Rules around eligible medical expenses need loosening

While recent news reports say the Canada Revenue Agency (CRA) is now allowing medical marijuana as an eligible medical expense, the agency’s recognition of health-related expenses is still too limited, Toronto tax litigation lawyer David J. Rotfleisch tells the Financial Post . Read more

Tax obligations, debts continue for incapacitated individuals

As incapacitated individuals have the same tax filing requirements as all other taxpayers, substitute decision makers should be sure to stay on top of their record-keeping obligations, Toronto tax litigation lawyer David J. Rotfleisch says in a recent Caregiving Matters podcast. Read more

Webinar to outline tips for navigating tax audits

On Oct. 1 , Toronto tax litigator Adrienne Woodyard will share practical strategies for navigating audits and resolving tax disputes with the government via a webinar hosted by Wolters Kluwer. Read more

Large costs award for CRA provides lessons for taxpayers

The Tax Court of Canada's recent move to hand down one of the first cost awards against a taxpayer under a new set of rules should be considered a cautionary tale for those evaluating settlement offers, says Toronto tax litigation lawyer David J. Rotfleisch. Read more

More to uncollectible tax debt data than meets the eye

Recent reports detailing the Canada Revenue Agency's (CRA) move to write off some $4 billion in uncollectable debts over the last two years do not necessarily tell the full story behind the numbers, Toronto tax litigation lawyer David J. Rotfleisch writes in the Financial Post. Read more

Seek out reputable accountant to guard against tax fraud

Unfortunately for taxpayers, cases of fraud involving tax preparers are a well-known phenomenon in Canada, and serve to highlight the importance of using a reputable accountant, says Toronto tax litigation lawyer David J. Rotfleisch. Read more

Employee v. freelancer distinction key from tax perspective

The question of whether a person is an employee or an independent contractor can be a minefield from a tax point of view, with the employer assuming most of the risk, Toronto tax litigation lawyer David J. Rotfleisch tells Newstalk 1010’s The Night Side. Read more

Case confirms CRA cannot arbitrarily delay assessment

The Federal Court’s recent move to order the Canada Revenue Agency (CRA) to process a tax return it had been holding for two years in hopes of discouraging participation in tax shelter schemes was unsurprising, as the agency’s actions were unsupported by the Income Tax Act, says Toronto tax litigation lawyer David J. Rotfleisch. Read more

Implications of tax disclosure case 'troubling' for public companies

A recent Federal Court decision that compels a large business to disclose the "roadmap" of its uncertain tax positions to the Canada Revenue Agency (CRA) may signal a "troubling" change in the approach to public company audits, says Toronto tax litigator Adrienne Woodyard . Read more

CRA dispute highlights transfer pricing rules, requirements

News that the Canadian Revenue Agency is seeking more than US$200 million in back taxes and penalties from a Vancouver-based "streaming" firm is an important reminder that Canadian companies are required to have transfer pricing documents prepared at the time of entering into an agreement with an offshore affiliate, says Toronto tax litigation lawyer David J. Rotfleisch. Read more

Federal revenue agency writes off billions in 'uncollectible' tax debts

OTTAWA - The federal revenue agency has written off at least $4 billion in debts in the last two years - including accounts worth more than $10 million, newly released records show. Debts were declared uncollectible because those owing had died, gone bankrupt, could not be located or lived outside Canada, according to Canada Revenue Agency records obtained under the Access to Information Act. In other cases, officials considered it not worth the expense to track down the money owing, or they reached a compromise settlement with the debtor. The revenue agency says it makes every effort to collect all tax debts from those who do not pay voluntarily. Murray Rankin, the NDP's deputy revenue critic, questioned whether the government is doing enough to collect the substantial sums owed to the federal treasury. “They are not going after international tax debt the way they should be,'' Rankin said in an interview after reviewing the newly disclosed documents. The outstanding balance in undisputed, unpaid taxes was $29 billion as of March 31, 2012, the federal auditor general reported in a 2013 examination of the issue. According to the latest federal public accounts, the Canada Revenue Agency wrote off $3.4 billion in debts in 2013-14, representing the lion's share of $3.7 billion in total federal write-offs. The newly disclosed revenue agency records do not align neatly with fiscal years, but span the period from Jan. 12, 2013, through Oct. 10, 2014, when just over $4 billion was written off. Names and other identifying information have been stripped from the records for privacy reasons. However, they provide insight into the scope, nature and frequency of the revenue agency's decisions. A January 2015 memo to revenue commissioner Andrew Treusch covered just one segment of the write-offs during the 2014-15 fiscal year, involving 700 accounts totalling more than $306 million. Magali Deussing, a federal revenue agency spokeswoman, declined to make anyone available for an interview about the figures. A decision on whether an account is uncollectible and can be written off is based on rules set out in the Financial Administration Act and other legislative authorities such as the Bankruptcy and Insolvency Act, Deussing said in an emailed statement. Under the law, an account may be submitted for write-off only if “there is no reasonable prospect of recovery,'' she said. The heavily censored revenue agency records say the department's Uncollectible Debts Committee examined all relevant documents in coming to their decisions. The records indicate that between July and October last year, there appeared to be at least two cases in which the write-offs exceeded $10 million apiece. The emphasis a government places on debt collection is “all about political priorities,'' Rankin said. “Are they going after them as aggressively as they might in other countries?'' Allowing debtors that owe more than $10 million off the hook with “a stroke of the pen appears to be disturbing,'' he added. Concerns surrounding international tax evasion and aggressive tax avoidance using offshore accounts are not exclusive to Canada – they are worldwide problems, Deussing said. The government's latest budget included additional monies to address tax avoidance by large organizations as well as offshore non-compliance, she noted. When a debt is declared a write-off, it does not eliminate the taxpayer's obligation to pay, Deussing added. The revenue agency “has the right to collect the debt in the future, if and when the taxpayer is located or the taxpayer's financial situation improves.'' Read more

Jump in voluntary disclosures shows awareness of new reality

Recently reported data that shows a large increase in the number of voluntary disclosures to the Canada Revenue Agency (CRA) is just the latest sign that taxpayers are getting the message that offshore bank secrecy no longer exists , says Toronto tax litigation lawyer David J. Rotfleisch. Read more

Taxpayers must approach CRA audits strategically

When it comes to managing a Canada Revenue Agency (CRA) audit, the key thing for taxpayers to keep in mind is that in most cases, there is a “reverse onus” on the taxpayer to prove that its filings are correct, says Toronto tax litigator Adrienne Woodyard . “When the CRA believes a taxpayer has taken an unreasonable or incorrect position, it will issue a tax reassessment, and that reassessment is usually considered presumptively correct unless the taxpayer proves otherwise,” says Woodyard, a partner with DLA Piper (Canada) LLP . “This is both inconvenient and counterintuitive for many clients,” she says. Read more

Income splitting still limited for private corporations

Although a recent study raises the possibility that those in several higher-income professions have been income splitting for years, for most, this is not the main tax benefit of incorporation, says Toronto tax litigation lawyer David J. Rotfleisch. Read more

Shooting by alleged de-taxer latest tragedy involving group

Reports that a man implicated in the recent shooting death of an Edmonton police officer may also be linked to a group of de-taxers is the most recent incident involving a member of a group that aims to opt out of society’s laws, says Toronto tax litigation lawyer David J. Rotfleisch. Read more