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It’s Giving Season: Tax Credits for Charitable Donations vs. Political Contributions
By: Alexandra Tzannidakis In the public mind, the idea of tax credits for giving to ‘good causes’ sometimes leads to confusion and conflation of charitable tax credits and political tax credits. The truth is that charities and political causes are legally very distinct concepts (there is no such thing as a political charity) and although an individual can get tax credits for donating to both, the schemes that govern the reporting and calculation of these ...
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The Penny Drops
It is common knowledge that taxation authorities around the world are playing catch up with the developments of new technology. One of the most interesting areas of such ongoing technological development has been the advent of Bitcoin. But at least in the case of Bitcoin it seems that the Income Tax Act’s broad general definitions mean the Department of Finance is ahead of the game for once. Bitcoin is a type of virtual currency. It ...
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Beyond the Grave: Balancing Confidence and Flexibility in Gift Planning
Balancing Confidence and Flexibility in Gift Planning By: Adam Aptowitzer One of the unstated pillars of gift planning is to find ways of assuring a donor that his/her wishes will be carried out after death. Unfortunately, this can be a double-edged sword. While it may help convince a donor to give now the future needs of a charity can be difficult to anticipate. Consequently, it is important to balance flexibility with respect for the donor’s ...
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Back to the Tax Basics
Lawyers and advisors in the charitable sector often discuss high level tax topics in articles and seminars - but, for many, tax remains a dark and mystical art. Indeed, even those who once professed an understanding of the system may, over time, lose touch with the basics if they do not remain current on developments. This is a somewhat reasonable reaction to the complexity of anything tax related, but ostriches do not have a good ...
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Start the Clock – New Case on Suing Tax Advisors
By: Adam Aptowitzer It is no secret that over the past few years there have been a number of circumstances which have led to lawsuits against tax lawyers and accountants. These have primarily been related to the proliferation of tax shelters but, as always, there are the usual negligence claims resulting from more typical work. One recent Ontario case is instructive in discussing the limitation period relating to such cases. It is common amongst the ...
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Seduction, Money and Tax New Court Decision: Sensible but Unsettling
In the still smoldering wreckage of the charitable donation tax shelters a new case has surfaced, which dealt with the involvement of some of the planners. Interestingly the case does not attack the individuals for their role as planners but rather for their own participation in an individualized version of the tax shelter they later peddled to others. And in this interesting reversal of the cobbler’s children phenomenon the individuals donated millions of dollars through ...
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When the Tax Man Cometh
In September 2015, Adam Aptowitzer presented at UN Tied to the Chair, Held at the prestigious Orange Art Gallery, this invitation-only event featured industry thought leaders from the legal, financial and operations world, who informed, engaged and empowered local dentists. To view the presentation please check out the video below ...
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Supreme Court Rules Against Director of a Charity
By: Adam Aptowitzer As Counsel for Ms. Guindon in her case with the Minister of National Revenue we have kept our readers abreast of developments as the appeal wended its way to the Supreme Court of Canada. On July 31st, 2015 the Supreme Court issued its ruling in the matter thus ending the appeal for Ms. Guindon. The Supreme Court found that Ms. Guindon was indeed civilly liable for her actions related to the issuance ...
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Charter Protection Cannot be Taken for Granted
By: Adam Aptowitzer It is almost trite to say that the Canada Revenue Agency is dedicated to the administration of the income tax system in this country. There are exceptions to this, of course, the most obvious being the regulation of charities. However, a recent amendment to the Income Tax Act giving the CRA new powers may have gone beyond adding ancillary duties and created a secondary mandate for the agency. New subsection 241(9.5) requires ...
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An Oscar Worthy Performance
By: Adam Aptowitzer Readers will likely agree that the study and practice of taxation can be both interesting and, at least at times, exciting. It is therefore surprising that there are not more movies featuring tax lawyers and accountants. One would imagine these movies would show a tax litigator with a well-muscled calculator finger fighting off the faceless hordes of CRA auditors to free the unjustly reassessed taxpayer in distress. Yet, despite the self-image of ...
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Tax Litigation and the Veil of Secrecy
There are many lawyers in the country who chafe at the name appropriated by the Department of Justice given the Orwellian connotation that it has a monopoly on its dispensation. In reality, the DoJ is the law firm for the federal government and thus acts as other law firms, providing advice to all government departments. That advice is either accepted or ignored by their clients. But unlike lawyers of the private bar whose paramount duty ...
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Considering Costs in Estate Litigation
A recent judgment from the Ontario Court of Appeal provides a good reminder to factor in the risk of paying costs before deciding whether to litigate a matter. In Sawdon Estate v Watch Tower Bible and Tract Society of Canada et al.[1], the court awarded a type of ‘blended’ costs that are outside the usual rules of estate litigation cost awards. The judgment is also a good object lesson in the types of considerations a ...
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Fighting Back
By: Adam Aptowitzer One does not need to be a tax lawyer to be familiar with stories of CRA officials using their office and abusing their power to cause problems for their fellow citizens. Obviously, the vast majority of CRA representatives act in a professional manner but a small number of miscreants can cause such dramatic and catastrophic consequences for otherwise law-abiding citizens that their tales of woe colour the reputation of the entire Agency ...
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Bolting the Barn Door After It’s Burned to the Ground
By: Adam Aptowitzer In a report entitled “Donor Beware”[1] the Tax Ombudsman opined on the CRA’s administrative responsibilities regarding charitable donation tax shelters. Perhaps the most surprising thing about the report is that it is dated March 19th, 2014 after years of legislative implementation of tools for the CRA to crack down on tax shelter promoters, charities, directors of charities and donors connected with such plans. As far as we can tell most offensive tax ...
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Death and Taxes May Be Inevitable…
... but Does It Have to Be So Complicated? By: Adam Aptowitzer We have written before (several times in fact) of the great untapped potential in the donation of shares of private companies to charity. That there is great value in private companies is evident in their title as the engine of our economy. And the opportunity for capitalizing (if you’ll pardon the tax pun) on these assets lies with the turnover of assets that ...
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Guindon Case on Section 163.2 Penalties Headed to Supreme Court
By: Alexandra Tzannidakis The Supreme Court of Canada has granted Julie Guindon leave to appeal from a Federal Court of Appeal decision that held section 163.2 penalties against tax advisers are not “penal” and therefore do not attract section 11 Charter rights. Our readers may recall that we have written about this important case in the past.[1] Ms. Guindon was assessed penalties amounting to $564,747 under section 163.2 of the Income Tax Act on the ...
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The Dire Consequences of Failing to ‘Continue’ to the New Federal Not-for-profit Corporations Act
Advisers acting for federal not-for-profit corporations take heed: you have a deadline of October 17, 2014, by which to switch over (or “continue”) to the new Canada Not-for-profit Corporations Act. The changeover period has been running since 2011 and this year is your last chance to comply… and yet, less than 10% of affected corporations have actually taken the plunge. So, let us put this another way. On October 18, 2014, Corporations Canada will start ...
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Israel Changes Trust Rules
By: Adam Aptowitzer Taxing on the basis of residency rather than citizenship has an element of fairness as, at least in theory, only those who use a country’s services should be forced to pay for them. On the other hand, as times become difficult for governments increasing the tax base is increasingly seductive. In 2000, the Canadian government of the day succumbed to temptation, at least in part, and introduced legislation to tax any non-resident ...
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Suing the Tax Man
by: Alexandra Tzannidakis EquiGenesis Corporation and its owner, a corporate commercial lawyer by the name of Kenneth Gordon, have filed a statement of claim against the CRA and one of its senior auditors. The corporation is claiming substantial damages from the CRA for intentional delays and disregard of its own policies that injured EquiGenesis’s business. For anyone who has ever experienced hair-pulling levels of frustration from CRA delays (all of us), this lawsuit offers a ...
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New Hope for Taxpayers Caught in Charitable Donation Tax Shelter Schemes
By: Alexandra Tzannidakis In November 2012, the Tax Court of Canada added an interesting new twist to the epic story of Canada Revenue Agency versus tax shelters with its decision in Berg v The Queen.[1] The story is an old one. Every year, many Canadian taxpayers are seduced by the quick profit and respectable veneer of tax shelter schemes that turn on charitable donations. In return for fees paid to a promoter, they are offered ...
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Why Jurisdiction Matters to Corporate Finances: CNCA vs. ONCA
While Federal not-for-profit corporations are still adjusting to the new Canada Not-for-profit Corporations Act (CNCA), their Provincially-incorporated counterparts in Ontario are about to face a similar change when the Ontario Not-for-profit Corporations Act(ONCA) comes into force later this year. The two pieces of legislation are similar-yet-different enough to confuse the uninitiated. Their slightly misaligned schemes of financial review are particularly complex, but are well worth taking the time to understand. The circumstances in which corporations are required to ...
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New Canadian Anti-Spam Laws on the Horizon
By: Alexandra Tzannidakis Back in 2010, Bill C-28 (Fighting Internet and Wireless Spam) was passed by Parliament and received royal assent. It was expected to come into force in 2012, but delays in drafting the regulations mean that 2012 has come and gone without a coming-into-force date having been announced. This delay gives Canadian businesses, and any foreign entities that do business with Canada, more time to carefully consider what the legislation will require of ...
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In Incentive Lies Behaviour – If You Understand the Incentive
By: Adam Aptowitzer Most Canadians are aware of the effect that RRSP contributions have on their taxes, and are aware of the deadline for making contributions each year. This is mostly due to the educational efforts of the banks and others that ‘sell’ RRSPs make each year – as the March 1st (or February 29th as the case may be) deadline approaches. The run for RRSPs each year illustrate that when Canadians understand the incentive ...
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Sometimes the Wheels of Justice Turn a Bit Too Fast
By: Adam Aptowitzer The name “Parklane Charitable Donation Program” will be familiar to those that follow the news in the charitable sector. Originally the Program, like others, involved an out of pocket expense and charitable donation tax receipt, the former being several times less than the latter. In the case of Parklane, the receipt generally came from a Registered Canadian Amateur Athletic Association (an “RCAAA”) rather than a charity. Predictably, the CRA shut down the ...
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The Canary in the Charity Mineshaft
By: Adam Aptowitzer We recently argued a case in Tax Court which may be of interest to the community of tax advisors and directors of charities. The case was somewhat unique because of its precedent-setting potential for both the tax planner and tax preparer subsections of the Third Party Civil Penalty rules in s.163.2. The case involves a family law lawyer who signed an opinion letter indicating, as is usual, that she had reviewed the ...
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