Tax & Business News
Trips, tips and traps
March 2016
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Links For March 2016
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Federal Interest Rates Q1
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Latest info from StatsCan
Population estimate
35,985,751
CPI Annual Inflation
2
.0%
Unemployment Rate
7
.2%
GDP Monthly growth
0.2%
Forward this email to a friend!
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California is the largest US state with a population three times that of Ontario. Ontario's debt is more than double that of California.
In graphic terms, the per capital debt in Ontario is a whopping $20,166 and over 9% of revenue is used to service the debts compared to $3,844 and 2.8% in California.
The Fraser Institute has prepared an analysis of this and it makes for sober reading. Find it
here
.
Thus, the introduction of the Ontario Retirement Pension Plan and the sale of Ontario Hydro point to desperate measures to balance the books.
Currently, Ontario spends $11 billion on interest payments annually and spends more than it collects!
The Fraser Institute has another interesting graphic comparing Ontario to the other provinces.
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Permanent Links
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PAYROLL
TAXES
CALCULATORS
MISCELLANEOUS
SENIOR'S CORNER
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| Calendar of Important Dates |
Corporati
ons with a December year end, claiming the small business deduction must pa y the balance of tax owing by the end of March.
Corporations with a January year end, not claiming the small business deduction must pay the balance of tax owing by the end of March.
Filing deadline for a September 30, 2015 year end is March 31
, 2016
March 22 - Federal Budget @ 4:00 pm
March 23 - Purim
March 25 - Good Friday
March 28 - Easter Monday
Next Issue - April 11, 2016
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GOVERNMENT GRANTS
Grant application assistance available...
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Grants for Entrepreneurs!
Starter Company Program to Provide Funding for New Businesses
The
Ontario Starter Company
program will provide a grant of up to 75% to a maximum of $5,000 for entrepreneurs aged 18-29 to start and/or expand a new business. Eligible participants must be Ontario residents who are not full-time students. Entrepreneurs will be required to commit at least 35 hours/week to their business venture, enroll in the "Business Training Program", and attend mentorship meetings for at least 6 months after receiving funding
Additionally, applicants will receive funding only if they are not participating in any other government funded entrepreneur training programs. Ineligible business types include marketing ventures, companies that are shared 50% or more, and/or are previously associated with other commercial businesses. Funding for new businesses is limited; applicants are encouraged to apply as soon as possible
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TAXPAYER TO BLAME
Read before you sign...
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In a December 16, 2014 Tax Court of Canada case, at issue was whether the Minister could assess the taxpayers outside of the normal reassessment period (generally three years after the notice of Assessment is issued for individuals). A taxpayer can be assessed outside the normal period if there is a misrepresentation that is attributable to neglect, carelessness, wilful default or fraud.
In 2002 the taxpayers withdrew $80,000 and $148,000 from their RRSP and transferred it into a "high performance" investment
but did not report the withdrawal from the RRSP as income. The taxpayer relied on the promoter for tax filing advice. In 2009 the Minister assessed the taxpayers with income for the 2002 year based on the withdrawals.
The Court noted that to rely mainly on promoters, their agents, and co-workers who were not experts, was not prudent behaviour. Further, there were additional red flags that should have made the taxpayers suspicious of the information provided by the promoters. Also, one of the taxpayers did not review their tax return.
As such, the Court found that the taxpayers did not
exercise the required degree of diligence. The Appeal was dismissed and the Minister was permitted to assess beyond the normal period.
Action Item: Review your tax returns and tax related activities to ensure you are duly diligent. Ask an expert if there are areas of question.
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RANSOMWARE
What you can do to protect yourself...
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A recent cyber attack against a US hospital highlighted the vulnerability of technology exposed to the internet. That a health institution should be subject to this kind of extortion reveals that heartless nature of the perpetrators.
Here is what you can do to protect yourself from ransomware:
- Daily Backup to a remote server that is not mapped on your network. Backups need to be tested regularly to insure files are being backed up and they are available to restore.
- Show hidden file-extensions to more easily spot suspicious files
- Deny emails with ".exe" extensions
- Disable files running from AppData/LocalAppData folders
- Use Third Tier software as a defense tool
- Keep your anti-virus software up to date
- Set restore points on you computer
See the full article by welivesecurity here.
Top of Page
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HOME ACCESSIBILITY TAX CREDIT
Seniors only...
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This new non-refundable credit will provide federal tax relief of
15% on up to $10,000
of eligible expenditures per calendar year, per qualifying individual (a person 65 years of age or older at the end of the particular taxation year or a person eligible for the Disability Tax Credit). If there is more than one eligible individual in a residence, the maximum eligible expenditure for that property will be $10,000.
A qualifying renovation
is a renovation or alteration that is of an enduring nature and is integral to the eligible dwelling. The renovation must:
- allow the qualifying individual to gain access to, or to be mobile or functional within, the eligible dwelling; or
- reduce the risk of harm to the qualifying individual within the eligible dwelling or in gaining access to the dwelling.
The credit is eligible for expenditures after 2015.This credit may be compounded with the similar provincial credits offered in BC, Ontario, and New Brunswick.
Action Item: As the $10,000 limit is annual, consider improving the house in stages over a number of years.
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Recent CRA Decisions
There is no escape from tax...
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REFUNDS FOR SOME
Brathwaite et al v. The Queen. Tax Court of Canada, February 1, 2016 (Amended December 8, 2015). Neutral Cite: 2016 TCC 29. Court File No. 2013-868(IT)G; 2014-1150(IT)G. Rowe DJ. Penalties -
Whether imposition of penalties for gross negligence justified -
The taxpayers were a husband and wife who
engaged third parties to prepare their tax returns, and those returns included
large fictitious business losses and loss carrybacks. The Minister disallowed all such claims and imposed penalties for gross negligence for the 2005, 2006, 2007 and 2008 taxation years in respect of the wife's returns and for 2007 and 2008 in respect of the husband's returns.
The taxpayers appealed and their appeals were heard on common evidence. The Court held that the
taxpayers had been duped by the tax return preparers but that the trust they placed in those individuals was unreasonable in the circumstances and constituted willful blindness.
The Court concluded that the Crown had failed to discharge its onus with respect to the imposition of penalties for the wife's 2008 return, but that penalties had been properly levied for the 2005, 2006 and 2007 years. With respect to the husband, the Court held that no penalty was justified for 2008, but that penalties were properly imposed for 2007. The appeals were allowed in part.
REFUNDS FOR EVERYONE
Regina v. Khan, Raza and Raza. Supreme Court of British Columbia, December 2, 2015. Neutral Cite: 2015 BCSC 2512. Court File No. 26305-2. Myers J. Tax evasion -
Whether issuance of false charitable donation tax receipts constituting fraud -
The accused were charged with defrauding the federal and provincial governments of tax revenue exceeding $5,000. The charges arose from a scheme in which they, in the course of operating a tax return preparation business,
allegedly issued false and forged charitable donation receipts.
The Court held that on the evidence the Crown had established beyond a reasonable doubt that false documents and false returns were prepared by the defendants. The evidence also established that the defendants Fareed Raza and Saheem Raza
were aware of the nature of their actions and therefore had the requisite mens rea to be found guilty of fraud. The Court concluded that the third defendant Faiz Khan was guilty of attempted fraud, since although he had the requisite mens rea to commit fraud, no actual return was filed with respect to the false donation receipt he prepared
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| Disclaimer |
 The preceding information is for educational purposes only. As it is impossible to include all situations, circumstances and exceptions in a commentary such as this, a further review should be done. Every effort has been made to ensure the accuracy of the information contained in this commentary. However, because of the nature of the subject, no person or firm involved in the distribution or preparation of this commentary accepts any liability for its contents or use.
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NEW NEWS
All you need to know...
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Life in the Tax Lane - March 2016
Watch this 10-minute rapid-fire discussion of select recent developments in the wonderful world of Canadian tax by the Video Tax News Team.
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| Life in the Tax Lane - March 2016 |
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Sincerely,
Howard Render, CPA*CA
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