Mark Your Calendar: Critical Deadlines for May and June

Tax season never truly ends, it seems, as there are many more upcoming tax filing, investment planning and education milestones to discuss with your clients over the next six months. Check out our handy checklist below and then test yourself – what are the conversation openers you’ll use and with which clients? It’s your opportunity to shine with every member of the household:

  CRA has just announced the maximum contributory earnings for 2012 under the CPP, and  those figures generate a premium increase which at the maximum level will reach $2306.70 or $192.23 per month. Both employer and employee are required to contribution, which means that proprietors will pay $384.45 a month or $4613.40 when their contributory earnings are $50,100. The basic exemption remains at $3,500 (this amount has not been indexed to inflation for years) and therefore we see that premiums have actually increased by 4%. Meanwhile the expected rate of CPI inflation for 2012 has just been announced as well: it's 2%. That's quite a hike. This means that the maximum CPP pension for 2012 will be $986.67 per month. (Average of maximum pensionable earnings for last five years x 25% / 12 months)   Additional Educational Resources: Distinguished Advisors Workshop, Financial Recovery in a Fragile World book.  

General retrenchment of risk taking in the global economy has inhibited recovery in many areas. Uncertainty abounds in Europe, while weak consumer and investor confidence in the United States is expected to result in weak GDP growth. Sharp appreciation of the Yen is frustrating recovery and reconstruction in Japan, coupled with a decreasing demand for their consumer products. Growth in China, India, and other emerging markets is expected to slow to a more sustainable pace over the next year. While Canada is still in the eye of the global economic storm relatively, the domestic forecast has taken a turn for the worse since the summer. Domestic demand is likely to remain the primary area of growth, although at a slower pace than anticipated. Exports, on the other hand, are expected to remain weak, due to low foreign demand exacerbated by the persistent strength of the loonie. The Bank expects growth in Canada will be slow through mid-2012, but should pick up if the global economic environment improves and confidence is restored; it is projected that the economy will expand by 2.1 per cent in 2011, 1.9 per cent in 2012, and 2.9 per cent in 2013 with a return to full capacity by the end of that year. As a result of all of this, the Bank has decided to maintain the target for the overnight rate at 1 per cent and fiscal policies consistent with achieving the 2 per cent inflation target over the medium term. For more info: http://www.bankofcanada.ca/2011/10/speeches/opening-statement-83/ Additional Educational Resources: Debt and Cash Flow Managment, Financial Recovery in a Fragile World  

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