Tax Debt, Tax Arrears, Taxes Owing to the Canada Revenue Agency (CRA). Call it what you want, but it is ruining your life!

Do you have tax debt to the Canada Revenue Agency (CRA)?  Tax arrears causes stress each and every day on you, your business and your family? Even if you are in an arrangement with the CRA, they can change their mind on a moments notice and want more.  Knowing that the CRA can take all your money, or close your business at any time for your Tax Debt cannot help you sleep at night…

Everybody has answers for you which best suits themselves or their business.

We have a solution that best suits you and your business.

It’s called the Debt Diagnosis, and it’s a service we provide that no other tax solution / tax resolution / tax negotiator can provide.

Our Debt Diagnosis Program looks at the specifics of your CRA debt, your other debts, your current compliance situation, your assets, liabilities, ability to pay, and a whole bunch of other factors and we provide you with your options, suggestions and recommendations regarding how to proceed with your CRA debt(s).

We’ll advise you about options – options you know about already, like the CRA’s Taxpayer Relief Program, and the CRA’s Voluntary Disclosures Program – and we will tell you about options you don’t know about, and you won’t find in writing, because the CRA doesn’t want you to know about them.

As a former CRA Collections Senior Officer – who spent almost 11-years collecting primarily business taxes – GST/HST, Payroll, Corporate Tax, and Personal tax – and managing CRA Collections staff – I understand Director’s Liability, Non-Arms Length Assessments, Write-Off’s, Payment Arrangements, Taxpayer Relief, and everything else to do with collections better than anyone!

I created the Write-Off checklist that many CRA office’s use to write off their accounts.

I have resolved files that the CRA never thought they would collect on, while I was working at the CRA, and working outside the CRA.

Knowing the ins and outs of the CRA’s Collections division helps you!

Remember this: Getting in to Tax Debt takes time. Getting out of Tax Debt also takes time!

If someone is offering you a quick solution, then they are trying to get you into Bankruptcy, or filing a Consumer Proposal.  Insolvency firms are creating “tax” centres to “help” you with your tax debts.  They offer prompt resolution of CRA Collection actions, such as; Requirements to Pay and Wage Garnishments because if you go bankrupt the CRA cannot collect their debts… Most of the time.

Learn what options you have, which are specific to your Tax Debt / Tax Compliance matters.

The CRA has options available for Taxpayers who cannot pay their debts.

Use those, instead of trading Tax Debt for Credit Problems.

Talk to us at inTAXicating!

Find us @ http://www.inTAXicating.ca

Email us at info@intaxicating.ca

Learn the plan to take control of your Tax Debt, and all your other tax-related / debt-related issues and get moving in the right direction today.

There is no need to run to a trustee.

Or spend thousands and thousands of dollars to a firm who is going to promise solutions – tell you the CRA won’t budge on their position – and then tell you that the best option is to go bankrupt.

Get started on resolving your tax debt(s) today.  The CRA still works in the summer!

http://www.inTAXicating.ca

 

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Frequently Asked Tax Question Answered: How do I know if what I read about Tax Debt to the CRA is true?

This is one of the most commonly asked questions of me: How do I know if what I read on the Internet regarding debt to the Canada Revenue Agency (CRA) is true or not?

The answer is quite clear, however, complicated at the same time.

If you owe money to the CRA and you are looking for options, suggestions, or tips on the Internet, you have to pay special attention to the “Solution” options which are advertised as if they are providing legitimate advice.

The most important thing to do is to take note of the terminology used in these ads – over and over again – because the intention of these ads and blog posts are not to help you but to achieve a high SEO (search engine optimization) ranking.  These posts are written to capitalize on the number of eyes who will read that post because of the way it was written, not because it was intended to provide help to you.

Here is an example of a fear mongering ad, disguised as an article on taxes, meant to “help” you.  I am paraphrasing the content, but the example should provide a clear clue as to the true intention of the poster.

Title: Understanding Canada Revenue Agency (CRA) Tax Assessment & Arbitrary Assessments

The sample post: CRA tax assessment is when the Canada Revenue Agency conducts a review of your income taxes. The most common form of CRA tax assessment is the Notice of Assessment that is sent once the CRA has conducted a preliminary review of your tax return. There is another CRA assessment known as “arbitrary assessments.”   These assessments are also known as “notational assessments.” What this means is that, if you have not filed your taxes on time, the CRA could decide to complete and file your return for you.

Many people believe that, if you do not file your taxes, that the CRA will wait until you do file your taxes and then the CRA will penalize you by changing you penalties, fines, and interest.

This is not always true.

The CRA is able to choose to complete an arbitrary assessment in which the Canada Revenue Agency will estimate your income and the tax debt that you owe and then the CRA will charge interest on this debt as required.

The amount of tax debt that comes from a CRA arbitrary assessment will  not be as favourable to you as it would be if you completed your return yourself.

The CRA will use previous income tax statements to complete your return and will not take steps to include expenses or deductions or attempt to give you any tax breaks.

In many cases, the amount owing listed by the CRA will be very high and additional charges, penalties and interest will be charged since the assessment was late.

You will then be subject to CRA collection efforts such as a wage garnishment of up to 100% of your income, or the CRA will empty your bank account and then freeze it so you cannot use it.  They could also put a lien on your house and if you don’t pay them, sell it and keep the proceeds.

What do you do if you Receive a Notational Assessment?

If you receive an arbitrary CRA tax assessment, your options are;

  1. Pay the amount listed
  2. File an appeal of the assessment.
  3. You can also choose to file a return yourself at this point in an attempt to reduce your tax bill, but, this will trigger a CRA audit to ensure that your tax return is filed correctly.

In addition, if the CRA does not have the information it needs in order to complete an arbitrary assessment, it can take you to court where the court can order that you complete the return and pay a court fine.

If you ignore this court order, you could be subject to contempt of court charges and go to jail.

As you can see, your best option is to contact us, and we will help solve this problem.  We have an army of former CRA staff at our disposal who deal with hundreds of these daily.

Let us help keep you out of jail and away from the prying eyes of the CRA.

 

WHEW.

After reading this, if you were not afraid of the CRA, you must be by now.  This blog post started out trying to get people looking for CRA tax solutions and slowly wound its way through a series of lies and mis-truths and took the reader straight to audit and jail.  It just stopped short of proclaiming that King Tax Man was going to descend from the clouds and throw tennis sized hail-balls at you.

This type of article is not good.  It’s not accurate, heck, some of it is not even true.  But how would you know?

What are the red flags that you should notice?

Let’s break down this article and address some of the “facts”.

First paragraph – mentions of CRA, or Canada Revenue Agency – 5 times.  This is their SEO target, clearly.

I was also alarmed that the writer was unable (or unwilling) to state what a Notice of Assessment (NOA) is, and how the CRA actually issues them.  To set the record straight, a Notice of Assessment is the computer generated form which is issued once a change occurs on someone’s tax account.  This NOA carries with it a legal warning from which the CRA are able to take collections actions.

An additional lie occurred when the author stated that your tax return is looked over once it is filed.  In truth, no one has reviewed your tax return.  The data entry group take the paper-filed returns and just enter the information in the system.  Electronically filed tax returns are run through a program aimed at identifying any obvious errors or inaccurate deductions taken.

There is the idd case where the CRA will flag and wait for your tax return, however try not filing for 20-years and being under audit regularly, and then you can get to that level.

Canada’s tax system is a self-reporting system so the information is accepted as filed, and the Audit, or Verification department are responsible for checking the information to make sure it is correct after the fact.

Another HUGE issue, is that there is a significant difference between an arbitrary assessment and a notional assessment.

Arbitrary assessments are issued for personal (T1) taxes and occur when the CRA’s non-filer group, or a CRA collector takes information on your personal tax account for that current year, plus previous years and prepare the unfiled tax return for you, less deductions.

In many cases, they are pretty accurate.

A notional assessment is specific to GST/HST and in these cases the non-filer unit or the collections unit will assess an amount owing for each period outstanding based on a suggested amount the system provides.  That suggested amount is a combination of the previous filings, and the industry or SIC code that is associated to your file.

In both cases, returns can be filed and the assessments removed, however, Notices of Objection should be attached just to provide recourse should the filings not be accepted.

Filing the missing returns does not trigger an audit.

The whole piece about the CRA taking you to court, etc., makes absolutely no sense as it’s not even true.  Arbs and Notionals are based on information in the CRA’s systems.  If the CRA doesn’t have information, they can still raise an assessment.

I suspect the writer was just trying to close out the reasons for using them by tieing in the jail / court fine, for not complying.  It’s not true at all, but it makes for a compelling story!

If the intention of the article was to really assist Taxpayers and let each and every Canadian decide if they want to pay for assistance / expertise, then all they had to do was discuss prosecution which is what the CRA can and will do if repeated attempts to file have been issued from the CRA (Demand to File) and have not produced the returns.

Maybe they didn’t know that existed…

Maybe they were not aware that failing to file is a criminal offense, if the CRA asks for the returns and they are not provided.

Certainly, they did not want you to know that failing to pay is not.

If someone looked at the above post, they would panic, contact this firm, and likely be convinced to pay a lot of money for something they could likely do themselves because they don’t want to make it worse, or go to jail.

It’s hard to get the truth out there when there are people and firms distorting the facts in order to make a profit off of taxpayers lack of understanding of how the CRA works.

Additionally, if they intentionally muddled the facts in this post to scare you into using their services, what other information have they creatively adjusted?

Or, if they believe this to be the truth, then they just don’t have the experience or expertise to know better, and do you really want to use them to represent you in dealings with the CRA?

Outcome:

I questioned the author in an online social media forum.  I said, “I’ve always understood that an arbitrary assessment was specific to T1 returns and that they were actually quite accurate because most of the information used is already posted to your T1 account, whereas a notional assessment was specific to GST/HST and those figures were based on the industry or SIC code. Can you confirm this is your understanding as well?”

He never responded…

Surprised?

I’m not.

When you have CRA tax collections problems then you need the expertise of the firm with an actual former CRA tax collector.  inTAXicating Tax Services.

Visit us at http://www.inTAXicating.ca

You Filed Your Tax Return to the CRA. You Owe CRA Money. Now What?

You have filed you Canadian personal tax return by the April 30th deadline and you owe the CRA money.  Now what?  You have heard horror stories about how the Canada Revenue Agency goes about collecting taxes dollars.

You need to act fast, right?

Well that is exactly what is wrong with tax-filing season in Canada.

What about if you owe more to the CRA because you already have a balance, or if you happen to be self-employed and you plan on having your tax returns prepared after the April 30th deadline, but before the June 15th deadline for self-employed Canadians, and you find out that you owe money to the CRA?

Or, what if you carry a balance year-over-year because between taxes owing and installment payments, you just can’t keep up?

What do you do?

What are your options?

If you listen to the radio, you are likely to have noticed that about every 3rd ad is a commercials talking about debt.  In these commercials, very calm voices talk about how it feels to be in debt and how they a simple solution for debt.  They even refer to “programs” which are supported or endorsed by the Canadian government. and in 10 minutes / 15 minutes / 20 minutes, you too can be debt free.

It’s convenient.  Too convenient…

Their solution is bankruptcy or a consumer proposal, and their solution is a great way for you to no longer have debt owing to the Canada Revenue Agency, or your credit card provider, etc.

What they fail to mention, is that you are paying them money to trade your debt problem for a credit problem.

Sure, you won’t owe the CRA any more, but now that the euphoria of that “win” has worn off, you now have to face reality that you have no credit for 3-7 years at best.  During that 3-7 years, you won’t have a credit card unless it’s a prepaid one, and you won’t be able to get a loan, and you cannot be the director of a corporation.

During that period where you are under a  proposal or in bankruptcy, the CRA can, and still will raise assessment where they are allowed by law to, such as raising s160/s325 assessments for assets transferred to avoid paying the CRA, or if you act as a director even though the director is someone else’s name.

Forget about it if the CRA has already placed a lien on an asset.  That survives a bankruptcy.

But the commercials make it sound SO appealing, so quick, and so good.

I’ve always felt that bankruptcy and Consumer Proposals are great options for people with no options.  If your debt is tax-related then you really should know what your options are before jumping at the first thing you hear and making these Trustee / Insolvency firms rich, so they can advertise even more, but up bigger billboards and open their own “tax solution” businesses to “help” you with your tax problems.

Don’t fall for the easy way out, because you get way more than you bargained for!

Instead, contact us, inTAXicating, and let us diagnose your debt, and tell you the best options for you, and not what works best you the trustee or the CRA.

http://www.intaxicating.ca

What’s New For 2018: CRA

The Filing deadline for your 2017 Personal Tax Return (T1) is April 30th, 2018.

While most Canadian income tax and benefit returns for 2017 are due on April 30, 2018, if you or your spouse or common-law partner is self-employed, you have until June 15, 2018.

You can file online as early as February 26, 2018.

Filing early ensures your benefit and credit payments are not delayed or stopped.

If you have a spouse or common-law partner, they should also file a return early.

The benefit and credit payments include (Link to CRA website included):

This year, the Canada Revenue Agency is making it easier for paper tax filers to do their taxes by mailing them their forms and guides directly.

Want your tax refund faster?

You can register for  the CRA’s direct deposit, and receive your income tax refunds and benefits quickly and securely, however, if you provide the CRA with your bank information AND fall into tax troubles, the CRA can, and will, use that bank account to freeze or seize the money in it to pay off the debt.

Additionally, there are some new changes which can impact your tax return, some of which include;

Medical Expense Tax Credit for Reproductive Expenses

The medical expense tax credit provides relief for individuals who have paid significant medical expenses for themselves or certain dependants.  This credit is non-refundable credit and is intended to reduce taxes owing.

Effective for 2017, amounts paid for reproductive technologies for the purpose of conceiving a child can be claimed as a medical expense tax credit, even if the individual does not have a medical condition preventing them from conceiving a child. Previously, the medical expense tax credit was available if the use of the reproductive technologies directly related to a medical infertility condition.

A request can be made to the Canada Revenue Agency to claim reproductive technologies expenses unclaimed in the last 10 calendar years.

Certification of Disability Tax Credit Certificate

The Disability Tax Credit program provides relief for individuals who have a severe and prolonged impairment in physical and mental functions by providing a non-refundable tax credit that can reduce taxes owing.

As of March 2017, nurse practitioners and medical doctors are allowed to certify Form T2201, Disability Tax Credit Certificate.

Federal Public Transit Credit

After June 30, 2017, amounts paid for eligible transit passes no longer qualify for a non-refundable tax credit, however, you can claim a non-refundable tax credit in your 2017 income tax and benefit return for eligible transit passes paid from January 1, 2017 to June 30, 2017.

As a result of the changes made to the Federal Public Transit Credit, the Ontario government introduced a new refundable tax credit effective July 1, 2017, and to be eligible to claim this credit, you must meet the following criteria:

  • Be 65 years of age at the beginning of the year;
  • Reside in Ontario at the end of the year; and
  • Paid for eligible transit service from July 1, 2017 to December 31, 2017 (receipts should be retained).

The maximum refundable credit that can be claimed for 2017 is $225. For subsequent years, the maximum refundable credit is $450. Visit the Canada.ca site here, for additional information.

Tuition, Education and Textbook Credit

Effective January 1, 2017, the Federal, education and textbook credits were eliminated, however, any unused credits from previous years can be carried-forward.

As a result of the 2016 Ontario Budget, changes were made to the Ontario tuition and education non-refundable tax credits. Credit is available for eligible tuition fees paid for studies before September 5, 2017. In addition, credit for the education amount is available for months of study before September 2017. Unused credits from previous years can be carried forward.

FILE

Of most importance is that you must file that tax return on time to the CRA.  If you have a habit of being late, the CRA will increase the amount of the Late Filing Penalty (LFP) year-over-year, and they multiply that percentage against the amount of taxes owing.  There is not limit to the amount of penalties which can be charged, and the most I have seen is 93%.  That is a LOT, and it’s in addition to the taxes owing!

If you need assistance with anything discussed above, or if you require more details, or have CRA debts, you can reach us at info@intaxicating.ca for your coast-to-coast CRA Collections expertise.

Visit our website, http://www.intaxicating.ca.

Belgian Tax Authorities Going After Crypto-Currency Investors

It is no surprise, that the Tax authorities in Belgium, the Special Tax Inspectorate (STI) have begun to monitor investments involving Crypto-Currencies.

The STI have started investigating cases where citizens of Belgium have traded in digital currencies on foreign exchanges, and similar to many other countries around the world, the Belgium tax authorities are checking to see if these investors have been claiming their dealings and paying the 33% Capital Gains tax.

This gain would be reported in the “other income” section on a Belgian tax return.

Belgian tax authorities have found the taxation of Crypto-Currency challenging as every other county has, because the management of these assets takes place on foreign trading platforms and there is no jurisdiction around virtual space… Yet.

Likely, the Belgian tax authorities will follow suit of other countries and tax the gains as a commodity based on the location and / or residence of the trader.

The incentive to report will come in the way of significant penalties and interest when the STI finds the taxpayer before the taxpayer reports.

STI opened the investigations after receiving information from a foreign tax authority about the Crypto-Currency dealings of several Belgian citizens.

Information sharing among all tax authorities increased effective January 1, 2018 with the signing of The Multilateral Competent Authority Agreement (MCAA).

The MCAA is a multilateral framework agreement which provides a standardised and efficient mechanism to facilitate the automatic exchange of information in accordance with the Standard for Automatic Exchange of Financial Information in Tax Matters (Standard).

This new framework avoids the need for several bilateral agreements to be concluded, which means each participating country has ultimate control over exactly which exchange relationships it enters into and that each countries’ standards on confidentiality and data protection always apply.

In case you are ready to deem this framework illegal, the legal basis for MCAA rests in Article 6 of the Multilateral Convention on Mutual Administrative Assistance in Tax Matters (Convention) which provides for the automatic exchange of information between Parties to the Convention, where two Parties subsequently agree to do so.

So as it becomes easier to get information on local citizens from international tax regimes, you can expect government tax authorities, like the STI to continue to approach trading platforms, and other governments  directly to obtain more data about Belgian citizens and their transactions related to digital currencies.

In December 2017, the Belgian tax agency, STI, agreed that a 33% withholding amount would be applied to profits and incomes from Belgian citizens who were involved in speculative trading of Bitcoin and other Crypto-Currency.

The tax is imposed on private individuals who trade in digital currencies with the intention of earning profits from the price fluctuations.

When the crypto trading is conducted by a business, or by an individual as a business, the tax rate might be as high as 50%.

Governments believe that Crypto-Currency companies should be obliged to cooperate with tax authorities, or as in the case of the US, where the IRS sent legal requirements to a firm, who were then required to do so by law.

In Belgium, Crypto-Currency are neither legal, nor illegal, however, the government have not announced a comprehensive policy yet, and like other EU Countries, appear to be waiting for a common European policy.

If you have been dabbling in Crypro-Currency, and not reported it on your Canadian Tax return, you should reach out to us at inTAXicating Tax Services, and we can help you amend your return, report the gaims, claim the losses and get filed before the CRA finds you!

info@intaxicating.ca

 

2018 Federal Budget Highlights: 12 Changes Related to Taxation, the CRA, and you, the Canadian Taxpayer

The Federal Liberal government has just unveiled their 3rd budget, and in doing so will be increasing spending by roughly $20 billion dollars, bringing the federal deficit to roughly $670 billion dollars.

Looking at the tax issues, here are the main items which come from the budget this afternoon;

  1. 5-Week “Take-it-or-leave-it” Paternity Leave.

The government implemented a 5-week “take it or leave it” parental leave, pretty much like what Quebec has, in order to entice more dads to take paternity leave.  This would begin June 2019 (not sure why it takes this long to implement) and the Liberals expect it to cost taxpayers $1.2 billion dollars.

What this does not do is change the corporate culture which deters dads from taking time off, nor does it entice more moms to join the workforce.

What might have helped, would be more available daycare spaces, or fixing the Live-in Caregiver program which worked very well until it didn’t.

2.  Throwing bad money after bad money – Phoenix Pay system

If you have been following the Phoenix payroll fiasco that has been going on in the CRA, you would know that the CRA has already spent a lot of money on a payroll system which didn’t work, and then a ton of money to try and fix it.

Now, the Liberals have announced that it intends to eventually move away from Phoenix and explore the “next generation of the federal government’s pay system, but before doing so, the Liberals provided $16 million over the next 2 years to “research” a new pay system.

I’ll do that on my own, for half that amount.!

While “researching,” the CRA will now have $431.4 million over 6 years to try to fix the existing Phoenix system.

When you add the hundreds of millions of dollars that the Liberal government has already invested in fixing the Phoenix pay system, and the researching costs, and the budgeted costs, you will come to a figure of roughly $900 million on a system that this government will move away from.

This system was supposed to save the government roughly $70 million per year, starting in the 2016-17 fiscal year, and the Auditor General even said that scrapping the pay system would be the worst thing the government could do because if they start from scratch, they could have the same issues with another system!

3.  Help for the CRA to answer their phones!

The Liberal government is providing $206 million over 5-years to the CRA to help the Agency answer their phones.  This issue came up in November when the Auditor General noted that the CRA’s call centre only picked up the phone about one-third of the time.

The money will be used to improve the CRA’s telephone service, improve their online services and increase the number of community-based programs which help low-income people prepare their tax forms.  Ideally the call centre hours will also be expanded, and more training will be provided to ensure that more correct answers are provided.

4.  Private Company Passive Investment Income

Beginning taxation year 2019, there will be a phasing out of access to the small business deduction for Canadian Controlled Private Corporations (CCPC’s) which earn more than $50,000 of investment income.  The current rules for the refundable tax on dividends paid by CCPCs will also be amended.

CCPC’s are entitled to a preferential tax rate on up to $500,000 of qualifying active business income – the “small business deduction.”

Going forward, CCPC’s who earn income or net capital gains from property (not properties used in an active business) will be treated as follows; For each $1 of investment income earned over $50,000, the small business deduction limit will be reduced by $5, so once a CCPC has investment income greater than $150,000, they will lose their small business deduction entirely.

The government has decided that Canadians who earn income passively, ie/ rental income, deserve to pay more tax because either;

a. It’s not fair to Canadians who have to “work” to earn income

b. The Liberals got elected taxing the “rich” and by earning money this way – damn you – you are on their list, or,

c. The Liberals would tax a tax if they could because they need tax revenue to pay for all their promises.

5. New Tax Rules for Trusts to begin in 2021.

The government needs more taxes, hence the new tax reporting requirements for trusts which were unveiled in the budget.  The intention of these new rules is to provide the CRA with information related to beneficial owners, or potential beneficial owners of trusts.

Currently, trusts which do not earn income or make distributions in a taxation year are generally not currently required to file a T3 trust return.  (Trusts are required to file T3 returns if there is tax payable in the year or if the trust distributes income or capital to its beneficiaries.)

These new rules apply to express trusts which are resident in Canada as well as to non-resident trusts currently required to file T3 returns.  Each trust will have to provide the CRA with the identity of all of its trustees, beneficiaries and settlors, as well as each person who has the ability – through the trust terms or related agreements – to exercise control over trustee decisions regarding the appointment of income or capital of the trust, such as a protector.

The budget currently grants an exemption to mutual fund trusts, segregated funds, trusts governed by registered plans, graduated rate estates and qualified disability trusts, non-profit organizations and registered charities, and certain trusts that have been in existence for less than three months or that hold less than $50,000 in specified passive assets.

6. Tiered Partnerships Losses and At-Risk Rules

Essentially, partnerships wanted to use losses from one partner to lower the income of another partner, but the CRA disagreed.  The matter went to court and the CRA lost.  This budget reverses the CRA’s loss, making it a win, and worse than that, it is effective the date of the budget, which was February 27, 2018.  Losses are now lost.

7. Increased Assessment Period for CRA on Foreign Interests

Effective February 27, 2018, the CRA will have an extended reassessment period of taxpayers in respect of income arising in connection with foreign corporations in which they have at least a 10% interest in because it’s a long, often difficult process for the CRA to audit these foreign affiliates.

8. Reduced Filing Deadline to 6 Months for T1134.

Effective 2020, Taxpayers who currently had 15-months to file Form T1134, now have 6-months to do so.

9. Fighting Aggressive International Tax Avoidance

The Liberal government committed to fight international tax avoidance by strengthening rules related to controlled foreign corporations, addressing issues of treaty abuse, adopting the OECD revised Transfer Pricing Guidelines, and of greatest significance is the pledge to abide by tax reporting requirements of countries which Canada bilateral exchange agreements – and providing information to the tax authorities of these countries.

The acceptance of the OECD multilateral competent authority agreement now increases the countries which Canada can provide information to, and get information from.

Additionally, the CRA will be able to participate in what was called a “spontaneous exchange of information” on certain tax rulings with other tax administrations as part of a coordinated international effort to counter harmful tax practices.

The CRA also gets $38.7 million to expand its offshore compliance activities through the use of improved risk assessment systems and business intelligence, and to facilitate the hiring of additional auditors.

The anticipation is that the CRA will need these auditors to act on the new information they will be receiving as a part of the OECD/G20 Common Reporting Standard participation.

Another key tax issue relates to reassessment periods and non-residents of Canada to address a scenario where the CRA reassesses a taxpayer in order to reduce or eliminate a loss in a taxation year which results from a non-arm’s length transaction with a non-resident.  Currently, the CRA cannot reassess the taxation year to which that loss was carried back because the reassessment period has elapsed, but going forward, the CRA will have 6 years after the normal reassessment period to reassess the year to which the loss was carried back in such circumstances.

Another change impacts a scenario where a taxpayer contests a requirement for information (RFI) or an application for a compliance order – as this period will not be included when computing the time limit for the CRA to reassess.

This “stop-the-clock” rule is similar to the existing rule that applies for purposes of requirements for foreign-based information.

10. GST/HST

GST/HST is applicable on the fair market value of the management and administrative services provided by the general partner to an investment limited partnership where consideration becomes due or is paid before September 8, 2017.

GST/HST now applies to management and administrative services rendered by the general partner on or after September 8, 2017, unless GST/HST was charged by the general partner before that date.

The GST/HST is generally payable on the fair market value of management and administrative services in the tax year in which these services are rendered (however rules to calculate FMV, and what constitutes FMV were not provided at this time).

11. Excise – Cannabis Tax

A new excise duty framework for cannabis products under the Excise Act, 2001 applies to all products available for legal purchase, including fresh and dried cannabis, cannabis oils, and seeds and seedlings for home cultivation.

The cannabis taxation program will be administered by the federal government on behalf of most provincial and territorial governments on a coordinated basis. 75% of the taxation revenues from a combined $1 per gram / 10% of the price of the product, whichever is higher, excise duty rate will flow to participating provinces and territories, with the federal government receiving the remaining 25%.

12. Increased Funding to CRA and Tax Court of Canada

The budget provided money to the CRA and the Tax Court of Canada to:

  • $79 million over 5 years and then $15 million per year going forward in order to develop an electronic platform for processing trust returns;
  • $90.6 million over 5-years to help the CRA pursue domestic and international cases which have been identified as high-risk potential danger of loss through enhanced risk assessment systems;
  • $30 million over 5-years to enhance security measures aimed at better protecting the confidentiality of taxpayer information; and
  • $41.9 million over 5-year, and $9.3 million annually going forward to provide support for new front-line registry and judicial staff, most of whom are expected to support the Tax Court of Canada.

And so much more…

 

CRA: Cannabis Taxation at a Glance

Beginning likely in 2020, the Government of Canada will begin to legalize, regulate, restrict and tax cannabis to keep it out of the hands of kids, and profits out of the hands of criminals.

The Government of Canada believes that the total of federal and provincial-territorial taxes on cannabis products should not exceed $1.00 per gram, or 10% of the producer’s sale price of a product, and that this tax room should be shared equally between the Federal government and the Provincial government.

The proposed federal excise duty rate would be 50 cents per gram of cannabis, or 5% of the producer’s sale price of that product.

An additional rate would apply for an agreeing province or territory.

The proposed duty would apply to all cannabis products available for legal sale, including fresh and dried cannabis, cannabis oils, as well as seeds and seedlings for home cultivation.

The rate will also apply to the sale of medical cannabis.

It is important to note that excise duties are not paid directly by consumers. Rather, they are paid by manufacturers.

Cannabis product sales will be taxable under the Goods and Services Tax/Harmonized Sales Tax (GST/HST), as is currently the case for medical cannabis, for example.

The following example, provided by the government of Canada, illustrates the final price paid by consumers at a combined rate of $1.00 per gram, or 10% of the sale price:

One gram of dried cannabis

Pre-duty price: $8.00

Excise duty (per gram): $1.00

Subtotal: $9.00

GST/HST: $1.17

Total: $10.17

60 ml bottle of cannabis oil

Pre-duty price: $130.00

Excise duty (%): $13.00

Subtotal: $143.00

GST/HST: $18.59

Total: $161.59