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Can you get a tax receipt for giving a charity free rent at your property? Possibly.   You might be able to get a receipt if: (a) you take the rent and donate it back to the charity (including the rent in income, then claiming the donation tax credit against the tax payable) or  (b) you give the charity a formal lease, giving it a… Read More »Carson v. The Queen, (2013 TCC C. Miller) — You might be able to get a tax credit for giving a charity a right to use your property

Suppose you miss the normal 90-day deadline for filing your objection and also you miss the 1-year deadline for asking for an extension, but you have very good excuses for your failure, what can you do?  Nothing.   The FCA has been clear:  Tax Courts have no power to extend the objection deadline beyond the statutory 90 days plus 1 year, no matter how compelling… Read More »Hanson v. The Queen, (2013 TCC Woods) — If you miss the 1-year extension deadline to file your notice of objection, you lose your right to object and appeal; there is no exception

If you have not reported income for 8 years, though you tell your bank and other creditors that you earn hundreds of thousands, and though you have properties offshore, unexplained deposits to your bank account, and CRA thinks you owe $5 million in taxes, may CRA put a lien on your $1.2 million home to prevent you from escaping collection, without first giving you a… Read More »Tassone v. Canada (National Revenue), (2013 FC Gleason)  — If you’re a collection risk, CRA can take collection action without telling you or waiting for you to have a chance to object to the assessment

If you have two ways to interpret a contract, should you read it so that GST will apply twice or only once?  Hogan J. says, choose the “interpretation [that] avoids double taxation”.  (Para. 25.) Casa Blanca agreed to buy 14 parcels of land from a developer.  It paid a deposit for each purchase.  Then, for 12 of the properties, Casa Blanca assigned its purchase rights to… Read More »Casa Blanca Homes Ltd. v. The Queen, (2013 TCC Hogan) — GST — Courts will interpret tax laws to avoid double taxation

If your child lives with your separated spouse most of the time under a court order, can you claim the Child Tax and GST refundable credits?  Probably not, unless you could show that, even though the child lives more with your spouse, you are “the parent who primarily fulfils the responsibility for the care and upbringing of the [child]”.   (See the definition of “eligible individual”… Read More »Hrushka v. The Queen, (2013 TCC Woods) — if your child lives primarily with your spouse under a written agreement or court order, probably you can’t claim the Child Tax Benefit and GST refundable credit

A dividend is a distribution of a corporation’s profits.  This case asks: Can you distribute the same profits twice, tax-free, despite the anti-avoidance rule in ITA s.  55?  Justice Graham says: Yes, you can.    Income tax rules allow dividends to pass tax free from one Canadian corporation to another.  Why?   Because the paying corporation (or a company from which it got the money as a… Read More »D & D Livestock Ltd. v. The Queen, (2013 TCC Graham)  — You can pay a dividend of the same profits twice, tax-free, to save extra capital gains tax, despite the ITA anti-avoidance rule

Can you claim a reduction in your net tax for GST/HST/QST if you write off a contract debt where there was no payment made for a year, the debtor’s directors had declared it insolvent, and it had made an arrangement with suppliers (including you) to avoid bankruptcy?  Sure, under ETA s. 231.   If your written evidence shows that you only wrote off part of the debt,… Read More »Vivaconcept International Inc. c. La Reine, (2013 CCI Tardif) — You can recover GST net tax on a bad debt either by writing it off or by issuing a credit note

Can you claim the medical expense tax credit for a full-time attendant without a medical certificate attesting “that the impairment is a severe and prolonged impairment in physical or mental functions the effects of which are such that the individual’s ability to perform a basic activity of daily living is markedly restricted”?  No.   Though the rules for this credit are complicated, this was an… Read More »Arciresi c. La Reine, (2013 CCI Favreau) — You need a physician’s certificate to claim the medical expense credit. 

If you move to a home 60 kilometres from your workplace but four years later you move back to be nearer to your work where you “performed new duties with the same employer at the same business location”, can you deduct the moving expenses from your taxable employment income?  No.   Ms. Langelier moved around a lot but she never changed employers from 1996 to 2012.… Read More »Langelier v. The Queen, (2013 TCC Favreau)  — If you move far from work, then move back later without more workload, you can’t deduct the moving expenses from employment income

This decision is most interesting to lawyers involved in tax litigation because it details: the proper practice for judicial review applications and  when it’s proper to ask for judicial review in the Federal Court and when, instead, you must file an objection and appeal through the Tax Court of Canada.  CRA taxpayer relief discretion is one of the common areas for judicial review in tax law.… Read More »Canada (National Revenue) v. JP Morgan Asset Management (Canada) Inc. (2013 FCA, Stratas) — If you don’t like CRA conduct, you can appeal to the TCC or sue, but, generally, you cannot get judicial review

The Guaranteed Income Supplement (GIS) under the Old Age Security Act is an income-based benefit, as is the refundable GST credit and the Child Tax Benefit and other refundable credits.   Ms. Brighton, who estimated her annual income (after her business failed) was under $10,000, did not realize that the RRSP withdrawal she made in 2011 “would affect her GIS entitlement.”  Because of it, her income exceeded the… Read More »Brighton v. Canada (Human Resources ans Skills Developement), (2013 TCC Paris) — Large RSP withdrawals can deny you Old Age Security payments

CRA Collections officers have great powers and sometimes they use them harshly, where they feel a taxpayer has been dishonest and especially, as here, where the tax debtor had been involved in drug trafficking.   Faced with harsh CRA Collections practices, people have asked the Federal Court judges to intervene to stop or reverse CRA’s action.  (The process is called “judicial review”.)  But, as this case… Read More »Johnson v. HMTQ, (2013 FC Manson) — Don’t expect the Federal Court to help you stop or reverse collection action.  

This case involved a claim for the landlord’s GST rebate for new residential rental property.  Ms. Tsenkova got it, even though her lease was for “temporary accommodation”.   Under ETA s. 256.2, if you pay GST when you buy a new home, you may claim a GST/HST rebate if you plan to use the home or part of it to lease to residential tenants and the lease will be… Read More »Tsenkova v. The Queen, (2013 TCC Sheridan) — To get the Landlord’s GST rebate, you must expect to rent for at least a year (but you don’t need many witnesses to prove that)

Suppose your spouse  lives in the family house in San Francisco and you live in Vancouver.  Your child occasionally visits you.  Are you entitled to claim the Child tax credit for that child?  Justice Woods says you can.   The unusual feature of this credit in ITA s. 118(1)B(b.1) is that it applies where “at any time in the year” your child is “wholly dependent for support… Read More »Severinov c. La Reine, (2013 CCI Woods) — You can claim a credit for a dependent child, even if she doesn’t live with you or live in Canada

Mr. Hall donated “$24,800 to the International Association of Scientologists”, which does many clearly charitable things.  But IAS was not a registered charity in Canada; so he was not entitled to the donation tax credit he claimed.  That is a simple result and the case would not be interesting except that Mr. Hall claimed that denying him the credits infringed his right to equality under s.… Read More »Hall v. The Queen, (2013 TCC Pizzitelli) — The Charter of Rights does not guarantee you tax credits for all your medical expenses or for all your donations to every charity

Suppose you miss the 90-day deadline for filing a notice of objection to CRA’s reassessment of your tax return and you miss the one-year extension period too.  The law is strict then: You can’t object to the reassessment, no matter how good your reasons.  But if you could show that CRA never sent you the reassessment notice or that it sent it to a wrong… Read More »Chomatas v. The Queen, 2013 (TCC Woods) — If you miss the notice of objection deadline because you didn’t get CRA’s reassessment notice, ask for proof CRA sent it

What happens if CRA reassesses you and you disagree?  You file a Notice of Objection.  What happens if, while you wait for CRA to review your objection, you ask it to adjust your tax return for other reasons, unrelated to the issues in the objection?  You could unwittingly invalidate your Notice of Objection, lose your right to challenge the earlier reassessment, and be forced to… Read More »DouangChanh v. The Queen, (2013 TCC Woods) — You can invalidate your ongoing Objection by asking CRA to adjust your tax return    

This is a simple case on a failed New Housing Rebate application.   There is a range of rebates related to new housing.  The most common rebate is the one for new housing bought from a builder.  If you want the GST New Housing Rebate (with a provincial rebate portion, it can be very valuable), you must meet two main conditions:  (1) When you sign… Read More »Napoli v. The Queen, (2013 TCC Paris)  — New Housing Rebates: You have 2 years to apply & you must choose between owner-used or rented

As noted in an earlier post on the Bower case, Canada spent about $4 billion in 2011-2012 on the refundable GST credit and about $10 billion on the Child Tax Benefit. This may explain why the rules are complex and the CRA is strict.  Obviously, Canada can only afford to give these credits to its own residents.  (See the tables in the Department of Finance’s Tax Expenditures and Evaluations… Read More »Kwangwari v. The Queen, (2013 TCC Lamarre) — Canada Child Tax Benefit: You or spouse must be a Canadian citizen or qualified resident and CRA’s mistakes can’t make you qualify

For most taxpayers, CRA has only 3 years to reassess a tax return, after originally processing it.  For GST/HST returns, the period is four years after the person was supposed to file the return, whether or not he filed it.  (See ITA s. 152(3.1) and ETA s. 298(1)(a).) As Justice Campbell Miller confirms in this decision, if the CRA has “‘requested additional information from the [taxpayer or registrant] and not having… Read More »Golini v. The Queen, (2013 TCC C. Miller)  — If you don’t give an auditor information, CRA can issue a “protective reassessment”

Taxpayers may claim a credit against taxes for their “medical expenses” if the expenses are higher than $2,152 (for 2013) or “3% of net income” (whichever is less).   “Medical expenses” are defined in s. 118.2(2).  They can include renovations or alterations to your home if they help a person with a “severe and prolonged mobility impairment” access or move around in the home.  In cases before… Read More »Sotski v. The Queen, (2013 TCC Pizzitelli)  — Medical expense credit for engineered laminate hardwood flooring

27/9/2013 0 Comments For most taxpayers, CRA has only 3 years to reassess a tax return, after originally processing it.  For GST/HST returns, the period is four years after the person was supposed to file the return, whether or not he filed it.  (See ITA s. 152(3.1) and ETA s. 298(1)(a).) As Justice Campbell Miller confirms in this decision, if the CRA has “‘requested additional information from the [taxpayer or registrant]… Read More »Golini v. The Queen, (2013 TCC C. Miller)  — If you don’t give an auditor information, CRA can issue a “protective reassessment”

This decision deals with Tax Court procedure: How can you speed up your case?  There are at least two rules designed to help parties end a case early.   One rule, for the “special case”, recognizes that sometimes the parties may agree on the facts so that the Court need simply decide a question of law.  If the Court decides that hearing the case in… Read More »Sentinel Hill Productions IV Corporation v. The Queen, (2013 TCC, Woods) – Ways to speed up your appeal

This was a procedural motion.  Mr. Kerouac claimed a tax credit for a $2 million donation to the City of Larouche in Quebec.  CRA said he had only donated $1 million.  As well as appealing CRA’s reassessment in the Tax Court, Mr. Kerouac was suing the City in Quebec Superior Court, to get back his $2 million.   The City brought a motion in the Tax… Read More »Kérouac c. La Reine, (2013 TCC, Jorre) – You can’t go into someone else’s Tax Court Appeal just to get help with your civil lawsuit

CRA investigated Mr. Taylor for criminal tax evasion but didn’t lay charges.  The case involved business and employment expenses, loans and embezzlement.  After 3 years of negotiations, Mr. Taylor, eager to have “the matter concluded quickly” signed a waiver of his appeal rights in exchange for CRA’s agreeing to remove gross negligence penalties.  Within days of signing his waiver, Mr. Taylor wrote the CRA that… Read More »Terry E. Taylor v. Her Majesty the Queen, (2013 SCC) — If you agree to settle your tax dispute with CRA, you probably can’t reverse it in Tax Court

There aren’t many cases dealing with Alternative Minimum Tax and how to calculate it.  This is one.  Mr. Gelinas had rental properties.  He had losses in the 2009 and 2008 tax years.  Alternative Minimum Tax (AMT) is designed to make sure that high income taxpayers pay some tax on their income, even though their tax deductions from investment losses or exempt gains might otherwise mean… Read More »Gélinas c. La Reine (2013 TCC, Jorre) – Alternative minimum tax:  You can’t use prior year losses from rental interest expense to reduce your income for AMT  

This decision is helpful for saying when you may use background evidence to help interpret a contract.   Here, the taxpayers were farmers who supplied the Pharmaceutical company Wyeth Organics with estrogen from pregnant mares.  Wyeth paid the farmers several different amounts to cancel the supply contracts.  The CRA said that one of these amounts was a substitute or “surrogate” for annual revenue so that… Read More »River Hills Ranch Ltd. v. The Queen, 2013 TCC (Hogan) — You can use background oral and documentary evidence to explain a contract’s terms.

ITA s. 118.3 allows you a credit for physical or mental impairment.  You can get the credit if your impairment has lasted or will last for at least one year and, 90% or more of the time, your ability to do a basic act of daily life is “markedly restricted”.  One of these “basic acts” is dressing yourself.   In this case, Justice Miller thought… Read More »Wiley v. The Queen, 2013 TCC (VA Miller) – you can claim the disability tax credit if you can’t dress and bathe in a normal amount of time

This is a helpful case because it repeats the tests for “when a debt owing to the taxpayer had become bad” so that the taxpayer could claim a capital loss.  Paris J. relied on the FCA decision Rich v The Queen2003 FCA 38 (CanLII), where Rothstein J. (now on the SCC) said: “[12 ]     The assessment of whether a debt is bad is one based… Read More »Fisher v. The Queen, (2013 TCC, Paris) – When is a debt bad so that you can claim a capital loss?

Mr. Goulet renovated his house and garage, almost doubling its size.  He applied for the HST new housing rebate.  He didn’t get it.  You are entitled to a new housing rebate if you “substantially renovate” your home.  But the TCC said that to qualify as a “substantial renovation”, “The definition essentially requires that the existing house be gutted.”  (Para. 15.)  An addition, to qualify, must… Read More »Goulet v. The Queen (2013 TCC, Graham) – You can get a GST new housing rebate for a renovation but only if it guts the old house

Ms. McLeod’s is another example of a fake business loss scheme.  Many of these are in the TCC now.  A group called “Fiscal Arbitrators” was the main advocate but many others modeled on them.   The idea is that you are not taxable because you are an agent for yourself.  (The argument’s more involved but, as Justice Woods said, it’s “pure nonsense”.) Ms. McLeod “was… Read More »McLeod v. The Queen, 2013 TCC (Woods) – Employees: Do not listen to false business loss schemes.  The penalties will ruin you.  

Dr. Klundert was an optometrist who didn’t report his income.  CRA prosecuted him through three trials, two appeals to the Ontario Court of Appeal and one attempt to appeal to the Supreme Court of Canada.  The Ontario Court convicted him of tax evasion.  CRA then reassessed his 1993 – 1996 tax years and he appealed the reassessments to the TCC.  Justice Pizzitelli dismissed Dr. Klundert’s… Read More »Klundert v. The Queen (2013 TCC, Pizzitelli) – If a criminal court says CRA’s evidence is illegal, the TCC may refuse it too

Canada has a rich but complex set of tax rules to help businesses carry out scientific research and experimental development (“SRED”).  The rules include a simpler “proxy method” for calculating the expenses that qualify for tax incentives. CalAmp hoped to include bonuses it paid to some of its employees when it was sold and became a public corporation trading shares in the US.  For Justice Bedard, the… Read More »CalAmp Wireless (2013 TCC, Bedard) — SRED proxy method – bonuses must relate to the SRED work

Her lawyer was only 7 days late in filing Ms. Hamilton’s Notice of Appeal in the Tax Court of Canada.  But the Tax Court refused her application to extend the filing time limit.  That refusal is surprising, especially because this was an Informal Procedure appeal.  Normally, the Government would agree to the application, when the taxpayer misses the deadline to appeal by so few days. … Read More »Hamilton (2013 TCC, V. Miller) – If you miss the 90-day deadline to appeal, you can apply for an extension but don’t count on it

Mr. Anonby showed that his employer had paid him more than CRA recognized.  He filed his tax return reporting $42,000 of income, including about $13,000 for withheld taxes, CPP and EI.  But his employer had not remitted that money and CRA refused to recognize it.  So, CRA reduced Mr. Anonby’s income to $29,000 — a lower amount but, because he got no credit for withheld… Read More »Anonby (2013 TCC, C. Miller) – If your employer doesn’t send your withheld taxes to the Government, you may still have to pay them.

Canada spent about $3.5 billion in the year ended June 2012 on the refundable GST credit and about $10 billion on the Child Tax Benefit. This may explain why the rules are complex and the CRA is strict.  Obviously, Canada can only afford to give these credits to its own residents.  This case deals with the test for residence in Canada. Mr. Bower was from Nova… Read More »Bower (2013 TCC, Bocock) – To get CCTB and GST tax credit refunds, you must be a Canadian resident

A status Indian’s income from property on an Indian reserve is exempt from income tax under s. 81 of the ITA and s. 87 of the Indian Act.  But cases have expanded the meaning of “property situated on a reserve”. “If there were sufficiently strong, concrete and discernable connections between the property and a Reserve, the exemption would be available to the Indian.” (See para. 38 citing the SCC… Read More »Pilfold Estate (2013 FCC, C. Miller) – Whether fishing business was “situated” on a reserve

This is another in a series of charity deduction cases in which the taxpayer lost.  The charity donation scheme is similar to other schemes of the past, such as the software partnerships of the 1990s.  The basic idea is to give you a deduction based on a falsely inflated valuation of your expense or donation.   You should avoid these schemes.  They prey on your belief… Read More »Bandi v. The Queen, 2013 TCC (Hogan) — Charity donation schemes aren’t gifts; so you can’t get a tax credit for them