In 2000, a wealthy B.C. family invested approximately $26 million in a KPMG tax product in the Isle of Man, a self-governing territory. This tax product was targeted for high net worth Canadian residents, resulting in the family paying close to no tax over several years. As a result of this investment, the B.C. family received approximately $6 million between the 2002 and 2010 taxation years. KPMG is claiming that the distributed funds were gifts and therefore non-taxable. The CRA asserts that both the B.C. family and KPMG knew that the funds were being hidden in an offshore account that was actually owned by the family.  The CRA has levied gross negligent penalties against the B.C. family and has sent a demand order to pay millions in tax arrears. In 2013, the court issued an order permitting the CRA to obtain KMPG’s list of clients who had also invested in

Donna Marie Stancer and Deanna Lynn Lavalley have been convicted of six fraud related charges after filing nearly $192-million in false expenses for themselves and 224 clients of their now closed Vernon tax preparation company, DeMara Consulting. Here at Barrett Tax Law we are already assisting a number of taxpayers who were defrauded by Demara Consulting. If you filed returns through DeMara Consulting we can help. Please give us a call today. CLICK HERE TO BOOK A CONSULTATION WITH A TAX LAWYER

August 31, 2015 – Michael Citrome’s article ‘A Defective GST/HST New Housing Rebate Claim Can Lead to Costly Tax Trouble’ published in the Ottawa Business Journal touches on the issues that arise if you didn’t give a lot of thought to the GST/HST New Housing Rebate. “If you recently bought a newly-built home, you probably didn’t give much thought to the GST/HST New Housing Rebate. But if you didn’t move in and rented it out, or had a friend or relative act as your mortgage guarantor and the lender made them go on title, start thinking, because it could cost you a lot of money…” “…The Rebate appears hidden because the builders usually claim it on your behalf behind the scenes, so you don’t have to come up with the money at closing and apply for the rebate yourself after the fact. ” For the article in its entirety, click

Income Splitting is a tax planning strategy designed to shift income from a taxpayer paying a high rate of tax to another taxpayer paying tax at a lower rate. The Income Tax Act has many provisions attempting to limit income splitting, but you should be aware of the opportunities. Some of them can be found below: If you own a business, pay a reasonable salary to your partner or children; You may also use dividends to distribute corporate profits at a lower tax rate. Make contributions to a spousal RRSP; Invest child tax benefit payments in your child’s name; Share CPP payments; Pension income splitting; The higher income partner assumes all of the personal household expenses, leaving the the lower income partner with as much income as possible to invest; Transfer or sell assets to family members for Fair Market Value consideration; Gift to minor children capital assets that are

This summer, a number of small and medium-sized business owners have been asked by the Canada Revenue Agency (CRA) to participate in the Liaison Officer Initiative (LOI) – a part of the CRA’s 3-point plan to provide early tax compliance support to businesses. Through the LOI, selected businesses would receive in-person guidance and information to assist them to understand their tax responsibilities, help them identify potential errors so they can be corrected before filing, and help them better comply with their tax obligations. Participation may include being asked to review the company’s books and records, visits to a place of business, or being asked to sign a Compliance Support Arrangement (CSA). For those being asked to participate, the primary questions have been: Must I comply with LOI’s requests for an onsite visit and review of the company’s books and records? If I comply, will the findings be held against me,

Self-employed cab drivers are required by the Canada Revenue Agency to register, collect and remit HST/GST from their fares to the government. This requirement does not correspond to a certain amount of money being made by cab drivers. Rather, if you drive a cab as a self-employed individual, you must be registered. For others, the Canada Revenue Agency requires you to register for HST/GST when your sales total over $30,000. Now we all know that Uber considers itself a technology company and not a cab company. Meaning it does not seem to have an opinion as to whether its drivers are required to register for HST/GST or not. This should be of great concern to the Federal government, anyone driving for Uber, and those who care about tax compliance. Uber does not allow an individual driver to charge HST/GST above the fare charged by Uber. In addition, an Uber driver

August 7, 2015 – Michael Citrome’s blog post “Moving Provinces? Avoid Surprise Tax Bill” that was posted in the Ottawa Business Journal discusses the issues regarding income taxes and moving between provinces. “People move between provinces all the time. Here in Ottawa, we are constantly leapfrogging between Quebec and Ontario, whether it’s for a meeting, shopping, lunch, or for a new home. But for income tax purposes, moving between provinces takes on great significance, especially when moving from a province with higher income tax rates to one where you’ll pay less – like from Quebec to Ontario.” To read the article in its entirety, click here. CLICK HERE TO BOOK A CONSULTATION WITH A TAX LAWYER

Many IRS filing deadlines have recently been changed by Congress, in H.R. 3236, the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015. Effective as of December 31, 2015, if you are required to file with the IRS for your C corporation, partnership, or FBARs, then your due dates have likely changed. Partnerships have a new deadline of March 15th, whereas filings for C corporations and FBARs will be due on or before April 15th. FBARS also now have a 6-month extension, ending October 15th. For others that are required to file a tax return with the IRS, the due date is still April 15th, and for S Corporations the due date still remains March 15th. There are some exceptions to these new deadlines. For instance, C corporations that have a tax year that ends on June 30th will maintain their current filing deadline of September 15th, with

The Department of Finance Canada’s Budget 2015 proposes to put into operation a new streamline reporting system for foreign assets. Presently, Canadian resident individuals, partnerships, corporations, and trusts that own a total value of more than $100,000 of specified foreign property must disclose detailed information regarding each property by filing Form T1135, Foreign Income Verification Statement, with the Canada Revenue Agency (“CRA”). This detailed reporting requirement that was introduced in 2013 has proven cumbersome for some taxpayers. With the proposed reporting procedure, the detailed information reporting will continue to be used for specified foreign property only if it has a total cost of $250,000 or more during a year. Specified foreign property with a total cost below $250,000 and greater than $100,000 must still be reported, but will be done under the new streamlined reporting procedure. This method will maintain the CRA’s ability to fight international tax evasion and tax

If a Canadian taxpayer owns certain foreign property, the collective cost of which exceeds $100,000 CDN, the taxpayer must file a Form T1135 (Foreign Income Verification Statement). The Canada Revenue Agency (“CRA”) recently provided its views on whether digital currency is considered “specified foreign property” under the reporting rules in section 233.3 of the Income Tax Act. What is Digital Currency? Digital currency is virtual money that can be used to buy and sell goods or services on the Internet, for instance, Bitcoins. Bitcoins are not controlled by central banks or any country, and can be traded anonymously. This specific form of digital currency can be bought and sold in return for traditional currency, and can also be transferred from one person to another. In CRA Document No. 2014-0561061E5 “Specified Foreign Property” (April 16, 2015), the CRA was asked whether digital currency or interests in a foreign partnership holding digital