July 22, 2015 – Global News reports on the issues surrounding taxes and companies such as Uber and Etsy in their “Booming shared economy leaves governments of all levels scrambling to keep up on taxes.” See Dale Barrett’s comments regarding the issue and planning ahead here. CLICK HERE TO BOOK A CONSULTATION WITH A TAX LAWYER

In 2010, Donna Marie Stancer and Deanna Lynn Lavalley started a tax consultation company by the name of DeMara Consulting Inc. It wasn’t until March of 2012 that the Canada Revenue Agency (the “CRA”) raided the DeMara Consulting Inc. office in downtown Vernon looking for evidence of tax evasion. Stancer and Lavalley had been marketing themselves by stating that they knew of a loophole that would result in the taxman taking less of their money and called this “The Remedy.” The two women proceeded to illegally file tax returns using this method on behalf of 224 clients resulting in some of those clients suffering quite extensively in tax return interest penalties, and, in some cases, even facing gross negligence penalties. The two women from Okanagan were on trial for defrauding the Canadian Government of roughly $195 million in false expenses for themselves and 224 clients. On July 3, 2015 the

Today, many Canadians own real property in the U.S. as vacation or rental property. There are various ways to hold such property, and the choice of how to hold your foreign real estate depends on the goal(s) you wish to achieve. Some of these goals may include avoiding ancillary probate in the U.S., deferring, reducing or avoiding capital gains tax or land transfer tax, planning for children and their inheritance, and protection from creditors, to name a few. The consequences of how you hold title to foreign real estate vary significantly. Owning property personally, in a partnership, by a corporation, as tenants in common, as joint tenants, as a Cross Border Trust, or as an LLC, each comes with its own unique advantages and disadvantages. For Canadian citizens, despite how the property is held in the U.S., it will be treated in Canada according to Canadian law. This can get

Generally, the test applied to determine the residency of a trust is where its “central management and control” is located. The Newfoundland Supreme Court rendered a decision which recognizes the reality of the “trust” relationship. In Discovery Trust v. Minister of National Revenue, the trust filed its 2008 return indicating it was a resident of Alberta rather than Newfoundland. This declaration saved approximately $9 million in tax. The CRA conducted an audit on the basis that the “management and control” of Discovery Trust continued to be exercised in Newfoundland, even after a trustee was an appointment in 2006. The Court analyzed the residency by examining each action taken by Discovery Trust and ultimately vacated the reassessment. It was not prepared to find that the trustee gave up management and control in the context of a fairly typical case where the trustee appears to have discharged its duties prudently and in

July 20, 2015 – The Ottawa Business Journal published a blog post written by Barrett Tax Law’s Ottawa Managing Lawyer, Michael Citrome. “Here in Ottawa, many people think of the government as an employer, rather than as an obstacle to doing business. Even still, for many entrepreneurs, the government may seem like a monolithic thing that is more adversary than an ally, especially when it comes to taxes.” To see the article in its entirety, click here. CLICK HERE TO BOOK A CONSULTATION WITH A TAX LAWYER

There is a common misconception that all communications with a lawyer are privileged. A recent Federal Court case, Canada (National Revenue) v. Revcon Oilfield Constructors Incorporated, 2015 FC 524, is a reminder that not all communications with a lawyer are protected by solicitor-client privilege. Specifically, the court pointed out that tax planning communications are not privileged. Tax planning communications in Revcon, that were not privileged, included merely accounting and transactional matters, including corporate transactions and restructures that were unrelated to obtaining legal advice. The court was not saying that all tax planning communications are not protected, but rather that the privilege may not attach if you are receiving advice in a non-legal capacity or if the communications are unrelated to obtaining legal advice. If, however, you were seeking advice from your lawyer on specific tax consequences of a business plan or income tax reporting requirements, for example, then the communications

Are you a shareholder of a non-arm’s length company and also employed for the same corporation? If so, you should think carefully before making an agreement where you are paid in dividends instead of being paid a salary or other form of compensation. If dividends are distributed when the corporation has a tax debt, the CRA may find you personally liable under Section 160 of the Income Tax Act for the company’s tax debt. Unlike other transfers of property, where a Section 160 assessment can be overcome by showing that the transfer was made for fair consideration, the courts have made it clear that this does not apply to dividends. Dividends are not issued for consideration, even if the employee/shareholder intended for this to be their salary. What’s worse is that there is no time limit on when the CRA may make this Section 160 assessment, and the bankruptcy of

With the passing of this new section, the Minister is now allowed to collect 50% of the amount assessed in respect of a tax shelter even if the related assessment is in dispute. Meaning even if you object, or appeal to Tax Court, the Minister can still come after you for half the amount owing. This is in stark contrast to how the law used to be. This is just one of the many provisions that the Government of Canada has enacted in an attempt to stop abusive tax shelters. If your charitable tax receipt reads more than the actual cash you have contributed, it is likely that the Canada Revenue Agency will want to speak with you. CLICK HERE TO BOOK A CONSULTATION WITH A TAX LAWYER

Rosenberg v. Canada, 2015 FC 549 The taxpayer in the above noted case entered into an agreement with the CRA’s auditor. The CRA agreed not to reassess the 2006 and 2007 taxation year, except to make one specific adjustment. Three years later, the CRA commenced a second audit for the same taxation years. The taxpayer was served with a request for information, which pertained to the same transactions that were the subject of the first audit. Eventually, this matter was brought before the Federal Court with respect to the Minister’s exercise of her audit powers.  The CRA denied having entered into an agreement with the taxpayer. Even if it had entered into said agreement, it would not operate to waive the CRA’s audit powers. The matter is still being adjudicated in the Federal Court. It should be noted that an agreement with the CRA may not be binding. Typically, the

Have you received a call from someone calling themselves Jason White? He typically calls from 1-613-912-4377. This Jason White may be pretending to be a Canada Revenue Agency employee who claims there is a warrant out for your arrest. He then informs taxpayers that the only way for the warrant to be removed is for you to send him money through credit cards, or other means. If you get a call from Jason White, or anyone who you think might not be from the Canada Revenue Agency, ask for their badge number. Following this, call the general enquiries line for the Canada Revenue Agency and verify whether the person is actually an employee. If they ask for credit card payments, that is a red flag. Canada Revenue Agency does not accept credit card payments. If you receive a threatening call from the Canada Revenue Agency, or from someone pretending to