1. Pre-printed official receipts with errors can still be used
Are you involved with a registered charity or qualified donee? Canada Revenue Agency (CRA) recently advised that official donation receipts will need to contain CRA’s updated website address, canada.ca/charities-giving, as of March 31, 2019. If your organization has a substantial number of pre-printed receipts, all hope is not lost! CRA takes the administrative position that pre-printed receipts containing errors, such as CRA’s old website address, can still be used if the registered charity or qualified donee crosses out the error, adds “the correct information using a stamp (if possible),” and makes the change “on both the donor’s and the duplicate copies.”
2. A registered charity can issue an official receipt to an anonymous donor
Ever wonder whether anonymous donors are eligible to receive official receipts? Although the federal Income Tax Act requires official receipts to contain the donor’s name and address, according to CRA, it will allow registered charities to issue official receipts to anonymous donors if:
3. CRA recommends registered charities encrypt emailed receipts
Does your registered charity send receipts to donors via email? Make sure you are following the CRA’s recommendations, including the recommendation that emailed receipts “be encrypted and signed with an electronic signature.”
4. Registered charities don’t have to give you a receipt for your donation
Registered charities aren’t obligated to issue a receipt for your donation. In fact, many registered charities choose not to issue receipts unless a certain amount is donated. CRA’s website provides more information on this topic here.
5. Registered charities can issue official receipts for donations of gift cards
Are you one of the many Canadians who plan to obtain and donate their $25 Loblaw gift card from the bread price fixing scandal to a local food bank? Wondering if you can get a receipt? According to CRA Guidance, CG-007, Donation of gift certificates or gift cards, where a gift certificate or gift card “has been issued for consideration and the terms permit its assignment, upon donating the gift certificate to a registered charity, a holder who has purchased or otherwise acquired a gift certificate, can receive an official donation receipt for the eligible amount of the gift.” Assuming the terms of the Loblaw Card Program meet CRA’s requirements, local food banks will likely be able to issue official receipts for gift card donations.
Raw Deal for Sushi Restaurants and All Future Corporate Appellants Seeking to Self-Represent at the Tax Court
You know you’re in for a bumpy ride when a judge’s reasons state “[g]iven the prior state of the law, none of the parties could reasonably have anticipated the conclusion that I have reached.” On November 28, 2017, the Tax Court of Canada (TCC) denied the motions of two corporate appellants, Masa Sushi Japanese Restaurant Inc. and 2075957 Ontario Inc. (o/a Katsu Japanese Restaurant), and their individual directors. All four appellants are parties to a TCC proceeding under the general procedure and were seeking to be represented by a Chartered Professional Accountant (CPA).
Appeals to the TCC follow either the informal or general procedure. The informal procedure normally applies when the amount in dispute, not including interest, is equal to or less than $25,000 for income tax appeals and $50,000 for GST appeals. Taxpayers can also elect to limit the amount in dispute and have the informal procedure apply. Otherwise, the appeal proceeds under the general procedure. The primary distinction between the two procedures is the amount in dispute, not the complexity of the issues to be argued. Any taxpayer appealing under the informal procedure can appear in person, be represented by counsel, or an agent, such as a CPA, regardless of the complexity of the issues at stake.
The Tax Court of Canada Rules (General Procedure) (GP Rules), established pursuant to the Tax Court of Canada Act (TCA), give individual parties two options for representation under the general procedure. They can represent themselves, i.e. “act in person”, or be represented by counsel. Counsel is defined with reference to the TCA as a person “who may practise as a barrister, advocate, attorney or solicitor in any of the provinces.” Since the definition of counsel does not include accountants, the TCC’s denial of the individual directors’ motions to be represented by their CPA isn’t controversial.
For parties that are not individuals, such as corporations, the GP Rules stipulate the “party shall be represented by counsel except with leave of the Court and on any conditions that it may determine.” Prior to this case, the TCC had interpreted the GP Rules to permit “officers, directors or even shareholders to represent a corporation in general procedure appeals.” However, in this case, the judge identified a conflict between the GP Rules applicable to corporate parties and the TCA that had not previously been addressed by the TCC. Essentially, the specific wording in the TCA section dealing with a party’s right to appear in general procedure proceedings mirrors the GP Rules’ wording for individual parties, i.e. the TCA section provides that parties “may appear in person or be represented by counsel.”
The TCC judge examined a number of factors, including other cases, historical context, and policy reasons, before ultimately determining that, unlike an individual, a party that is a corporation cannot appear “in person.” Although the corporate appellants in this case were given additional time to find a lawyer and amend their notices of appeal, other corporate taxpayers who appeal to the TCC will feel the impact on their bottom line—if they choose to appeal under the GP Rules at all.
Small businesses with a sole director, officer, and shareholder are likely to be especially hard hit, as they will need to weigh the potential costs of legal representation against the amount of tax in dispute before choosing to appeal under the GP Rules. Ditto for corporations that are registered charities or non-profit organizations seeking to appeal an assessment of tax and penalties at the TCC. Overall, the outcome of this decision is particularly frustrating for small corporate taxpayers with income tax amounts in dispute of more than $25,000 (or GST amounts in dispute of more than $50,000), but with relatively less complex issues to be argued.
It’s no secret that planning for a wedding and planning for a marriage are two very different things. Depending on the length of your engagement and the breadth of your wedding budget, newly engaged couples usually have a ton of decisions to make about how to celebrate their big day. Given the timelines involved, planning for the actual marriage often takes a back seat to wedding planning. If you’ve got a wedding on the horizon, make these three easy ways to increase marital bliss a part of your marriage planning.
1. Update your marital status with CRA
Notify the Canada Revenue Agency (CRA) of your change in marital status, as it may impact your family’s entitlement to benefits, such as the GST/HST sales tax credit and the Canada child benefit. You can notify CRA online, by phone (1-800-387-1193), or by mailing a completed Form RC65, Marital Status Change to your tax centre. You need to let CRA know of your marriage by the end of the month after the month you got married. No newlywed couple wants to deal with a benefits overpayment and clawback because they forgot to notify CRA of their marriage!
2. Make an appointment with a Family Lawyer
A consultation with a skilled Family Lawyer will enable you and your partner to sort out whether a marriage contract or prenup can benefit your family. Taking the time to consult a Family Lawyer before you wed can potentially reduce future conflict over how you share finances, assets, and business interests during your marriage. Although not as enjoyable a task as tasting and choosing wedding cakes, it is in your family’s best interest to at least discuss these issues before the wedding.
3. Make an appointment with a Wills and Estates Lawyer
In Ontario, marriage revokes a Will unless the Will contains a declaration that it has been made in contemplation of marriage. Making an appointment with a Wills and Estates Lawyer to get Wills and powers of attorney in place before the big day will ensure you and your partner understand:
Take the Next Step
Contact me directly for more information or come to the Tie the Knot Urban Wedding Show on February 17, 2018 to meet the Fresh Legal team and myself. We will be there answering questions about the legal implications of getting married. We will also be hosting a free "Before you tie the knot!" information session on February 26, 2018.
Early January—that time of year when all sorts of resolutions are made and lofty goals set for the upcoming year. If making or reviewing your Will is not on your to-do list, here are three great reasons why it should be.
1. It doesn’t take as much effort as you think
The process of making a Will requires you to consider a number of important matters, such as your assets and debts, family dynamics, and mortality. Although these aren’t necessarily the cheeriest of matters to think about, the good news is, this is where the bulk of your effort is exerted. Once you’ve considered these issues and discussed them with a legal professional, the rest of the Will making process is relatively easy on your end. The infographic to the right describes the 5 main steps in the Will making process.
2. It doesn’t cost as much as you think
Concern about cost is a common reason why people avoid making a Will. Although cost is a real concern, many legal professionals offer flat fees for Wills, which can allow you to budget accordingly. Canadian Lawyer magazine’s most recent legal fee survey cites the average cost of a simple Will as ranging from $301 to $400. Depending on the specifics of your situation, if you die without a Will, your estate will likely end up paying far more than it would have cost you to make a Will in the first place. In Ontario, there are also organizations that provide estate planning help for low income families—please contact me directly for more information about these services.
3. You won’t regret it
Some New Year’s resolutions, e.g. cutting out sugar or learning a new skill, require considerable sacrifice and discipline, which can lead to moments of regret and even a failure to stick to the resolution. The likelihood that you will regret making a Will or become overwhelmed by the process is greatly reduced if your relationship with your legal professional is a good one. In fact, you might find such comfort and peace of mind from the process that you commit to reviewing your Will and estate plan on a regular basis!
A recent Tax Court of Canada (TCC) decision confirms it’s never a good idea to make a false statement or omission on your income tax return in order to generate a tax refund. In Arbuckle v The Queen, the taxpayer participated in a tax avoidance scheme promoted by her tax preparer. The scheme involved the taxpayer claiming “fictitious business losses” even though she didn’t carry on a business or have any business losses.
In addition to disallowing the losses, Canada Revenue Agency (CRA) imposed gross negligence penalties. When CRA wants to impose gross negligence penalties, it must be able to show the taxpayer made false statements “knowingly or in circumstances amounting to gross negligence.”
In this case, the TCC found the factors relevant to gross negligence were present because the taxpayer:
Although the taxpayer argued her tax preparer “duped” her into participating in the scheme and added the fictitious business losses after she had signed the returns, the TCC found the evidence showed otherwise. In particular, the TCC judge found the taxpayer’s failure to do more than a cursory review of her returns was an abdication of “her responsibility for the correctness of the information contained in the returns” and showed her indifference “as to whether those returns complied with her obligations under the” Income Tax Act.
As well, had she reviewed the returns, the TCC judge found the fictitious business losses “would have been obvious” and inconsistent with the tax preparer’s explanation of her entitlement to “the large tax refunds he promised her.” So, the moral of this story is clear—if your tax preparer presents you with a proposal that seems too good to be true, it likely is! Moreover, if someone else prepares your income tax return for you, it is vital that you review the return thoroughly before signing and make sure you understand all of the claims you are making to ensure you don’t “knowingly or in circumstances amounting to gross negligence” make a false statement or omission.
Here’s the link to the case if you’d like to check it out: http://bit.ly/2hwRs2D.
The generation gap is a common theme in Western pop culture. Music, books, movies, and social media are full of references to intergenerational discord. In recent years, the so-called millennial generation has been the target of choice. Although there is some disagreement as to when generation X ends and the millennial generation begins, the millennial label is generally affixed to those born between 1980 and 2000, i.e. today’s 17 to 37 year olds. Millennials are routinely derided for their alleged laziness, need for instant gratification and praise, and disinterest in achieving the milestones that have traditionally marked adulthood. This latter generalization, that millennials are somehow shirking from adulthood, has resulted in the emergence of the concept of “adulting”—a concept that seems to have been equally embraced and rejected by millennials themselves.
Oxford University Press defines “adulting” as “[t]he practice of behaving in a way characteristic of a responsible adult, especially the accomplishment of mundane but necessary tasks.” Merriam-Webster has “adulting” on its radar, yet hasn’t committed to providing it with a formal entry. In the Twitterverse, the hashtag #adulting is used both to facetiously mock and earnestly lament various Twitter users’ achievement of adult milestones. So, what does any of this have to do with estate planning?
Much ink has been spilled about the estate planning needs of baby boomers and their parents, as boomers are primed to inherit the biggest transfer of wealth in Canadian history. The needs of millennials, on the other hand, seem to have been overlooked, likely in part due to the misconception they are uninterested in or have deliberately opted to postpone the achievement of traditional milestones, such as buying property, getting married, and having children. The achievement of these traditional milestones by other generations have, in the past, typically triggered the estate planning process. This indifference to millennials’ estate planning needs is unfortunate, in part, because millennials now make up approximately 34.9% of the Canadian population.
According to a July 12, 2017 release from Statistics Canada, the average life expectancy at birth for Canadians is now 81.7 years, with 79% of deaths occurring at or after 65 years of age. This means, if all goes well, the average millennial has another 44.7 to 64.7 years to live (or at least a decent chance of making it to age 65). This is a pretty good chunk of time to accumulate wealth and acquire traditional assets, e.g. real property, money, and jewellery, and non-traditional digital assets, e.g. email accounts, digital music, loyalty program points, social media accounts, digital images, and domain registrations. Millennials will have a digital footprint unlike any generation before and estate planning professionals will have to continue to come up with creative solutions to protect these digital assets for their clients.
A longer life means more opportunity for millennials to have multiple marriages or common-law partnerships, blended families, and alternative family structures, which could result in complex and novel dependants’ support arrangements. A longer life also means an increased potential for major life transitions like illnesses and career changes; as well as added exposure to future tax and succession law amendments. As such, millennials should expect to revisit their estate plans at key times over the coming years. Savvy and optimistic millennials should consider taking steps now to ensure they have the appropriate legal documents in place, including powers of attorney and wills, to protect their digital assets—regardless of whether they buy into the concept of adulting.
 Based on Statistics Canada’s population estimates for July 1, 2016, online: http://www5.statcan.gc.ca/cansim/a26?lang=eng&retrLang=eng&id=0510001&pattern=&csid.
 “Mortality: Overview, 2012 and 2013” (12 July 2017), online: http://www.statcan.gc.ca/daily-quotidien/170712/dq170712b-eng.pdf.