anywhere for any reason.

The ever-popular Canada Revenue Agency (CRA) and other agency-related extortion threats have continued to sustain significant financial losses by unsuspecting victims.

CRA combating underground economy with Home Depot purchase records

15 October 2019

Credit: Global News

The Canada Revenue Agency (CRA) is trying to use information from Home Depot customers to crack down on the underground economy.

The company sent out letters to customers who have a commercial credit card account, notifying them Home Depot would be handing over information like business names, addresses and purchases between 2013 and 2016 to the agency.

Personal use of work smartphone, laptops by employees may become more of tax headache for Canadian employers

10 October 2019

Credit: The Globe and Mail

The use of a company-supplied smartphone, laptop or other electronic device is commonplace these days, and employers know full well that employees will use them both for work and personal purposes.

However, new guidelines from the Canada Revenue Agency suggest employers may have to take a fresh look at how much of the cost of these devices can be attributed to their commercial activities.

CRA announces prescribed interest rates for Q4

1 October 2019

Credit: Advisor

The Canada Revenue Agency (CRA) has published the prescribed annual interest rates for amounts owed to or by the agency in the fourth quarter of 2019. The only change is in the interest rate for corporate taxpayers’ pertinent loans or indebtedness, which will decrease to 5.65% from 5.67% last quarter. The interest rate charged on overdue taxes, Canada Pension Plan contributions and employment insurance premiums remains the same as last quarter, at 6%.

Lessons from more than five years of battling the taxman

19 September 2019

Credit: The Globe and Mail

Sometimes a real-life story can provide lessons for the rest of us – and for the Canada Revenue Agency (CRA). The case of Bygrave v. The Queen (2019 TCC 138) is just such a story. A decision handed down by the Tax Court of Canada on June 25 sided with the taxpayer, but Mr. Bygrave had to endure more than five years and three court decisions to win his case.

Can the CRA force a taxpayer to provide any document during a GST/HST audit?

7 August 2019

Credit: Mondaq

We regularly get asked whether the Canada Revenue Agency (“CRA”) can ask for particular documents during the course of a goods and services tax (“GST”) / harmonized sales tax (“HST”) audit or during a GST/HST appeal.  Usually, the question is in the form of a statement “they are not allowed to ask for that”. Our answer to the question “Can the CRA force me to give them this document” depends upon the document that is being requested and the relevance of the document to the issue.

Being tax smart requires year-round planning

6 August 2019

Credit: Cambridge Times

If they’re like me, I suspect many Canadians tend to forget about their income taxes once they have filed their return until the following March or April when tax season rolls around again.

A recent report by IG Wealth Management highlights the importance of Canadians taking a year-round approach to tax planning by showing there is a disconnect between their level of confidence about their ability to file their income tax returns and their knowledge of the tax system.

Tax tip – protecting your personal information

6 August 2019

Credit: Newswire

One of the Canada Revenue Agency (CRA)’s top priorities is preserving the confidentiality and privacy of taxpayer information. The CRA processes more than 28 million individual income tax returns annually; as a result, an extensive privacy and security framework is in place to manage and protect personal information for all Canadians. As the privacy of information is a shared responsibility, there are a number of steps you can take to safeguard your own information.

Big or small fish, anyone is bait for a CRA tax review

6 August 2019

Credit: BNN Bloomberg

It’s tax filing season and while the average Canadian may have already filed their seemingly simple tax returns, anyone is bait for a review by the Canadian Revenue Agency (CRA), according to some experts.

“There’s no way to prevent a review or audit. It’s more a function of how your tax return looks and the size,” said Lorn Kutner, chief taxation officer at Northwood Family Office in Toronto.

What are the impacts of Canada Revenue Agency’s cap on stock option tax deductions?

25th July 2019

Credit: Mondaq

The government budget in 2019 revealed that Canada intends to cap stock option deductions for individuals because the stock option tax deduction was regressive. The government’s purpose for the stock option deduction was to allow corporations that were starting out to provide competitive salaries to desirable candidates.

CRA program that helps poor file taxes sees boost in returns in push to lift more people out of poverty

22nd July 2019

Credit: Financial Post

A federal program designed to help low-income Canadians file their taxes has boosted the number of returns it’s handled in the year since the government increased its funding.

The extra money allows volunteer-driven clinics run by more than 3,000 groups to operate year-round.

Selling real estate? The CRA is watching

18th July 2019

Credit: Advisor’s Edge

When your client sells property, the transaction must be correctly defined and reported for tax purposes. Failure to do so may result in unwanted audits, potential back taxes, and related interest and penalties. Such negative outcomes occur regularly.

18th July 2019

Credit: The Globe and Mail

Did you know that, in Canada, paragraph 11(d) of our Charter of Rights and Freedoms ensures that we are “to be presumed innocent until proven guilty according to law in a fair and public hearing by an independent and impartial tribunal”? Good news, isn’t it? But wait. This Charter right doesn’t apply in the matter of taxes, where the opposite is true: You’re guilty until proven innocent.

How BDC walks the talk of digital transformation

17th July 2019

Credit: Canadian Accountant

Do you remember your parents or teachers saying, “Do as I say, not as I do”? Then you probably remember tuning them out because, as humans, we tend to model the behaviour we see in others.

The same is true in business. It’s a lot easier to take advice from those who “walk the talk.”

Have foreign property? The CRA issues harsh penalties if you don’t file this form

12th July 2019

If you own foreign property whose total cost exceeds more than $100,000 at any point in the year, you must complete Form T1135, Foreign Income Verification Statement, and file it along with your annual income tax return.

When we think of foreign property, our minds may turn to that offshore Swiss bank account or, perhaps, a Florida rental property. But, believe it or not, a T1135 must be filed if you own foreign stocks, such as Apple Corp., Ford Motor Co. or Bank of America, in your Canadian, non-registered brokerage account.

How big property owners are manipulating B.C. Assessment’s appeals process

8th July 2019

U.S. Congressional testimony has said that Donald Trump “inflated assets when it served his purpose and deflated his assets to reduce his real estate taxes.”

Why should anyone in B.C. care? This is common practice for B.C.’s big property owners as well. Under-assessed mega-properties are shifting property taxes to smaller commercial and residential taxpayers.

Audit Data Analytics creating a revolution in Canadian auditing

4th July 2019

Technology’s ability to gather and process information has never been greater, with increasingly comprehensive and complex streams of data generated from all areas of an organization. However, producing data is only useful if it can be used to improve decision making, whether those choices are strategic, financial or operational in nature.

Minister of National Revenue releases fifth report in tax gap series

18th June 2019

The Government of Canada committed in 2016 to calculate the tax gap, fully recognizing that it would help it better target its compliance activities and ensure a tax system that is fair to all Canadians. Today, the Honourable Diane Lebouthillier, Minister of National Revenue, announced the release of the fifth report in the tax gap series. Canada is part of a select group of countries that estimate their tax gaps, including the United Kingdom, the United States, and Australia.

Real estate authorities build anti-money laundering network

April 2019

On April 9, the two real estate regulators – the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) and the Real Estate Council of British Columbia (RECBC) – announced that they have entered a memorandum of understanding (MOU) in an attempt to prevent money laundering in the real estate industry in BC.

POSSIBLE BENEFITS

The MOU allows them to share compliance-related information – which will help facilitate legal actions against money laundering, particularly in the real estate sector, in accordance with the Proceeds of Crime (Money Laundering) Act and the Terrorist Financing Act.

We must lower income taxes on the lower and middle classes

16th June 2019

The income tax is one of the single greatest burdens on Canadian families. While a lot of talk goes into “taxing the rich”, not much goes onto “not taxing the common man.” Thus, we must lower taxes on everyday Canadians, and surprisingly, this is something Conservatives and the NDP agree on.

Canada has a progressive marginal taxation system. This means people on the lower end of the socio-economic strata pay less as a percentage of their income than those at the higher end.

Canada Revenue Agency is tough on regular taxpayers but goes easy on those with offshore accounts, audit finds

22th November 2018

The tax man goes easy on wealthy Canadians with offshore bank accounts while being harsh on regular taxpayers, according to a damning report made public by the federal auditor general Tuesday.

Wealthy tax cheats are given more time to find receipts and they get their interest and penalties waived, even if they didn’t ask for it.