Fairness

Making an application for fairness—or “taxpayer relief” as it is now called—is often a frustrating process for a tax professional. One wonders, sometimes, whether the CRA agent responsible even reads the application. The CRA has issued Information Circular IC07-1 about…

Revival

Subsection 227.1(1) of the Income Tax Act (Canada) (the “Act”) permits the CRA to assess a director of a corporation for the corporation’s failure to remit source deductions. Subsection 227.1(4) of the Act, however, provides that

no action … to recover any amount payable by a director of a corporation under subsection [227.1(1)] shall be commenced more than two years after the director last ceased to be a director of that corporation.

What happens if a director, who is otherwise potentially liable under section 227.1, fails to resign, but the corporation of which he is a director dissolves involuntarily and more than two years passes before the CRA issues an assessment under section 227.1?

Section 84.1

The following article on section 84.1 of the Income Tax Act (Canada) appeared in the latest edition of the Hamilton Law Association Law Journal.

1 Accountants will tell you that mistakes involving section 84.1 of the Income Tax Act (Canada) (the “Act”)[1] are at or near the top of the list of reasons why members of that profession must report themselves to their insurers. Of course, clients typically look to their accountants for tax advice, and a lawyer who implements a reorganization further to instructions received from an accountant, and in reliance upon his or her tax expertise, should not be liable for any tax mistakes. But the key word in that last sentence is “should”. A deemed dividend under section 84.1 will be a nasty surprise for a client, and he or she might not be so willing to recognize the division of labour between the lawyer and the accountant after the CRA hands out a reassessment. In any case, if you can recognize some of the section 84.1 danger signs and prevent an error by asking questions, you might earn the undying gratitude of the referring accountant.

Warnings

Those who have had the misfortune to participate in tax shelters gone wrong some times complain that the CRA did not do enough to warn the public about the pitfalls associated with them. The CRA appears to be trying to remedy the deficiency with a rather stern warning about participating in a gifting arrangement.