One of the “arguments” advanced by amateur lawyers who question the legality of the income tax is that no “official” consolidated version of the Income Tax Act, RSC 1985, c 1 (5th Supp), as amended, exists. Because no official version exists, the argument seems to go, the Act must be illegal or unenforceable. This is nonsense of course. An official consolidated version of the Act does exist (see below). Moreover, validity does not require consolidation.
T1135 assessments
Marlene Cepparo, “Form T1135 and Part I Tax Return Reassessment” (January 2016) 24:1 Canadian Tax Highlights discusses technical interpretation 2015-0572771I7 (September 15, 2015). A late-filing penalty for a T1135 must be assessed within the normal reassessment period for the year…
55(2) and creditor-proofing
The new purpose tests in section 55 make creditor proofing problematic. The 55(3)(a) exception remains, however, for deemed dividends. Perhaps it’s possible, then, to achieve creditor proofing by engaging in a 55(3)(a) butterfly. Not so fast. The CRA’s comments at…
45(3) elections and the principal residence exemption
If you buy a home and then change its use, should you always file the 45(3) election to defer any gain? Maybe not, according to James Painter, “Principal-Residence Tax-Deferral Election May Be Inadvisable” (Feb 2016) 6:1 Canadian Tax Focus. Mr…
Employee theft
Mark Tonkovich, “Theft by Owners or Senior Employees: Deductibility of Losses” (Feb 2016) 6:1 Canadian Tax Focus, analyzes employee theft as discussed in Income Tax Folio S3-F9-C1, “Lottery Winnings, Miscellaneous Receipts, and Income (and Losses) from Crime”. The Folio sets…
Section 160 and shareholder benefits
Can the Minister assess a taxpayer under section 160 in respect of an amount already included in the taxpayer’s income under subsection 15(1)? From Justice Bocock, in Parihar v R, 2015 TCC 52 at ¶45: shareholder who has been…
Unpaid income tax and bankruptcy
In Schnier v Canada (Attorney General), 2016 ONCA 5, the Court held that an amount of tax owing (about $4.4 million) was a contingent claim because the relevant assessments were under appeal to the Tax Court. As a result, the…
A simpler T1135
My thanks to Fred Buzzelli, who sent me a link to a good article by Gabe Hayos on the simplified T1135.
Are step children related?
Mr X and Ms Y are common law partners. Each of them has a son from a previous relationship. Are the sons related for the purposes of the Income Tax Act (Canada)? The CRA says “yes” because the step brothers…
Misrepresentation
From Justice Bocock, in Robertson v R, 2015 TCC 246, we read the following regarding whether a mistake of law amounts to a negligent misrepresentation: wise and prudent person is, generally by definition, not unknowledgeable of the law. However,…