Gross Negligence

Canada’s self-reporting tax system relies on taxpayers to identify and report their income. Because of this, taxpayers are often confronted with the decision of how to report a certain stream of income – for example, whether a certain transaction should be treated as business income or capital gain, tax deductible or non-deductible or what proportion of a property is related …

Negligence – The Penalties Can Be Gross

A gross negligence penalty (“GNP”) is a discretionary penalty applied by the Canada Revenue Agency (the “CRA”) when the CRA believes that a person has knowingly, or in circumstances amounting to gross negligence, made or participated in the making of a false statement or omission in a return. The penalty is severe and is the greater of $100 or 50 …

Enhanced Disclosure Required For Family Trusts Beginning in 2021

In February 2018, the federal government tabled its annual budget, which contained proposals to require certain trusts to file T3 Trust Income Tax and Information Returns (T3 returns) and to provide certain information with respect to the trust’s settlor(s), trustees, beneficiaries and protectors.  On July 27, 2018, draft legislation was released which would give effect to this proposal. The changes …

Net Worth Audits

Subsection 152(7) of the Income Tax Act[1] provides that the Canada Revenue Agency (CRA) is not bound by a tax return provided by a taxpayer in making an assessment and notwithstanding whether a tax return has been provided the CRA may raise an assessment.  This provision permits the CRA to assess a taxpayer for any amount at any time (subject …

The Meaning of “Voluntary” for Purposes of the Voluntary Disclosure Program

The Canada Revenue Agency’s (CRA) voluntary disclosure program (VDP) allows taxpayer to correct inaccurate or incomplete information or disclose unreported information for up to 10 previous years.  On March 1, 2018, the program was divided into two tracks: the general program and the limited program.  Taxpayer’s who fall under the general program will be granted interest relief, will not be …

Tax Dispute

Tax Dispute Resolution We Have The Experience We understand that tax issues with Canada Revenue Agency involve both legal and non-legal considerations. Whether you are an individual, business, or an accountant acting on their behalf – if you disagree with a Notice of Reassessment, have unreported income or unfiled tax returns, or are being audited, dealing with these tax problems …

Condo Flippers Beware

With the real estate markets in Toronto and Vancouver growing robustly with prices reaching historical highs, speculators have pounced on the opportunity to realize quick returns on buying and selling condos and other real estate.  The Canada Revenue Agency (“CRA”) has taken notice of this activity and is aggressively looking into whether these sales are being reported and, if they are, whether they are being …

Changes to the Voluntary Disclosure Program Effective March 1, 2018

  The Voluntary Disclosure Program   The Canada Revenue Agency’s (CRA) voluntary disclosure program (VDP) allows taxpayer’s to correct inaccurate or incomplete information or disclose unreported information for up to 10 previous years.  If a taxpayer’s disclosure meets the CRA’s conditions for the VDP, the taxpayer is not assessed penalties or criminally prosecuted with respect to the disclosure and the …

Shareholder Benefits and Shareholder Loans

Many Canadians operate their business through a corporation. Even though the finances of small business corporations are directly linked to the finances of their owner-managers, it’s important to remember that corporate funds are not personal funds and should not be treated as such. Treating your corporation like a personal bank account can lead to adverse tax consequences. Under the Canadian …

Foreign Reporting Requirements

Foreign Reporting Requirements   In the interest of enhancing compliance with tax laws, gathering information to verify compliance and to better target international tax evasion and aggressive avoidance, the government has established foreign reporting requirements.   The foreign reporting requirements are found in sections 233.1 to 233.7 of the Income Tax Act.  In certain conditions, the following must be reported: …