Bill C-31: Royal Asset and New CRA Powers Could Come Soon

Changes are coming to the Income Tax Act and both you and your clients will all be affected with new tax risks including longer tax audits. Bill C-31, which passed second reading in the House of Commons on June 3 and is now at committee stage, contains elements of previous Federal Budgets that will expand the CRA’s compliance and enforcement powers. Here’s what you need to know and pass along to your clients:

The history of taxation in Canada is as old as Canada itself and it matters in a modern context, because recently a Tax Court of Canada case was tasked with examining when a tax is a penalty, specifically regarding a Tax-Free Savings Account (TFSA).     

While only 10% of small business would file for bankruptcy today, over 60% are carrying pandemic debt of about $160,000 according to the CFIB.  This is worrisome given new data out of the U.S., where close to 50% of small businesses are at risk of shutting down[1].

Retroactive claims for three important pandemic wage supports will end in October and November, for Periods 27 and 28.  The programs were first introduced on October 24, 2021 with an end date of May 7, 2022; however retroactive claims were still allowed. Specifics appear below:  Business owners who have not yet made claims for the CRGP – Canada Recovery Hiring Program, the CRGP – Canada Recovery Hiring Program and the HHBRP – Hardest-Hit Business Recovery Program will be out of luck after November 6.

Old Age Security clawbacks, technically known as the Old Age Security Recovery Tax, are applied when your tax return is filed, and your net income is over the clawback threshold ($81,761 for 2022). Then, the following July, the government assumes your income will remain the same for the following tax year and starts collecting the clawback by reducing your OAS payments each month.

FIRESIDE CHAT: DOING GOOD You’ve likely heard about social financing: the collaborative investment of public, private and philanthropic funds to re-image our economic structure to build a “Social Infrastructure Network”. At it’s core – doing good is the big idea.

An important discussion is taking place in Canada and tax professionals will not want to miss their chance to weigh in by the September 30 consultation deadline.  Specifically, the federal government wishes to “modernize” the GAAR – General Anti Avoidance Rules - after a series of 24 losses in court.  Here are the issues: