Articles
Articles, blogs, and thought pieces, written by me
So you’re working from home: Deduct expenses and pay less tax (Originally On The Lawyer’s Daily)
Almost all of us have been working from home during the COVID-19 pandemic and many of us will continue to work from home for some time to come. Google just announced that it is going to have its employees work from home for at least the next year, and personally I have no immediate plans to bring all my employees back to my office. I may decide to have some employees work from home forever. If you are working from home, and even if you have just worked from home for a period of time and have since returned to your place of employment, you will want to take advantage of all the possible ways in which you can reduce your taxes. And if you’re creative you can reduce your taxes substantially. If you are self-employed If you are self-employed you know that you are entitled to claim deductions for
Estate Freezes: A Silver Lining of COVID-19 (Originally On The Lawyer’s Daily)
With the world in flux and an unprecedented shutdown of the world’s economy, those who were planning to transfer businesses to the next generation have been given what is (hopefully) a once-in-a-lifetime opportunity to defer additional taxes for many years. As valuations of investments and businesses — both public and private — have reduced sharply, unless you are in the hand sanitizer business, right now is arguably the best time ever to freeze one’s estate. ESTATE FREEZE Since capital gains tax is imposed at the time of death, owners of closely held corporations are assessed a capital gains tax on the growth of their shares on their terminal return. The idea behind an estate freeze is to limit the tax payable upon death by limiting the growth of the taxpayer’s interest in the company. It is not that we want to freeze the taxpayer’s business itself. Rather we
Wondering about Canada’s 75% Emergency Wage Subsidy?
Here is what we know so far about Canada’s Emergency Wage Subsidy, a government program helping businesses avoid having to lay-off their employees during the Covid-19 Pandemic. We will be updating this article as new details are released. The Canada Emergency Wage Subsidy is for businesses small and large – there is no minimum employee requirement In order to be eligible, companies must have seen a reduction in gross revenue of at least 15% in the month of March, 2020 and 30% in the following months, and you do have the option to choose January and February of this year as a reference period Non-profit organizations and charities are eligible to apply, and they have the option to include or exclude government subsidies when calculating loss of revenue The government of Canada will be subsidizing up to 75% of an employee’s salary on the first $58,700
A Sad Story about Mr. X. from Country Y (Originally on The Lawyer’s Daily)
Meet Mr. X. Don’t judge him by his country of residence. It is not his fault. It wouldn’t be fair. He was taken there as a child by his parents who were fleeing another country for a better life. They could never have predicted how the government of Mr. X’s adopted country would treat him when he grew up. In fact, the government has been using its immense resources to conduct an ongoing investigation into the activities of Mr. X., which one night culminated in officials bursting into Mr. X’s house without warning, bringing police with them and scaring his wife and children. That night the government took away all his computers and papers, as well as some cash that his family had been saving for a vacation. Apparently the investigation, which had lasted two years, had uncovered evidence that Mr. X had been breaking the law. Armed
I Lost My Battle with the CRA, but I Won the War (originally on The Lawyer’s Daily)
My law firm cannot make the claim that we have won all of our cases in the Tax Court of Canada, but what we can tell you is that every single case we have won in tax court — either in trial or a settlement — was lost at the CRA objection stage. And in many cases, besides losing our tax assessment objection, we were also unable to convince a CRA auditor of our client’s position. In these types of cases, two different Canada Revenue Agency departments had thought we were wrong before we were able to convince a judge otherwise. So before a win or settlement in tax court, the taxpayer often has to lose twice. After notices of objection fail, people ask us whether it is worth fighting their case in tax court. After a loss, many taxpayers simply roll over and accept that the CRA was
A Tale of Two Taxpayers: The Fiscal Arbitrators Client (originally on The Lawyer’s Daily)
In part one of this series, I considered the situation of a hypothetical wealthy client who was involved in the KPMG tax scheme promoted by a big accounting firm. In the end, the taxpayer signed a settlement with the CRA. Part two relates the story of a typical client of the Fiscal Arbitrators tax scheme (which can be found in Torres v. Canada 2013 T.C.J. No. 332). While the general fact patterns between the groups are similar in broad strokes, the outcomes are not. The Fiscal Arbitrators Client The client is a working-class individual who is employed at a factory. He has $125,000 of equity in his home and savings and investments of $23,000. The taxpayer has a grade 12 education and has never taken any tax, business or accounting classes. The taxpayer was sold on the idea of the Fiscal Arbitrators program during a seminar by a
20 Tax Audit Triggers
Sometimes a taxpayer is randomly selected for an audit. It’s like winning the worst lottery in the world, and there’s nothing you can do to change that. But apart from a random tax audit, the odds of being targeted for an audit are dependent on a variety of risk factors. In short, the odds of being audited depends on who you are, where you are, what you do, what types of expenses you have, and so on. Various pieces of a taxpayer’s profile may help uncover risk factors. And the more risk factors a taxpayer has, the greater the odds of that taxpayer being audited. Below are the 20 tax audit triggers which increase the odds of being audited by the CRA. They are in no particular order: 1. Being self-employed If the taxpayer receives T4 income, the odds are that sufficient tax has already been withheld at
A Tale of Two Taxpayers: the Wealthy Client (originally on The Lawyer’s Daily)
By Dale Barrett – Managing Partner at Barrett Tax Law, Founder of Lawyers & Lattes Legal Cafe, Author of Tax Survival for Canadians: Stand up to the CRA, Editor of the Family Law and Tax Handbook, and Tax Columnist at the Lawyer’s Daily. Originally published by The Lawyer’s Daily. Unlike a superior court, which can make an equitable decision — a decision based on fairness — the Tax Court of Canada is not a court of equity. It must apply the law and the facts and arrive at a decision that the judge believes to be a correct application of the law to the facts. It’s a one-size-fits-all approach. It’s consistent. And although not equitable to a particular taxpayer, the law is typically applied equally between them. It’s designed this way. The judge of the Tax Court does not have the discretion to decrease the gross negligence penalty from 50 per
The Peril of Family Asset Transfers (originally on The Lawyer’s Daily)
By Dale Barrett – Managing Partner at Barrett Tax Law, Founder of Lawyers & Lattes Legal Cafe, Author of Tax Survival for Canadians: Stand up to the CRA, Editor of the Family Law and Tax Handbook, and Tax Columnist at the Lawyer’s Daily. Originally published by The Lawyer’s Daily. Most people don’t think twice before transferring assets between family members. Why would they? People deposit money into each other’s accounts. They put each other’s names on their properties in order to get mortgages. They sell assets to one another for one dollar. They move closely held company shares back and forth. And they inadvertently create massive tax problems for themselves, some of which are impossible to fix. Sometimes as a result of such transfers and transactions, people create capital gains tax debts which otherwise would not have existed, and other times people are forced to pay a related party’s
Dale Barrett Answers Your Pressing Tax Questions (originally on Global News)
As seen on GlobalNews.ca, Dale Barrett, Managing Partner at Barrett Tax Law, answers your pressing tax questions: THE QUESTION: I don’t understand the implications of adding my adult child as a joint tenant on my home. I know that there can be capital gains tax implications but don’t really understand how it works. – A Money123 reader THE ANSWER: While adding a child as a joint tenant allows the property to pass to the child outside of the estate and saves probate fees, there are many possible issues of which one should be aware. The parent loses absolute control over the property. Both owners will have identical rights in the property. If the property is not the parent’s principal residence, capital gains tax is payable upon adding the child to title if the property has increased in value since the purchase date. The increase in value
