May 2025 Poll

Does the Liberal promise expected soon to cut the lowest personal income tax rate by 1% to 14%,  go far enough to help Canadians impacted by high costs?

Let's pretend you are a prudent taxpayer, a paragon of fiscal responsibility. You follow every CRA bulletin and government statement in order to properly file your return accurately and timely every year. Last year however, you relied on advice that a CRA official gave to you over the phone regarding a special new tax credit you could be eligible for if you purchased qualifying ëgreen' home appliances. You sort of need a new refrigerator anyways and have been looking around, but you can only really afford the baseline model that does not qualify for this tax credit. As a result of relying on the CRA's advice though, you go and purchase a higher model, ëgreen' appliance which you have calculated will actually cost you slightly less after the tax credit; everyone wins! You are astonished to find that the Minister has disallowed your tax credit at the end of the year though- can he do that? It depends. Estoppel is an equitable legal doctrine that holds as follows: if one party makes a statement or representation of fact to another who subsequently relies on this information to their detriment, the person making the representation can be ëestopped' from reneging on their prior representation and hiding behind their literal, black letter legal rights (such as a contract for example). As an equitable doctrine, it infuses the harsh reality that can result from following the law with moral and ethical considerations that the judiciary have a wide discretion over and an even wider proscription of remedies for. Three factors give rise to an estoppel. First, there must be a representation, or conduct reasonably perceived as amounting to a representation, by somebody intending to induce a course of conduct from the person he is making the representation to. Secondly, the person to whom the representation is made must have relied on that representation, by act or omission, and thirdly, this must result in some form of detriment to that person. For taxpayers though, there is an important and pertinent rule within this doctrine: misrepresentations of law by government officials cannot give rise to estoppel. Therefore, misrepresentations and/or advice from the CRA based on their misinterpretation of taxation legislation cannot give rise to an estoppel. Now, this may seem truly unfair, and indeed it can have terrible results. However, the underlying theory is that, regardless of any egregious incompetent advice from government officials, estoppel cannot override the law of the land and the Minister is not bound to misapply the law. As a result, it is often said, incorrectly, that estoppel cannot be brought against the Crown in any circumstances. Estoppel can be brought against the Crown for misrepresentations of fact, but not law. For example, in Rogers v R (1998), a taxpayer relied on a statement made by a government official that the educational institution that he was thinking of attending was one in which a particular tax credit could be claimed. The taxpayer relied on this misinformation, because without it he wouldn't have enrolled, and it became detrimental to him when the Minister then denied his tax credit on the basis that his institution of choice did not qualify. The government was estopped from denying the taxpayer his credit because it would be unconscionable to do so and because it was a misrepresentation of fact, not law. The example above is analogous to Rogers and therefore the Minister could be estopped from denying your ëgreen' tax credit.   Greer Jacks   Additional Educational Resource: Evergreen Explanatory Notes, and Essential Tax Facts 2012  

The Government is inviting commentary from stakeholders on RDSPs to ensure that the plans are meeting the needs of the recipients. "It is important for those who benefit from these plans to give their input, so that RDSPs continue to accurately reflect and address their true needs,î said Minister Flaherty. It is hoped that the review will highlight issues crucial to the success of the RDSP with changes foreseeable in the establishment of plans, the accessibility of plan savings, details on plan termination, and the administration of the RDSP in general. For more info: http://www.fin.gc.ca/n11/11-103-eng.asp   ADDITIONAL EDUCATIONAL RESOURCES: Distinguished Advisors Workshop  

The Minister of Finance released updated growth projections from fifteen leading private sector forecasters. The outlook has deteriorated since the last survey in March, and as a result of economic uncertainties in the United States and the prevailing situation in Europe, the forecasters believe that growth will be hampered in Canada throughout 2012. The Minister called for decisive action to sustain global recovery on October 25th,  at the fifth annual meeting of the Toronto Forum for Global Cities. This comes after Minister's call on European leaders and the G-20 on October the 17th in Dublin to address the current economic challenges by acting quickly and in unison and by implementing strong, consistent policies. The Minister stated: "Events during the summer have made it clear that global economic challenges are by no means behind us. The pervasive force of uncertainty is a major inhibitor to growth, and it demonstrates the fundamental need for close cooperation in a global context.î The Minister expressed his concern for the European debt crisis; he feels as though that is the most pressing international issue at the moment and is capable of bringing the world into another recession if immediate action is not taken. "Delays will only make necessary choices more difficultî he stated. The Minister was also in Paris on the 15th where he welcomed the ambitious reform policies of the European economic governance and the implementation by Euro area countries of the actions necessary to increase the capacity and the flexibility of the European Financial Stability Facility (EFSF). In fact, all the ministers believed that they have formulated a plan that will address vulnerable sectors of each economy, whereby: - Advanced economies with large surpluses will shift to growth with a focus on domestic demand, while those with deficits will implement policies to increase national savings;- Emerging markets will adjust macroeconomic policies to maintain growth and contain inflation; - Surplus emerging economies will accelerate reforms to rebalance demand toward domestic consumption; In addition, all countries will undertake further structural reforms to raise potential growth, create jobs and maintain stability in the banks and markets. More from the Minister in Toronto: http://www.fin.gc.ca/n11/11-105-eng.asp More info from Dublin: http://www.fin.gc.ca/n11/11-102-eng.asp More info from Paris: http://www.fin.gc.ca/n11/11-101-eng.asp   ADDITIONAL EDUCATIONAL RESOURCES: Distinguished Advisor Workshop  

Bozzer v Canada (2011) FCA 186 Since 1991, taxpayers who feel they were unjustly charged interest or penalties on income tax owing could apply to the CRA under the ëfairness provisions' for potential relief. These provisions offer the CRA a wide discretion to cancel, waive or alter penalties or interest, but not the tax itself. In order for the provisions to apply, the contentious interest and/or penalties must have arisen from circumstances which were beyond the taxpayer's control including events such as, natural disasters, civil disturbances, a serious illness or accident, or serious emotional or mental distress such as a death in the family. Subsection 220(3.1) of the Income Tax Act gives the CRA a wide discretion to waive or cancel any portion of interest or penalties owing under the Act, statutorily limited to ten years; the question in the Bozzer case was how to delineate the parameters of that ten year limitation. The Federal Court of Appeal gave an answer that was very favourable to all taxpayers. The CRA denied Bozzer's request for relief multiple times before he arrived at the Court of Appeal, saying the ten years expired for his file on December 31, 1999 for the 1989 taxation year and December 31, 2000 for the 1990 taxation year. Mr. Bozzer argued it was irrelevant that his debt arose in 1989 and 1990 because he was merely requesting relief for the ten years prior to his application, which was made in December 2005. Therefore, the ten year limit covered the interest that accrued from January 1, 1995 to December 31, 2004, and was unrelated to the years the debt arose. The Federal Court of Appeal agreed with these submissions and, at paragraph 42 Stratas J.A revealed the difficulty in interpreting this section of the Act but proclaimed: "The words chosen by Parliament are ambiguous. In my view, in this particular situation, this ambiguity should be resolved in favour of the taxpayer.î   ADDITIONAL EDUCATIONAL RESOURCES: Distinguished AdvisorWorkshop - November Year End Planning and Introduction to Personal Tax Services  

By Evelyn Jacks Where do you invest your money? That's likely the most salient question of the times. There are so many ways to go wrong. A recent article in The Economist, summarized the historical fury of bear markets that have substantially wiped out wealth: In 1946 when bond yields were at their current 2.5% level, 75% of their value was lost in the following 25 years in Britain. When investors hurried into gold in its last peak in 1980, the price fell by 2/3 in the next 20 years that followed. By the year 2000, when the world was highly exuberant about the internet, the dividend yield on American equities was just one per cent; and the annual real equity return over the next 10 years just under that, .08%. In 2011, despite strong growth in India and China, emerging equity markets fell 23% in the third quarter; resulting in those shares trading on a discounted valuation compared to developed-market counterparts. In Canada, we are comforted by strong banks and a strong, stable real estate market. Today residential housing development represents about 20% of the domestic economy, according to the Canada Mortgage and Housing Corporation, and rising real estate values continue to drive consumer confidence. What's noteworthy, however is that residential mortgages are the biggest single asset on Canadian bank balance sheets, according to an October 15 article by Postmedia News. What happens if the real estate bubble bursts? What could make it burst? Demographics, for one thing. Will baby boomers downsize out of their empty nests? Will their 20 and 30-something children stop buying homes with all the uncertainty? Will they default on mortgages if we enter a deeper recessionary phase? How will that affect the balance sheets of Canadian banks? My co-author Robert Ironside says this: "The issue with respect to the banks, should we have a major real estate correction, is of great concern. The banks are shielded somewhat by the existence of mortgage insurance on their high ratio mortgages but their income and asset growth would be significantly affected.î Wealth preservation seems to be the name of the game today, but an additional issue is this: even if we are great savers, what will our current dollars buy in the future?If we hold on to the wrong things; we face the winds of financial erosion. Those winds include the potential for recession, deflation, inflation and taxes. Continuing to make new money is a strong defense. This is easier if you have a stable income from employment or self-employment; much more difficult if you are living on a fixed income in retirement, although a savvy eye to investing in income-producing assets is important; so is an indexed pension plan. Managing tax and debt loads is something we can directly control, and both add points to your rate of return as well. In other words, financial recovery begins at the micro level; with financially stable households. It's Your Money. Your Life. It makes sense to get your financial affairs in order in this climate. Managing debt loads, especially mortgage debt, is important. So is tax efficiency.But in addition, having a great relationship with a trusted and learned team of tax, financial and legal advisors is paramount. Evelyn Jacks is President of Knowledge Bureau and has recently been named one of Canada's Top 25 Women of Influence. She is writing her 48th book, and will discuss the financial recovery with an inter-advisory audience at the Distinguished Advisor Workshops November 2 to 10 and at the Distinguished Advisor Conference November 13-16 in Palm Springs.  

The Employer's Guide to filing the T4 slip has been released, together with the slip itself and the changes to be aware of are the following: CPP Reform - Employees under 65 who are receiving a CPP or QPP will have to make CPP contributions that will increase their CPP retirement benefit. - Employees who are between 65 and 69 (inclusive) and are receiving a CPP/QPP will be able to elect to stop contributing to the CPP. Reporting Change for Pensionable/Insurable Earnings - These must now be completed on the T4 slip at all times Volunteer Firefighters - Exempt payments to volunteer firefighters (up to $1000) will now have to be reported using code 87in the ëother information' area of the T4. Web Forms As of January 2012, you can electronically file an original or amended information return of up to 50 T4 slips in a single submission using the CRA's Web Forms application. This service will allow you to: - Create an electronic T4 information return;- Validate data in real time, with prompts to correct errors before filing;- Calculate the totals for the Summary;- Print and save T4 slips; and- Securely submit encrypted T4 information returns over the Internet. For more information: T4 Web forms T4 Statement of Remuneration Paid (slip) RC4120 Employers' Guide - Filing the T4 Slip and Summary ADDITIONAL EDUCATIONAL RESOURCES: INTRODUCTION TO PERSONAL TAX PREPARATION SERVICES