Tax Law Blog
PWC's Response to the Proposed Changes to the TCC Act
We have written about the Department of Finance’s proposed rules to amend the Tax Court of Canada Act. However, we did not post PWC Canada’s submission. This morning, PWC Canada sent its submission to our firm
New OBA Tax Submission to the Proposals to Change the Tax Court Act
In an earlier post, we reported that the Department of Finance (the “Department”) proposed rules to amend the Tax Court of Canada Act and invited the public to comment on proposed changes. In the interim, the following articles and submissions have been published commenting on the proposed changes.
On December 3, 2011, the National Post published its article entitled “Tax court aims for speedier resolutions”.
PWC Canada sent its submission to the Department. We are working to obtain a copy of PWC Canada’s submission.
On December 14, 2011, the Tax Executives Institute sent its comments to the Department.
On January 20, 2012, the Lawyers Weekly published its article entitled “Limit bump among Tax Court changes”.
On March 9, 2012, the Ontario Bar Association sent its submission to the Department. (Full disclosure: I am a member of the OBA Tax Executive and one of its Public Affairs Liaisons. My responsibilities included working with the OBA Tax Executive to develop its response to the Department’s Proposals and draft the OBA’s submission.)
"Tax" Quote of the Day: Inadequate Reasons
Berlin v. Canada (the Minister of Citizenship and Immigration) relates to an application for judicial review of an Immigration Officer’s decision to deny an application for a permanent-resident visa. Although not a tax case, we believe that the Federal Court’s characterization of the Minister’s inadequate reasons are applicable to several Minister of National Revenue’s and the Canada Revenue Agency’s decisions to deny taxpayer relief from penalties and interest and decisions to deny applications under the Voluntary Disclosure Program.
The importance of the decision under review to this family demanded that careful consideration be paid to all of the evidence that the application not be denied on the basis of catch phrases about personal responsibilities and inconclusive observations about an apparent lack of forthrightness. A misrepresentation is not established by mere appearances.
Essential Tax Reading - Fighting for an Extension of Time in the Tax Court of Canada
Read ATX Law’s latest case comment, Fighting for an Extension of Time, published CCH’s Tax Topics Newsletter on January 6, 2012.
New ATX Law Article - Understanding Director's Liability & Due Diligence
The Tax Court of Canada’s decision in Buckingham v. Her Majesty the Queen was appealed to the Federal Court of Appeal (“FCA”). The FCA recently released its reasons for judgement. The courts’ decisions have provided valuable insight and generated discussion within the tax community. The Canadian Tax Foundation recently published ATX Law’s article entitled The Due Diligence Defence in Directors’ Liability Tax Disputes.
Taxpayer Relief Update
In Bozzer v. Her Majesty the Queen (“Bozzer”), Federal Court of Appeal held that the taxpayer relief provisions contained in the Income Tax Act allow the Minister of National Revenue (“Minister”) and Canada Revenue Agency (“CRA”) to cancel interest accrued in any taxation year ending within ten years before the taxpayer’s application for relief, regardless of when the underlying tax debt arose.
The Minister and the CRA have, in some circumstances, attempted to disregard the common law. We have been waiting for the CRA to announce its response to the Bozzer decision.
Today, the CRA distributed a news release entitled Taxpayer relief deadline is December 31, 2011. This news release confirms that the CRA will follow the Federal Court of Appeal’s decision in Bozzer. In addition, the CRA announced that it will adopt this change for requests for taxpayer relief made under the Air Travellers Security Charge Act, Softwood Lumber Products Export Charge Act and the Excise Act.
New Ministry of Finance (BC) Director's Liability Bulletin
The Ministry of Finance (BC) released a director’s liability tax bulletin that outlines the government’s position regarding director’s liability and the circumstances in which taxpayers may be held personally liable for a director’s failure to remit tax (the “Director’s Liability Bulletin”).
The Director’s Liability Bulletin includes the following passage related to deemed directors or de facto directors.
If a person who is not a director acts as if they are a director, the ministry may deem that person a director for the purposes of director’s liability. Director’s liability applies to such a person as if they were a director of record.
The ministry may consider a person to be a director if that person:
- purports to have the authority of a director,
- under their own authority, undertakes major actions or transactions for the corporation, or
- under their own authority, directs the business and affairs of the corporation.
However, a person will not be deemed a director because of actions they take:
- under the direction of a shareholder, director or officer of the corporation,
- as a lawyer, accountant or other professional acting solely in their professional capacity, as a trustee in bankruptcy, or
- as a receiver or secured creditor controlling its interests in the property of the corporation.
If the ministry believes that a person acted as a director, it will request additional information. If the ministry then decides that the person acted as a director, it will notify the person of its decision.
We recommend director taxpayers (or taxpayers that may be deemed to be defacto directors) to retain a tax lawyer with experience in director’s liability tax disputes to respond to any government requests for additional information and/or to prepare appropriate legal submissions.
Although the Director’s Liability Bulletin provides a limited explanation of the law surrounding director’s liability, we believe that knowing and understanding the government’s public position is valuable first step.
Interested readers can read the full Director’s Liability Bulletin here.
Proposals to Improve the Tax Court of Canada
The Minister of Finance, the Minister of Justice and the Attorney General of Canada have invited the public to comment on proposed changes to the Tax Court of Canada’s Rules.
If adopted, the proposals would:
- increase the Tax Court’s Informal Procedure limit to $25,000 or where a loss does not exceed $50,000 (the current limit is $12,000 or to $24,000 for a loss);
- allow the Tax Court to resolve issues independently; and
- provide a decision that bind a group of appeals regarding substantially similar transactions.
The Department of Finance may release draft legislation related to the proposals.
The deadline for submissions is December 16, 2011.
Interested readers can read the official news release Government Invites Comments on Proposals to Improve the Caseload Management of the Tax Court of Canada along with the Backgrounder: Proposals to Improve the Caseload Management of the Tax Court of Canada.
Tax Court of Canada Judicial Appointment Announced
The Honourable Randall S. Bocock, a lawyer with Evans, Philp LLP in Hamilton, has been appointed Judge of the Tax Court of Canada. Mr. Justice Bocock’s main areas of practice were corporate commercial law, administrative law and estates and trust law.
Mr. Justice Bocock was an active member of the legal community and was the founding director of Haven of the Homeless Child.
The Practical Taxman Cometh
The Financial Post Executive Podcast just posted our interview entitled “The Practical Taxman Cometh”.
Tax Attitudes & Tax Avoidance Survey
The Toronto Star published an informative article on September 8, 2011 outlining the results of a government survey related to tax avoidance and the underground economy. Read the Toronto Star tax article entitled Half of Canadians are ready to cheat on taxes, poll says.
Tax Quote of the Day: Credibility, A Perfect World & Reality
In the Tax Court’s reasons for judgement in Guilbault v. Her Majesty the Queen, the Honourable Justice Sheridan eloquently comments on the need to consider the taxpayer’s actions in light of the surrounding circumstances.
In a perfect world, I would agree. But the notional taxpayer who inhabits the pages of the Income Tax Act is blissfully unencumbered by the day-to-day concerns that afflict his human counterparts. In the Appellant’s case, gaining possession [of the investments] was but a dim ember on a horizon ablaze with more pressing concerns. I mention this not to relieve the Appellant of his obligations under the Act but to inject a note of reality into the facts as perceived by the Minister.
The Tax Court & Expanded Jurisdiction
The Tax Court’s Bench and Bar Committee and the Canadian Bar Association’s Tax and Charities sections have sponsored a new resolution proposing that the Canadian Bar Association renew its efforts to persuade Parliament to expand the Tax Court of Canada’s exclusive jurisdiction for all tax-related matters including judicial review of the Minister of National Revenue’s and the Canada Revenue Agency’s discretionary decisions under the voluntary disclosure program and the taxpayer relief provisions.
Supporters of the resolution believe that consolidating all tax matters within a specialized and expert court will improve cost, efficiency and service to taxpayers. Critics believe that the Federal Court provides good service to taxpayers and warn that the proposed change is a major substantive change.
We believe that this debate is important and any discussion that may lead to improved service, efficiency and access to justice in tax matters is gladly received. Unfortunately, the Canadian Bar Association’s governing council has decided to postpone its voting on the resolution until its next meeting in February 2012. We encourage interested readers to read Ms. Cristin Schmitz’s informative article published in the Lawyers Weekly entitled Tax and Federal Courts’ turf war goes public.
Tax Quote of the Day: Equity in Tax Law
“Seeking equity in tax law is like a blind person looking for a black cat in a dark room. We may find it by accident, but not too often.”
Vern Krishna’s comments appeared in his Financial Post article entitled Tax Court takes things literally.
Canada Revenue Agency Employee Facebook Page Urging Small Business Boycott Removed
Stephan Gieselmann, a CRA Assistant Director, created a Facebook page urging the public sector to boycott Canadian Federation of Independent Businesses (“CFIB”) members’ businesses reports Ms. Stefania Moretti. The CFIB is Canada’s largest small business advocacy group. The controversial Facebook pages has been removed and, at this time, the CRA would not comment on the matter. Interested readers can read Ms. Moretti’s article CRA staffer’s anti-CFIB Facebook page removed.
The CRA’s Administration of the Tax-Free Saving Account
The CRA’s Taxpayers’ Ombudsman reported that several taxpayers contacted the Taxpayers’ Ombudsman office complaining the Tax-Free Savings Account (“TFSA”) rules related to withdrawals and over-contributions were confusing. In addition, the Taxpayers’ Ombudsman noted several media reports describing taxpayer confusion regarding the TFSA rules.
In these circumstances, the Taxpayers’ Ombudsman conducted an investigation to determine whether the CRA’s TFSA information and administration complied with the Taxpayer Bill of Rights. In particular, the Taxpayers’ Ombudsman investigation focused on whether the CRA had provided taxpayers with complete, accurate, clear, and timely information and whether taxpayers who had inadvertently over-contributed to their TFSA and penalized were treated fairly.
The Taxpayers’ Ombudsman released a special report entitled “Knowing the Rules: Confusion about the rules governing the Tax-Free Savings Account”. The report stated that “[t]he CRA should have been more proactive in informing Canadians about the tax consequences of the TFSA”. In light of this finding, the Taxpayers’ Ombudsman recommended that the CRA:
1. take steps to make Canadians more aware of the information it provides about the TFSA on its Web site, in print, and elsewhere;
2. continue to update the information available on the TFSA and be proactive in informing Canadians about how to find the tax rules governing the TFSA; and
3. continue to work with the financial services sector to ensure that the CRA’s information products about the TFSA are widely available.
Dealing with the CRA? Here are 8 small things you should know
Read ATX Law’s recent article published by the Globe and Mail entitled Dealing with the CRA? Don’t Panic.
CRA Targeting Restaurants
The Globe and Mail published an informative article on August 2, 2011 explaining the CRA’s new audit program that targets restaurants using software designed to suppress restaurant sales i.e., zapper software. In addition, the Globe reports that the CRA intends to “develop a broad strategy to tack the problem” and that, although several cases are under investigation, the CRA has successfully prosecuted two cases. Read the Globe article entitled Taxman Finds Rampant Restaurant Fraud.
