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CRA has commented on settlement offers granted to certain taxpayers who have filed Objections with respect to denied charitable contributions made through gifting tax shelters.

The settlement offers note that if the terms are accepted:

• the Objection would be resolved, and the return would be reassessed; and,
• acceptance would conclude the dispute process.

If the offer is refused:

• CRA will take further action on the taxpayer’s Objection without advance notice;
• CRA will maintain its position that the taxpayer is not entitled to the donation tax credit in question; and,
• in most cases, the next step would be to pursue the matter before the Tax Court of Canada.

CRA has noted that they are continuing to issue these letters and may contact the taxpayer in writing in the coming months to resolve some of these Objections.

It appears that CRA may allow the cash portion of the claim if it is at least 20% of the total donation amount for which the tax credit was claimed.

Action Item: If you are involved in a gifting tax shelter, inform us as there may be a settlement option available.

CRA collects amounts owed for not just tax programs, but also for other government programs, including, for example:

• defaulted Canada Student Loan;
• Employment Insurance overpayment;
• Canada Pension Plan overpayment;
• Old Age Security overpayment;
• Labour Program receivable; and
• other Employment and Social Development Canada (ESDC) programs.

On November 1, 2014, CRA provided a general overview of the Government Programs Collection Policy for individuals, businesses and organizations that owe money other than taxes to the Crown.

They noted that amounts owed to the Government of Canada are payable in full without delay although, if a taxpayer cannot pay the total amount or the minimum payment owing on their statement of account immediately, they could contact the Revenue Collections and Client Services Division with respect to making payment arrangements.

CRA also noted that if amounts are not paid voluntarily, CRA may take legal action to:

• recover amounts from any benefits or other applicable credits they may receive from ESDC;
• recover from credits the Crown may owe to the taxpayer such as income tax refunds and/or GST/HST credits;
• garnishee income sources and/or bank accounts; or
• use any other means under any applicable statutes or law to collect an amount owing.

Garnishment action allows the Government to intercept funds payable to the taxpayer by a third party, such as a taxpayer’s employer, bank, or other sources of income.

Similarly, if any other Federal Government department owes the taxpayer money, a statutory set-off to that department may be made to have all, or part, of that money sent to the department to which the taxpayer is indebted.

Action Item: If you are struggling to pay your Government debts, contact us sooner, rather than later as options may be available.

The provision of some benefits to employees may be subject to GST/HST. Essentially, the CRA wants to ensure that the same amount of GST/HST is paid whether an employee purchases a good or service on his/her own, or whether he/she receives it from his/her employer.

When providing the benefit, the employer must first determine if it is subject to GST/HST. If so, the tax must be calculated and remitted on the GST/HST tax return that covers the last day of February in the following year.

The GST/HST is then included in the value of the benefit on the T4 for the employee.

Taxpayers can usually claim an input tax credit for the GST/HST paid or payable on goods and services supplied to employees or their relatives as a benefit if it is related to the business’ commercial activities.

Guide T4130 (Chapter 5) – Employers Guide, Taxable Benefits and Allowances is a resource which discusses the GST/HST requirements for employment benefits.

Action Item: Consider GST/HST on taxable employment benefits.

In an August 26, 2015 Tax Court of Canada case, the taxpayer wished to object to a CRA Notice of Assessment (NoA) but missed the deadline for filing the Notice of Objection. The NoA was received by the taxpayer’s wife, however, the taxpayer and his wife were going through divorce proceedings at the time of receipt and the mail was not forwarded to the taxpayer. Presumably, as the taxpayer did not see the NoA in time, he was unable to file a Notice of Objection in the proper time frame.

Taxpayer loses

A NoA is deemed to have been received by the person to whom it was sent on the day it was mailed. Non-receipt of the NoA cannot generally be used as grounds for extension of time unless an error is made by CRA. In this case, because the client did not update his address with CRA in a timely fashion, the Appeal was dismissed and the taxpayer was not permitted the extension.

Action Item – Ensure your contact information, including address, is up-to-date with the CRA.

American Citizens Abroad is a non-profit organization which aims to represent Americans living abroad. The organization has a network of individuals spanning more than 60 countries.

www.americansabroad.org provides a wide range of information on topics such as taxes, banking, voting, citizenship, social security, FATCA (Foreign Account Tax Compliance Act), the FBAR (Foreign Bank Account Report), Medicare, and healthcare.

Citizenship Requirement FAQs and Table of Transmission Requirements are also available, both of which can assist in determining whether an individual is a U.S. Citizen.

Action Item: Check out this useful resource for Americans in Canada or abroad.

This Grant is available to employers to help train new or existing employees for jobs that need to be filled. The program is not restricted to technical training, but is also open to professional and management development. Two-thirds of the cost of the training, to a maximum government contribution of $10,000 per employee application, is available. The Grant must be reported as revenue on the employer’s tax return. This program is available to most sizes of employers. The application, however, must generally be approved prior to engaging in the training program.

As the Grant is administered at the provincial/territorial level, there are differences in administration and eligibility rules across the country. Some of the aspects which may vary include:

• whether the training must result in a credential;
• whether the program must last a minimum number of hours;
• whether salaries paid to participants may count towards the employer’s share;
• whether the training must be incremental to normal training programs;
• the funding limit per organization;
• what costs qualify (tuition, books, travel etc.); and,
• whether the individual has to be an employee before and after the application.

The Grant is available in most provinces and territories across the country (except for Quebec, New Brunswick, and Nunavut, as of the date of publication).,

Action Item: As there are limited government funds allocated to the program annually, ensure to apply for funding before the money runs out!

Individuals who have a severe and prolonged impairment in physical or mental functions may apply for the disability tax credit (DTC). The federal tax credit is valued at over $1,100 (15% x 7,766) in 2014, with the possibility of an additional disability supplement for certain individuals under the age of 18 at the end of the year. Provincial tax credits may also be available.

The DTC is a non-refundable tax credit used to reduce income tax payable on an individual’s income tax return. All or part of this amount may be transferred to an individual’s spouse or common-law partner, or another supporting person.

Being eligible for the DTC can open the door to other federal, provincial, or territorial programs such as the registered disability savings plan, the working income tax benefit, and the child disability benefit.

For individuals that may have been eligible for the DTC for a number of years, but have not applied, taxpayer relief may be an option to access these credits for the prior 10 years.

Action Item: If you think you may be eligible for this generous DTC, contact us to discuss.

In an August 8, 2014 Technical Interpretation, CRA reminded taxpayers that an Executor should obtain a Clearance Certificate before distributing property under their control.

The Certificate attests that all amounts payable by the Estate have either been paid or the Minister has accepted security for such amounts. If the Executor distributes the Estate’s property without first obtaining a Clearance Certificate, the Executor may be personally liable for amounts that are outstanding to the Government.

The Clearance Certificate protects the Executor only in the above-noted capacity. CRA can still pursue the beneficiaries of the Estate for any unpaid taxes even where a Clearance Certificate is issued.

Action Item: Executors should consider obtaining a Clearance Certificate to avoid personal liability.

An individual can deduct certain expenses they paid to earn employment income if they meet certain conditions including:

• their employment contract required them to pay the amount; and,
• they did not receive an allowance for the expenses or the allowance they received is reported as income.

Employees must obtain a signed T2200, Declaration of Conditions of Employment, from their employer to deduct employment expenses from their income.

Eligible employment expenses are quite limited. However, they may include, for example, motor vehicle expenses, supplies, and certain work space in the home if you meet particular criteria. Additional expenses may be available to commissioned salespersons.

Action Item: Obtain a signed Form T2200 from your employer before deducting employment expenses.