Bill C-47 received Royal Assent on June 22, 2023, bringing into effect the new expanded reportable transaction rules. A failure to report as required by the new rules could result in substantial penalties for both taxpayers and their advisors. The reportable transaction rules require certain persons to file information returns with the Canada Revenue Agency (“CRA”) in respect of …
Budget 2023 The Federal Budget 2023 introduced several amendments to strengthen and modernize the General Anti-Avoidance Rule (“GAAR”). Some of the more notable amendments include the changes to the definition of “Avoidance Transaction” as well as the introduction of the concept of “Economic Substance”. Avoidance Transaction – This test has been significantly broadened by replacing the “primary purpose” test with …
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 …
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 …
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 …
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 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 …
Solicitor-Client Privilege Generally Solicitor-client privilege (also known as “legal advice privilege”) operates to protect communication between a lawyer and his/her client from disclosure to third parties. The privilege belongs to the client and can only be waived by the client. Solicitor-client privilege is not time sensitive and does not expire. Communication is subject to solicitor-client privilege when three …
The Canada Revenue Agency (“CRA”) often applies penalties when a taxpayer has failed to comply with their obligations under the Income Tax Act, Excise Tax Act and other acts which the CRA administers.[1] The CRA can apply penalties for late-filing returns, repeatedly late-filing returns, failing to report income, deficiencies in foreign reporting obligations, for being grossly negligent, etc. Interest (currently, …
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 …
