5 BULLET FRIDAYS - Tax Mechanic News, Tips, Strategies

Bite size tax and finance related information that could save you $$$

Logical fallacies in Tax Court of Canada order?

We recently reported on a court order in a Tax Court of Canada application by Mr. Michael DiPierdomenico for an extension of time to serve a notice of objection regarding the reassessments for his 2011, 2012, 2013, 2015, and 2016 taxation years. The application was dismissed in September, based on several factors, including Mr. DiPierdomenico's inability to provide evidence supporting his claims and his failure to meet statutory deadlines.

Today we would like to add some comments as legal food for thought, to the particular paragraphs of the judgement which is available here.

6) How does absence of records prove a negative? What evidence could be provided to prove that he did not receive any notices?

7) As above, what evidence could be produced to prove a negative? How does receiving mail from other senders relate to receiving mail from the CRA? What difference does it make that he is a mail carrier as it relates to receiving notices?

8) The CRA's affidavits only referred to policies in place for mailing. The actual notices were not produced as evidence. How can the applicant bring forth credible evidence to refute the fact of receiving notice when there is none?

11) This point is not relevant as the Respondent did not prove that the assessments were sent.

All of the reasons provided were logical fallacies. One cannot prove a negative. An argument from authority, also called an appeal to authority, or argumentum ad verecundiam, is a form of argument in which the opinion of an authority on a topic is used as evidence to support an argument.

We have helped clients get an extension much after the deadline based on subsection 166.2(5). Do you have a court case? Call us!

Know your TFSA Designations:
Beneficiary vs Successor Holder?

TFSAs are a great way to save on taxes, but there is a lesser-known benefit of them in the strategic choice between naming a beneficiary or a successor holder. Beyond the simple act of sheltering investments from taxation, understanding the nuances of these designations can significantly impact the posthumous distribution of assets and the preservation of tax-free room.

How does it work?

TFSAs allow account holders to designate either a beneficiary or a successor holder and it has several advantages. It facilitates a faster transfer of assets to loved ones, over the time-consuming probate process. Additionally, keeping a TFSA out of the estate helps maintain privacy, as estate information becomes public record.

When an account doesn’t have a specified beneficiary or successor holder, the assets pass through the estate, subjecting them to scrutiny. However, by naming a beneficiary or successor holder, the TFSA assets bypass the estate entirely, ensuring a smoother transition to the recipient.

What is the difference? Read here!

Opting for corporate business income as salary (or a bonus) allows you to claim an income tax deduction for the salary, and payroll taxes like CPP and EI. Subsequently, you include the salary in your taxable income, subjecting it to personal tax rates.

Alternatively, your corporation can pay tax on its corporate income in the year it is earned and then distribute its after-tax corporate income to you as dividends in that year or a subsequent one. This allows for a lower tax rate (compared to salary) on eligible and non-eligible dividends, through the dividend tax credit. Read more!

CRA adjusts $458 M in CEWS funds

The CRA claw backs are getting serious. As an ongoing audit is in progress, the CRA has recently disclosed that it has denied or adjusted a total of $458 million in funds allocated to employers through the Canada Emergency Wage Subsidy Program, as of September 29. The CEWS was aimed to subsidize businesses' staff wages by 75% to encourage companies to retain their employees during the pandemic, when governments implemented the shutdowns.

The program that distributed about $100 billion in wage subsidies has undergone scrutiny by auditors suggesting that many businesses collecting wage subsidies did not meet the eligibility criteria. This concern came from discrepancies in their GST and HST filings, indicating an insufficient drop in revenue to qualify. Some reports indicate that while overall the majority of employers who received the subsidy showed a high levels of compliance, there were calculation errors and lack of documentation rather than actual ineligibility.
Read more here!

Have the CRA claw-backs reached you? Ask the Tax Avenger what to do!
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Shakira settles her tax fraud case before trial

A few months ago we wrote about the She-wolf’s potential tax jail threat due to accusations of tax fraud. Well, international pop star Shakira reached an agreement with Spanish prosecutors moments before her trial was scheduled in Barcelona. She was charged with six counts of tax fraud, failing to pay 14.5 million euros in income taxes.

Originally looking at a an eight-year prison sentence and a fine of over 23 million Euros, the last-minute settlement stipulated a three-year suspended sentence and a fine of 7 million euros.

During the proceedings, she consistently denied the claims, saying that she was not residing in Spain during the specified years. However, the prosecutors stated that since Shakira had spent more than 6 months a year in Spain from 2012 to 2014, it makes her liable for taxes in that country.

Here comes the important topic of being a resident for tax purposes, which concerns a lot of people who travel and live as digital nomads since the pandemic has opened this window.
Read more here!

Are you unsure whether you are resident for tax purposes in a country you are working in?

Is the CRA scouring your social media?

“Seven deadly tax sins. Seven ways the CRA is watching you. The CRA is scouring your social media and donning disguises. Whether it’s through a photo on social media or a casual conversation with a friend, the Canada Revenue Agency is always watching and listening. Their investigators will pursue you tirelessly if they think you’ve been lying on your tax returns.“

 Click here and watch my TikTok video to find out the rest!

Was this meant to scare you? Well, yes and no. We all know that if you get flagged, the CRA can cause you some serious headaches. But the Tax Mechanic is there to watch your back…

And that, my friends, would be IT for this Friday.
Have a safe and fun-filled weekend, and if tax problems weigh you down, all it takes is a call to start fixing them: