James Piper, Author

Thursday, April 28, 2011 ... please explain where the money for these deposits came from ... I n Nowak v. The Queen ( 2011 TCC 3 ) the Tax Court of Canada addressed the issue of the Canada Revenue Agency's reassessments of an individual with unreported income. The facts of the case are cloudy for a number of reasons. The taxpayer's records of his income and expenses were incomplete and inconsistent. He was reluctant to answer questions posed by the auditor. And documents provided by the taxpayer raised more doubts and questions in the mind of the judge. The CRA claimed the taxpayer had unreported income in excess of $290,000 during the two tax years in question. The auditor determined these amounts from an analysis of banking records. In essence, the records showed deposits that were clearly not reported as income. As the judge notes, the burden is on the taxpayer to demonstrate the money received is not income subject to tax. In this case the judge write...

Saturday, January 24, 2009 Ontario May Harmonize Sales Tax With GST ... It's about time. ... I read in the Toronto Star Ontario Premier Dalton McGuinty and his government may harmonize the Ontario sales tax with the federal GST. To that I say, it's about time. Currently the three N provinces (Nfld., NB & NS) have a harmonized sales tax with the federal government. Quebec has something similar, but Ontario has maintained its antiquated Retail Sales Tax and it's all about politics and getting votes. Sales taxes are visible and annoying to voters and changing them usually means trouble. The Ontario government needs the revenue from a sales tax and the best solution is a consumption tax on most goods ands services and not just on goods. A harmonized tax will significantly reduce administration and compliance costs for businesses. One tax return to complete instead of two. One set of laws to follow instead of two. It will also result in a fairer ta...

Thursday, January 22, 2009 ... A major victory for the Canada Revenue Agency from the Supreme Court of Canada ... O n January 8th, 2009, the Supreme Court of Canada issued its decision in the case of Lipson v. Canada. For tax practitioners across the country, the earth swayed, thunder rumbled and some checked their insurance coverage. Lipson is an individual resident in Canada who purchased a home, in part with borrowed money, and structured his affairs in such a manner to allow for a deduction on interest paid on the debt. Normally, debt used to acquire personal property is not deductible, but some taxpayers in the past have structured the purchase and debt to allow for an interest deduction against business income and income from property. This is what Lipson tried to do, but the government argued against it citing ITA 245--the General Anti-Avoidance Rule. Prior to Lipson, the courts held up such structures, but that was before the GAAR was law. Not so with Lipson a...

Tuesday, March 6, 2007 ... Online Tax Services Suspended by CRA ... I received an email press release from the Canada Revenue Agency late on Tuesday stating they were shutting down the computer that processed e-filed personal tax returns. For many tax preparers the announcement means they will have to file paper returns or wait for the system to come back on, but it could be a long wait. Until we can announce a business recovery date, the Agency will provide daily updates to the media on the steps we are taking. On the surface, e-filing a return makes sense because it is more efficient, but at present it only makes sense for simple returns. If you file a return beyond a T4 and an RRSP deduction, you can expect follow-up letters requesting original receipts. For accountants, this hassle means additional time—time that usually can't be recovered. As result, many accountants file paper returns for their benefit. What is required is a system that allows the recei...