The Toronto Star is reporting that the CRA has reassessed or will reassess more than 100,000 taxpayers for about $1.4 billion in taxes, interest and penalties because they participated in donation tax shelters. I posted previously about another story in…
Price adjustments
In a post I wrote in the spring, I summarized briefly Desormiers c. Lalumière, 2006 QCCS 2357, a decision of the Quebec Superior Court, which seemed to call into question the effectiveness of price adjustment clauses.
Prorogued
The Parliament of Canada website reports that The Governor General informed the Speaker of the Senate and the Speaker of the House of Commons that the First Session of the 39th Parliament was prorogued on Friday, September 14, 2007. Prorogation…
Garnishments
A garnishment (or “requirement to pay”) under section 224 of the Income Tax Act can be a real headache for the garnishee. The garnishee is put in the middle of another taxpayer’s troubles with the CRA, and the scope of the requirement is sometimes unclear.
U.S. Treaty amended
Finance just announced that “Canada’s New Government Sign[ed] Protocol to the Canada-U.S Tax Treaty for the Benefit of Canadians”. The news release summarizes the changes implemented as follows:
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?
Baxter, 2007 FCA 172
In Baxter v. The Queen, 2006 TCC 230, Mr. Justice Bell examined the definition of “tax shelter” in the Income Tax Act and concluded that the appellant taxpayer, a Mr. Baxter, did not buy a shelter when he purchased trading software. The Federal Court of Appeal disagreed and allowed the Crown’s appeal.
Anchor Pointe allowed
The Federal Court of Appeal, in The Queen v. Anchor Pointe Energy Ltd., 2007 FCA 188, has reversed Chief Justice Bowman’s decision in 2006 TCC 424. I discuss the latter decision here.
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.