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5 BULLET FRIDAYS - Tax Mechanic News, Tips, Strategies
In this edition: Tax Law - Specific vs General Rules / Maria is Back! / CRA prolongs man's grief
Tax Mechanic
October 20, 2023
Bite size tax and finance related information that could save you $$$
There is a strategy called "tax loss utilization" or "loss buying" to decrease a company’s tax bill. Your loss could be worth money.
Interested? Let me explain... book a call with me here!
Should specific rules overrules general ones?
Yes, this is a bit convoluted if you don’t understand tax law, but here we go:
In a tax dispute case between a Canadian corporation (CRIC) and the CRA, the corporation lent money to its foreign parent with an interest rate set according to certain regulations. They followed the necessary rules to classify these loans as "pertinent loans or indebtedness" under specific tax laws.
The dispute arised regarding whether the CRA can apply two different sections of tax law, namely 17.1 and 247, to these loans. Section 247 involves applying an "arm's length" principle to transactions, including the determination of interest rates, while Section 17.1 lays out specific rules for interest rates.
The principle being contested here is that specific tax rules should generally be more relevant and should not be overridden by more general ones.
Read the case study here!
Do you have a tax court case? Let me look at it for you!
Maria is Back!!! Here is a letter from her to you:
To my clients:
I am back at the Tax Mechanic after a long-deserved first year with my baby at home. It's easier said than done, but it was important for me to be back and find a work-life balance.
I had an amazing year with my baby and kids, it was a very special time to reconnect with them.
To be honest, my job of juggling a heavy workload at the Tax Mechanic coupled with the never-ending responsibilities of family life made me a master of multitasking. Balancing life as a working mom is not impossible, though. Respecting my own time and setting reasonable goals helps me feel confident in what I do, both at home and at my job.
Looking forward to finding my new balance between work life, home life and good clients :)
I do not want to bore you further, but I am back and feel free to get in touch with me and so we can start working on your file!
Maria Correa
CRA Nightmare: The Brian Kirkham story
In 2016 Brian lost his wife, and after a bitter period of grief, a seemingly straightforward financial transaction transformed into a nerve-wracking battle with the CRA. Brian's wife had a RRSP, and upon her passing, these funds were transferred to Brian's RRSPs, as is typical for a spouse and beneficiary. This maneuver is designed to maintain a neutral tax situation, meaning that no additional taxes should be levied. However, the CRA had a different perspective.
The CRA claimed that Brian owed a staggering $139,000 in income tax on the approximately $240,000 transferred from his late wife's RRSPs. To add insult to the injury, they nailed him with a penalty for exceeding the RRSP contribution limit. Brian is a retired banker with 38 years of financial experience, and he was shocked with this move, stating "I was shocked. I was in finance for 38 years. I dealt with this all the time. It's a routine transaction."
China’s Ernie Bot better than ChatGPT?
Baidu, often referred to as the "Google of China," is deeply ingrained in the fabric of China's digital ecosystem. Established in 2000, over time it has evolved into a multi-faceted tech giant, offering search engines, cloud computing, AI, autonomous driving, and more.
So how does Baidu’s Ernie Bot compares to ChatGPT? It seems they both have their own unique strengths and applications. Baidu excels in voice recognition, autonomous driving, and language understanding within the Chinese market, while ChatGPT has made significant progress in natural language understanding and text generation, geared towards international audiences.
Either way both Baidu and OpenAI are contributing significantly to the global AI landscape, showcasing the incredible potential of AI and continue to push the boundaries of what this technology can achieve.
“Small Business Owners: Maximize your deductions”
“Small business owners can maximize their deductions by making sure that they have an excellent mint bookkeeping system. Meaning that you should be online, you should be knowing all your expenses, you revenue and profit...”