The taxpayer had business deductions disallowed in late 2014 for the 2011 and 2012 tax years. The taxpayer had provided a lot of documentation over the course of the review, but the two returns were ultimately reassessed in May 2015. In January 2018, the taxpayer contacted the CRA with more information and the CRA said it’s too late. The taxpayer applied to the Tax Court to force CRA to accept the Notice of Appeal and the new information. The Tax Court also said it was too late. The Tax Court did point out that the CRA had the discretion to accept it and that the Tax Court would support the CRA in their decision.
The taxpayer made claims for expenses on his tax return. When asked, he was unable to provide supporting documentation. The CRA imposed the strictest of penalties and interest and the taxpayer appealed. The taxpayer was still unable to provide supporting documentation, so the courts determined it constituted reckless behaviour and wilful blindness. As such, in addition to the appeal being dismissed, all penalties and interest remained in place, AND he was fined $5,000 for court costs.
We all know how assets can be seized in proceeds of crime cases. This usually applies to drug cases and other illegal transactions. On November 22, 2018 the CRA successfully argued for the first time that tax evasion is a crime and the same provisions should apply. They were able to seize six rental properties and an automobile from two Ottawa residents charged with tax evasion.
Canada’s new marijuana rules came into effect October 2018. Although many States are onside with this new way of thinking, cannabis is considered a narcotic federally and those rules are very strict and harsh.
US immigration lawyers have warned Canadians that they can be denied entry to the US, or barred from the US for life, for admitting they smoke cannabis to a border agent. US officials say they haven’t changed their questions after the Canadian laws came into effect. But they may ask further questions.
Those involved with growing or distributing legal marijuana in Canada may be considered “dealers” or “traffickers” under US laws … even when used for medicinal purposes.
If you or your corporation owe the government for unremitted HST, you want to pay attention to this. A fellow owed the government money. He sold his personal house. The mortgage company got their money and he applied the balance towards his outstanding HST balance. The CRA challenged this feeling they had higher priority than the bank. The CRA won. The bank had to take some of the proceeds used to pay off the mortgage and pay off the CRA balance.
Do you think the bank is going to change their paperwork as a result of this? I suspect loans and mortgages will be conditional on HST and payroll remittances being current.
An accountant applied a commonly used tax strategy for a taxpayer. One condition of this strategy is that it cannot be used BEFORE the end of the year. The accountant missed that one point, and because of this mistake, the CRA assessed a tax of almost $180,000. The CRA would not allow the accountant to fix this mistake so it went to court.
The judge determined there was no wrong doing other than the mistake of applying the strategy a bit too soon. He concluded that allowing the problem to be fixed was fairer than the CRA’s proposed alternatives.