General

Gross Negligence Penalties are meant to penalize taxpayers for their failure to meet tax obligations such as not reporting income or claiming false credits. If the alleged tax avoidance or evasion is related to GST/HST the penalty is 25%. For income tax, 50% is applied to any balance owing. Technically, to uphold a gross negligence penalty, the...

GST/HST Audits on Property Sales The Canada Revenue Agency (“CRA”) has been reviewing property purchases and sales for years. More recently, they have started GST/HST audits which assess taxpayers as home builders in the course of commercial activity. They claim taxpayers are builders and not subject to a exception from...

The Canada Revenue Agency (“CRA”) has been going after those who buy and sell homes in quick succession for years. More recently, they have turned their attention to those who have bought and sold just one home in a short period.Property Flipping Audits – How does CRA know? They have staff who sit in land titles office reviewing for names coming...

The Tax Court of Canada decision in A-Supreme Nursing & Home Care Services Inc. v. The King, 2023 TCC 39 (“ANHC”), involved a CRA audit of a staffing agency in the business of supplying healthcare workers, resulting in a reassessment for over $1,000,000 in GST/HST. The decision is of interest as it clarifies the scope and...

In Chan v. The Queen 2022 TCC 87 , a decision under the Tax Court of Canada’s informal procedure, the primary issue was the beneficial ownership of specified foreign property (a bank account allegedly containing illegally procured funds) and the respective obligation to report it on the appellant’s tax return.According to a decision of the...

In Yao v. The Queen, 2022 TCC 23 (CanLII) , the primary issue was whether certain expert reports were admissible into evidence. The related tax aspect triggering the dispute is the question of the Appellants’ eligibility for the Canada Child Benefit (“CCB”) pursuant to section 122.6 of the Income Tax Act, RSC 1985, c.1 (5th Supp)...

Executors of the estate of a deceased can be held personally liable for its tax arrears. That is why it is important that a legal representative of the estate, such as an executor, obtain a clearance certificate from Canada Revenue Agency (CRA) before the disposition of estate assets.The issue of executor liability was more recently considered in...

The Proposed Residential Property Flipping Rule The Residential Property Flipping deeming rule introduced in the 2022 Federal Budget will not apply if the disposition of residential property is on account of a “life event”. Accordingly, it appears that Canada Revenue Agency (CRA)...

Subcontractor Expenses, Denied ITCs And The GST/HST Rebate For ‘Tax Paid In Error' In Mediclean Incorporated v. The Queen, 2022 TCC 37 (CanLII), the Tax Court of Canada provides guidance for successfully claiming the “tax paid in error” GST/HST rebate and reiterates the...

Bulk Taxpayer Relief Requests & Extreme Weather Events Canada Revenue Agency (CRA) released guidance on “bulk” taxpayer relief requests as well as taxpayer relief for “extreme weather events.” CRA makes specific reference to the “unprecedented...