PWC sends a tax bulletin to me from time to time, and its latest email contains information about Quebec’s plans to introduce measures to combat ‘aggressive’ tax planning. Apparently, the measures, if enacted, would require taxpayers to disclose the details…
What in the world?
What world does the CRA live in that it could think it would be a good idea to take a 78-year-old woman to Court under section 160 for cashing cheques for her disabled son? See Gambino v. The Queen, 2008 TCC 601.
CDA
The capital dividend account of a corporation (“CDA”) is defined in subsection 89(1) of the Income Tax Act (Canada), and the definition requires that the balance of the account be calculated using something like the following formula:
A + B + C + D + E + F + G – H
Process
The CRA and the Crown like to say (or at least sometimes they act as if), in the objection and Tax Court appeal process, all that matters is whether the assessment in issue is correct. Justice J.E. Hershfield, in Wood v. The Queen, 2008 TCC 105, begged to differ.
Failure to File Penalty
Subsection 162(2.1) of the Income Tax Act provides for a penalty for a non-resident corporation that fails to file a return and that it is liable to a penalty under subsections 162(1) or (2). The penalties provided by the latter subsections are computed as a percentage of tax payable. What happens if no tax is payable and so no penalty is applicable under the latter subsections? Does the 162(2.1) penalty still apply?
De-registered
The CRA has revoked the status of two more charities that had participated in tax shelters.
Insurance
The taxation of insurance policies is a world of its own, and in my experience not many advisers seem able to explain that world clearly. The virtue of White v. The Queen, 2008 TCC 414, an informal procedure case, is…
Lipson
The Supreme Court released its decision in Lipson today: see Lipson v. The Queen, 2009 SCC 1. The CanLII link to the case appears to be down right now, but it’ll probably be fixed later.
Limitation Periods
The following article appeared in the latest edition of the Hamilton Law Association Law Journal.
The Income Tax Act (Canada) (the “Act”) contains numerous limitation periods that affect when the Canada Revenue Agency (the “CRA”) can issue an assessment to a taxpayer and when a taxpayer can and cannot dispute such an assessment. Understanding these limitation periods is an important pre-requisite for advising clients about a wide variety of legal problems, including, for example, the expiry period for representations and warranties in a share purchase agreement.
Dividend Caps
Sometimes we receive instructions for incorporation that include a request to create shares with a fixed redemption amount and a right to receive unlimited dividends. We generally advise against creating such shares, especially if they are to be used in a freeze, because we are concerned that the fair market value of such a share will not be equal to its redemption amount, especially if the share will be held by a controlling shareholder.