December 2012
3 posts
6 tags
Personal Services Businesses and Government IT...
The Canada Revenue Agency (“CRA”) is in the process of auditing and reassessing IT contractors that provide services under long term contracts to various government departments. The CRA’s position is that these contractors were employees for tax purposes and any corporations were personal service businesses (the “Rulings”). If the Rulings stand, the Rulings will impact the IT contractors as...
4 tags
SR&ED & CRA Notices of Objection
We have experience representing SR&ED claimants at the objection and appeal stages. At times, we have questioned the CRA’s level of service and processes surrounding SR&ED objections. Today, the CRA published its press release entitled “CRA – Notices of Objection for SR&ED eligibility claims – Improved review process“ announcing that it has implemented new SR&ED...
7 tags
Tax Advisors & Accountants Third-Party Penalties:...
Prior to 1999, the Minister of National Revenue and Canada Revenue Agency (hereinafter jointly referred to as the “CRA”) had two legislative tools to severely punish taxpayers, advisors, planners, promoters and preparers i.e., subsection 163(2) and section 239 of the Income Tax Act (“ITA”).
Subsection 163(2) of the ITA provides the CRA can assess 50 per cent civil gross negligence tax penalties...
November 2012
4 posts
The Canada Revenue Agency's SR&ED program can help... →
4 tags
Canada Revenue Agency (finally) warns Canadians...
The Canada Revenue Agency (“CRA”) has assessed a number of taxpayers who have participated in the detax schemes. In addition, the CRA has imposed 50% subsection 163(2) gross negligence penalties. We think that - in many cases - the imposition of the subsection 163(2) gross negligence penalties is wrong in fact and law.
We are in the process of representing taxpayers to dispute the...
The CRA cautions businesses on Electronic Sales...
We have published various tax law blog entries related to the Canada Revenue Agency’s audit of restaurants and electronic sales suppression software (commonly referred to as “Zapper” software). The CRA has published its press release cautioning businesses to avoid Zapper software. The CRA invites businesses who use Zapper software to disclose suppressed income under the...
4 tags
FCA Clarifies Burden of Proof in Tax Cases & ATX...
In McMillian v. Her Majesty the Queen, the Federal Court of Appeal clarified the burden of proof in tax cases. We believed the decision was important and, in August 2012, we posted a blog article about the FCA’s decision. Recently, The Bottom Line (Canada’s Accounting and Finance Professionals newspaper) published an article on McMillian and asked for our reaction. We are flattered...
October 2012
1 post
3 tags
Tax Quote of the Day: Canada Revenue Agency...
It is trite law that the Canada Revenue Agency (“CRA”) Information Circulars and Interpretation Bulletins do not have the force of law. CRA Information Circulars and Interpretation Bulletins are simply the CRA’s interpretation of the Income Tax Act, Excise Tax Act and other tax legislation. Unsurprisingly, the CRA’s interpretation of the law is often rooted in its own...
September 2012
1 post
4 tags
Tax Court Proposals & ATX Law in the News
We have written several postings related to the proposed changes in the Tax Court Act and Tax Court Rules. To review, the proposed changes seek to increase the Tax Court Informal Procedure Limits (i.e., monetary increase), allow the Tax Court to dispose of issues raised in an appeal separately and allow the Tax Court to determine questions (i.e., pro tanto judgments) and bind multiple taxpayers...
August 2012
4 posts
3 tags
Tax Quote of the Day: Taxpayer Burden of Proof in...
In McMillan v. Her Majesty the Queen, the Federal Court of Appeal confirmed the principles which govern the burden of proof in tax cases. The FCA confirmed that the law is unchanged. In order to successfully defeat a Canada Revenue Agency reassessment, a taxpayer must displace or demolish the CRA’s assumptions that form the bases of the reassessment. A taxpayer may displace or demolish...
1 tag
Canada Revenue Agency Tax Dispute Statistics re:...
The Canada Revenue Agency Appeals Branch provided our firm with the following statistics related to the number of tax dispute and tax litigation files along with the rates of settlement, withdrawal and adjudication.
In June 2012, the CRA reported that:
the CRA Appeals Branch receives between 80,000 and 110,000 notices of objection to dispute tax reassessments;
approximately 90% of taxpayer...
3 tags
Tax Quote of the Day: Identifying the Source of...
In Svidal v. R., Chief Justice Bowman (as he was then) of the Tax Court of Canada cautioned that citing an “income from a source” does not - in itself - give rise to taxable income. Instead, the taxability of an amount requires consideration of the specific source of the amount and the provisions contained in the Income Tax Act.
It is settled law that proceeds from criminal...
4 tags
Scientific Research & Experimental Development...
The Department of Finance (Finance) has released a document entitled Consultation Regarding the Impact of Contingency Fees on the Effectiveness of the Scientific Research & Experimental Development Tax Incentive Program (the “SR&ED Document”). Finance has invited submissions related to SR&ED claims based on a contingency fee model. In particular, Finance is purportedly...
July 2012
5 posts
3 tags
Voluntary Disclosures Program & Tax Disputes:...
Subparagraph 60(o)(i) of the Income Tax Act (ITA) allows a taxpayer to deduct legal fees paid to contest an assessment of tax, interest or penalties including, but not limited to, fees incurred to provide the Canada Revenue Agency (CRA) with submissions or representation at the audit, objection and appeal stages. Moreover, in Flood v. HMQ (IP), the Tax Court of Canada held that a taxpayer who...
2 tags
Canada Revenue Agency "Detax" Update
In or about 1995, the “detax” or “untax” movement has been moving through Canada. Since that time, detax organizations have been gaining profit holding seminars that spread the detax philosophy. Generally speaking, detaxers believe that the they are “natural persons” (as oppose to government created “artificial personages”) and that “natural...
4 tags
Canada Revenue Agency Targeting Restaurants,...
Canada Revenue Agency (“CRA”) has completed a two-year pilot project targeting restaurants, waiters and waitresses. It is reported that the initial CRA pilot project targeted 4 restaurants in St. Catharines, Ontario uncovering $1.7 million in unreported tips. Although the CRA has not advised whether it will expand the pilot project, we believe that the CRA will likely expand the...
5 tags
The 50% gross negligence tax penalty versus the...
When are 10% civil penalties for omitting income greater than 50% civil penalties for omitting the same amount either wilfully or in circumstances amounting to gross negligence?
It is trite law that the Canada Revenue Agency (CRA) has the authority to impose tax penalties for non-compliance with the Income Tax Act (ITA). The Tax Court of Canada (Tax Court) recently released Knight v. HMQ,...
4 tags
Announcement: CRA Corporate Filing Issue &...
The Canada Revenue Agency recently sent our firm the following announcement.*
Due to a service disruption on June 29th with the Corporation Internet Filing service, corporate tax returns due June 30th will be considered filed on time if transmitted before midnight on July 6th. No taxpayer information was compromised as a result of this disruption and taxpayer information remains secure. The...
June 2012
2 posts
3 tags
Tax Quote of the Day: good faith & openness
We regularly attend a number of seminars and courses to ensure that our tax and advocacy swords remain sharp. We believe that the Canada Revenue Agency’s participation in these seminars is important because it provides both sides with the opportunity see a different perspective and to discuss tax dispute resolution and tax litigation in a non-adversarial environment.
This year, three of...
4 tags
Department of Finance Draft Tax Court of Canada...
We have discussed the Department of Finance’s (“Department”) proposed changes to the Tax Court of Canada Act. The Department posits that these changes will improve tax disputes between taxpayers and the Canada Revenue Agency increasing efficiency and access to justice. Although we agree - along with the Ontario Bar Association - that the tax dispute process and procedure would...
April 2012
1 post
March 2012
3 posts
PWC's Response to the Proposed Changes to the TCC...
We have written about the Department of Finance’s proposed rules to amend the Tax Court of Canada Act. However, we did not post PWC Canada’s submission. This morning, PWC Canada sent its submission to our firm
3 tags
New OBA Tax Submission to the Proposals to Change...
In an earlier post, we reported that the Department of Finance (the “Department”) proposed rules to amend the Tax Court of Canada Act and invited the public to comment on proposed changes. In the interim, the following articles and submissions have been published commenting on the proposed changes.
On December 3, 2011, the National Post published its article entitled “Tax court aims for speedier...
1 tag
"Tax" Quote of the Day: Inadequate Reasons
Berlin v. Canada (the Minister of Citizenship and Immigration) relates to an application for judicial review of an Immigration Officer’s decision to deny an application for a permanent-resident visa. Although not a tax case, we believe that the Federal Court’s characterization of the Minister’s inadequate reasons are applicable to several Minister of National Revenue’s and...
February 2012
1 post
Essential Tax Reading - Fighting for an Extension...
Read ATX Law’s latest case comment, Fighting for an Extension of Time, published CCH’s Tax Topics Newsletter on January 6, 2012.
January 2012
1 post
6 tags
New ATX Law Article - Understanding Director's...
The Tax Court of Canada’s decision in Buckingham v. Her Majesty the Queen was appealed to the Federal Court of Appeal (“FCA”). The FCA recently released its reasons for judgement. The courts’ decisions have provided valuable insight and generated discussion within the tax community. The Canadian Tax Foundation recently published ATX Law’s article entitled The Due...
November 2011
4 posts
Warning: Fake Canada Revenue Emails →
4 tags
Taxpayer Relief Update
In Bozzer v. Her Majesty the Queen (“Bozzer”), Federal Court of Appeal held that the taxpayer relief provisions contained in the Income Tax Act allow the Minister of National Revenue (“Minister”) and Canada Revenue Agency (“CRA”) to cancel interest accrued in any taxation year ending within ten years before the taxpayer’s application for relief, regardless of...
4 tags
New Ministry of Finance (BC) Director's Liability...
The Ministry of Finance (BC) released a director’s liability tax bulletin that outlines the government’s position regarding director’s liability and the circumstances in which taxpayers may be held personally liable for a director’s failure to remit tax (the “Director’s Liability Bulletin”).
The Director’s Liability Bulletin includes the following...
4 tags
Proposals to Improve the Tax Court of Canada
The Minister of Finance, the Minister of Justice and the Attorney General of Canada have invited the public to comment on proposed changes to the Tax Court of Canada’s Rules.
If adopted, the proposals would:
increase the Tax Court’s Informal Procedure limit to $25,000 or where a loss does not exceed $50,000 (the current limit is $12,000 or to $24,000 for a loss);
allow the...
October 2011
1 post
1 tag
Tax Court of Canada Judicial Appointment Announced
The Honourable Randall S. Bocock, a lawyer with Evans, Philp LLP in Hamilton, has been appointed Judge of the Tax Court of Canada. Mr. Justice Bocock’s main areas of practice were corporate commercial law, administrative law and estates and trust law.
Mr. Justice Bocock was an active member of the legal community and was the founding director of Haven of the Homeless Child.
September 2011
3 posts
The Financial Post Executive Podcast just posted...
Tax Attitudes & Tax Avoidance Survey
The Toronto Star published an informative article on September 8, 2011 outlining the results of a government survey related to tax avoidance and the underground economy. Read the Toronto Star tax article entitled Half of Canadians are ready to cheat on taxes, poll says.
2 tags
Tax Quote of the Day: Credibility, A Perfect World...
In the Tax Court’s reasons for judgement in Guilbault v. Her Majesty the Queen, the Honourable Justice Sheridan eloquently comments on the need to consider the taxpayer’s actions in light of the surrounding circumstances.
In a perfect world, I would agree. But the notional taxpayer who inhabits the pages of the Income Tax Act is blissfully unencumbered by the day-to-day concerns that...
August 2011
6 posts
4 tags
The Tax Court & Expanded Jurisdiction
The Tax Court’s Bench and Bar Committee and the Canadian Bar Association’s Tax and Charities sections have sponsored a new resolution proposing that the Canadian Bar Association renew its efforts to persuade Parliament to expand the Tax Court of Canada’s exclusive jurisdiction for all tax-related matters including judicial review of the Minister of National Revenue’s and the Canada Revenue...
1 tag
Tax Quote of the Day: Equity in Tax Law
“Seeking equity in tax law is like a blind person looking for a black cat in a dark room. We may find it by accident, but not too often.”
Vern Krishna’s comments appeared in his Financial Post article entitled Tax Court takes things literally.
1 tag
Canada Revenue Agency Employee Facebook Page...
Stephan Gieselmann, a CRA Assistant Director, created a Facebook page urging the public sector to boycott Canadian Federation of Independent Businesses (“CFIB”) members’ businesses reports Ms. Stefania Moretti. The CFIB is Canada’s largest small business advocacy group. The controversial Facebook pages has been removed and, at this time, the CRA would not comment on the matter. Interested readers...
2 tags
The CRA’s Administration of the Tax-Free Saving...
The CRA’s Taxpayers’ Ombudsman reported that several taxpayers contacted the Taxpayers’ Ombudsman office complaining the Tax-Free Savings Account (“TFSA”) rules related to withdrawals and over-contributions were confusing. In addition, the Taxpayers’ Ombudsman noted several media reports describing taxpayer confusion regarding the TFSA rules.
In these circumstances, the Taxpayers’...
3 tags
Dealing with the CRA? Here are 8 small things you...
Read ATX Law’s recent article published by the Globe and Mail entitled Dealing with the CRA? Don’t Panic.
3 tags
CRA Targeting Restaurants
The Globe and Mail published an informative article on August 2, 2011 explaining the CRA’s new audit program that targets restaurants using software designed to suppress restaurant sales i.e., zapper software. In addition, the Globe reports that the CRA intends to “develop a broad strategy to tack the problem” and that, although several cases are under investigation, the CRA has...
July 2011
1 post
3 tags
Conjecture and The Voluntary Disclosure Program
Read ATX Law’s recent Voluntary Disclosure article published by CCH in Tax Topics entitled Conjecture and The Voluntary Disclosure Program.
April 2011
1 post
3 tags
CRA’s Related Party Initiative (also known as the...
Yesterday’s Ontario Bar Association Tax Law Section Conference was a great opportunity for our firm to discuss, and learn more about, the Canada Revenue Agency’s (“CRA”) new Related Party Initiative (“RPI”) which targets high net worth Canadian taxpayers. The CRA consulted with the Australian Tax Office (“ATO”) who had initiated a similar project in or about 1996. At that time, the ATO simply read...
March 2011
1 post
4 tags
CRA’s Related Party Initative Part I
The Canada Revenue Agency (“CRA”) is launching a new project named the Related Parties Initiative (“RPI”) aimed at wealthy individuals and related entities. The CRA intends to initiate the RPI audits sending a 22 page questionnaire to taxpayers that the CRA has selected for audit.
We recommend that taxpayers who have failed to report taxable income retain legal counsel and initiate a voluntary...
