The following was just posted to the Finance website: Federal Government Moves to Strengthen Canada’s Tax Advantage and Protect the Fiscal Framework.
RESPs
A number of news outlets are carrying stories today about the private member’s bill on the deductibility of RESP contributions. The bill in question is C-253, and you can find the text of the bill here.
Revocation
The following is an extract from a press release posted on the CRA’s website today:
The Canada Revenue Agency (CRA) has revoked the registered charity status of the Francis Jude Wilson Foundation, a Montreal-area charity. This revocation was effective February 23, 2008, and follows a letter dated August 27, 2007, that was sent to the Foundation.
Notes on a Price Adjustment Clause
The following article will appear in the next edition of the HLA Journal.
Almost every tax-driven reorganization requires the lawyer implementing it to draft a price adjustment clause (a “PAC”). Most lawyers will have their favourite precedent for such a clause, but a lawyer needs to understand the nature and purpose of PACs—and how the CRA interprets them—so that he or she can use them appropriately in the context of any given set of transactions. This article does not purport to be a complete review of the theory and practice of PACs; it is more like a collection of notes on some of the more important features of a PAC precedent.
Requirements
The following article appeared in the latest edition of the HLA Journal.
CRA “requirements” (a “Requirement”) are a form of garnishment for unpaid taxes, and they can be quite troublesome for a business, especially if its systems aren’t what they should be. Businesses are used to acting as tax collectors for the federal and provincial government, of course: businesses withhold and remit amounts from wages and they collect and remit sales taxes. A Requirement, however, applies whenever a business is liable to pay an amount to another person; it is an obligation to act as a tax collector that applies in a broader variet of circumstances, not just when wages are payable, or goods or services are sold.
Safe income
The CRA has released the latest edition of its Income Tax Technical News (number 37). This issue is devoted solely to the question of the effect of non-deductible expenses on the calculation of safe income on hand in light of…
Tax Court Jurisdiction
The Tax Court has said it before, and it will say it again: it has no jurisdiction to hear an appeal from a “nil assessment” (an assessment where no federal taxes are payable) or from an assessment that relates only to Ontario taxes. See Baluyot v. The Queen, 2007 TCC 682.
Eligible dividends
As readers of this blog know, Joe Monaco and I prepared a presentation last spring on eligible dividends. “Eligible dividends” are taxable dividends paid by a corporation resident in Canada after 2005 that are received by a person resident in Canada and that are designated as eligible for the purposes of the Income Tax Act (Canada). An individual who receives an eligible dividend is entitled to claim an enhanced dividend tax credit. As a result, the effective tax rate on an eligible dividend for an individual otherwise subject to tax at the highest marginal rate is only about 25%.
What are the corporate procedures that a Canadian-controlled private corporation (a CCPC) should follow to pay and designate an eligible dividend?
Anchor Pointe
The Supreme Court has dismissed with costs the taxpayer’s application for leave to appeal from the Federal Court of Appeal’s decision in The Queen v. Anchor Pointe Energy Ltd., 2007 FCA 188.
Amalgamation IT corrected
Karen Wilkinson at Deloitte was kind enough to point out to me that the CRA has reversed itself on whether a 116 certificate is necessary when Canadian corporations with non-resident shareholders amalgamate. IT-474R2, issued on December 17, 2007, contained the…