The Importance of a Clearance Certificate from the CRA

An individual may deal with the business, property or estate of another person as a representative.  That business, property or estate may owe amounts to the Canada Revenue Agency (CRA).  The amounts can include federal income taxes, provincial and territorial taxes administered by the CRA and outstanding Canada Pension Plan and Employment Insurance premiums, including any interest and penalties.  If …

New Rules for Claiming the Principal Residence Exemption

Canadian residents who dispose of their family home and realize a gain may be eligible to claim an exemption when computing the tax on that gain.  The exemption can eliminate all or part of the taxable capital gain, depending on the circumstances.  This is known as the “principal residence exemption” (PRE) which has been a part of the Canadian tax system for many …

The CRA and the Power to Compel Information

The CRA has broad powers to audit taxpayers and demand information from taxpayers and third parties. There are few limitations on the power to audit and compel information. However, if a taxpayer becomes the subject of a criminal investigation, their rights under the Charter of Rights and Freedoms are engaged and act as a check on CRA power.   The …

Canada Revenue Agency’s Collection Powers

The Canada Revenue Agency (CRA) collects amounts owing such as: individual and corporate income tax, payroll deductions, GST/HST remittances, benefit overpayments (eg, Canada child benefit and GST/HST credit), etc. The CRA can also collect amounts owing for other government programs, such as: defaulted student loans, EI overpayments and penalties, CPP overpayments, etc.   If a taxpayer has failed to pay …

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 …

Canada Revenue Agency Audits

In 2015, the federal government committed to providing the Canada Revenue Agency (CRA) with additional audit resources. The CRA is expecting $118.2 million for underground economy audits, $25.3 million for offshore tax evasion and aggressive tax avoidance and $58.2 million for avoidance by large, complex entities. The CRA’s audit activity will increase as a result of the increase in resources. …

Filing a Notice of Objection – The First Step in a Dispute with CRA

This article provides an overview of what is, for many taxpayers, the first step in a dispute with Canada Revenue Agency (“CRA”) – the “Notice of Objection”. For most people, dealing with their taxes entails gathering all their t-slips and other relevant information and handing it off to their accountant or doing it themselves at home. They receive an assessment, …