Gekas v. Canada – CRA Is Forced to Overturn TFSA Over-Contribution Penalties

Section 207.02[1] imposes a tax on over-contributions to an individual’s tax-free savings account (TFSA) of 1 percent each month of the individual’s highest excess TFSA amount that month.  Section 207.03 imposes a similar tax on contributions by non-residents.   Section 207.06(1) provides the Canada Revenue Agency (CRA) with the discretion to waive or cancel the taxes imposed under sections 207.02 …

Director Liability Under the Income Tax Act

The Income Tax Act[1] provides liability for the directors of a corporation where there has been:   Failure to collect and remit source deductions under the Canada Pension Plan Act,[2] the Employment Insurance Act[3] and the income Tax Act; and Failure to collect and remit HST under the Excise Tax Act.[4]   In order for the Canada Revenue Agency (CRA) …

Choosing the Will or Family Law – A Surviving Spouse Has the Choice

On the death of a spouse, the surviving spouse has the right to choose between accepting his / her entitlement under their partner’s will (where there is a will) or claim an equalization of net family property (an “equalization payment”) under section 6 of the Family Law Act.[1]   Where there is no will, the surviving spouse has the right …

Interest in Henson Trust Not An Asset

S.A. v Metro Vancouver Housing Corp.   In the recently released case S.A. v Metro Vancouver Housing Corp.,[1] the Supreme Court of Canada (Supreme Court) had its first opportunity to consider the nature of Henson trusts.  Henson trusts are settled for the benefit of a person with disabilities who relies on publicly funded social assistance benefits.   The issue in …

Children Cannot Be Used As “Accomodating Parties” For Tax Planning

Caplan v Agence du revenue du Quebec[1] (Caplan) concerned distributions allocated from a discretionary trust to beneficiaries of a trust and then transferred to their father (also a beneficiary).  The court found that the children acted as an “accommodating party, whether as an agent or nominee, for their father.”  Moreover, they never had control over amounts paid to them by …

New Ownership Disclosure for Private Corporations

The Canadian federal, provincial and territorial finance ministers executed the Agreement to Strengthen Beneficial Ownership Transparency in 2017.  The agreement required the finance ministers of each government and territory to pursue legislative amendments to corporate statutes (and other relevant legislation) to ensure that corporations hold “accurate and up to date information on beneficial owners that will be available to law …

Audit Agreements

In February 2019, the Canada Revenue Agency (CRA) published Audit Communique AD-19-01 “Audit Agreement and Waiver of Objection Rights.”[1]  The purpose of the document is to provide guidance on negotiating an audit agreement with taxpayers and obtaining a waiver of objection rights.   Audit Agreements   According to the document an audit agreement is “an agreement between the CRA and …

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 …

Pre-Assessment Review? Consider Jumping Straight to Tax Court.

Many taxpayers experience delay in having their tax return processed as a result of the Canada Revenue Agency (CRA) conducting a “pre-assessment review.”  Practically, a pre-assessment review is not much different than a mini audit.  In some cases, the CRA reviews a return before processing it and issuing an assessment.  Unusual refunds, donations, medical expenses, professional fees, and substantial interest …

Henson Trusts – What Are They and Why Are They Used?

One of the ways an individual may qualify for income support under The Ontario Disability Support Program Act[1] is to qualify under the definition of a “person with a disability.”  Generally, to qualify as a person with a disability, the individual must have a substantial physical or mental impairment that is expected to last at least 12 months and substantially …