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 …

The Tax Court of Canada

If a taxpayer receives an assessment or reassessment from the Canada Revenue Agency (CRA) with which they disagree, their first opportunity to dispute the assessment is by filing a notice of objection with the CRA and attempting to resolve the matter with the CRA Appeals Division. If, after the objection process has ended, the taxpayer still disagrees with the CRA’s …

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, …

Capital vs Income

Many disputes arise over whether a gain from a sale should be treated as “business income” or “capital gain”. This is a common subject of tension between taxpayers and CRA because only half of a capital gain is taxable, while the full amount of business income is taxable. A common metaphor to illustrate the difference between the two types of …

Director Liability and the Available Defences

If you are a business owner who has chosen to incorporate, it’s likely that you are a director and officer of that corporation. Many owners don’t realize it, but directors are liable for the unremitted GST/HST of a corporation (pursuant to section 323 of the Excise Tax Act), and the unremitted source deductions of the corporation, including EI and CPP …