October 30, 2009 by Dan White.

Canada Court Says Sales Taxes Are Ordinary Claims in Bankruptcy

See COMMENTS below…

Oct. 30 The Supreme Court of Canada rulsed that Canada’s federal and provincial governments can’t skip ahead of other creditors in a bankruptcy to retrieve sales taxes the company had collected, Canada’s highest court ruled today.

The Canadian and Quebec governments argued the tax money was simply collected and held on their behalf, putting their claim ahead of other creditors in the bankruptcy, according to the ruling. Bankruptcy trustees said governments should be considered “unsecured creditors” and ranked accordingly.

The Supreme Court ruled unanimously, in a decision written by Judge Louis LeBel, that the country’s bankruptcy legislation calls for sales-tax trusts to disappear once companies become insolvent. As a result, sales taxes can’t be separated from other assets and governments have no priority over other creditors, the court said.

“When a supplier goes bankrupt, the tax authorities do not own Goods and Services Tax and Quebec Sales Tax amounts that have been collected but not remitted or are collectible at the time of the bankruptcy,” LeBel wrote. “Instead, they have an unsecured claim against the supplier.”

The case is Quebec (Revenue) v. Caisse populaire Desjardins de Montmagny, 32486, 32489, 32492, Supreme Court of Canada (Ottawa)

COMMENTS;
Well! does this ever bring up an issue regarding GST……. Considered a crown debt… as the money is held in trust for the crown. It makes me wonder if CRA really has the right to take this approach, when they take their normal position, that “before you can dispute the debt, you have to make arrangements to pay the debt…..hmmmmm…. we will have to ponder on this.

Dan White

Posted in Tax Topics | Print | No Comments »

October 30, 2009 by Dan White.

One third of Ontario Ministry of Revenue jobs in Oshawa to be affected by harmonized sales tax

So what we have here is a situation, where workers from Ontario Retail Sales Tax workers will migrate to HST. This will mean an increased assult on small business as the drive to collect more tax gains momentum.

If you think that you can avoid the tax problems that will need solutions, then you are putting your head in the sand. All small businesses must start doing audit ready bookkeeping. Dealing with CRA will become part of your regular business activities.

We are working hard to get our audit ready bookkeeping software to market and it is very close now. We have reinvented accounting and are proud of the solutions that we offer.

Dan White

_________________________
OSHAWA — Ontario’s revenue minister, John Wilkinson, right, spoke with Ron Bordessa, president of UOIT, October 14 during a talk with the Greater Oshawa Chamber of Commerce and business owners at the Holiday Inn in Oshawa. October 14, 2009

Ministry of Revenue offices in Ontario
Employees from 13 different locations will be affected by the sales harmonization tax:

Feds want ‘first crack’ at workers laid off by tax changes

Oct 30, 2009 - 04:30 AM

By Melissa Mancini of DurhamRegion.com

OSHAWA — Harmonizing the sales tax will affect about a third of the Ontario Ministry of Revenue positions in Oshawa.

But the Minister of Revenue said the Province is working closely with the two unions that represent affected workers.

And the good news is there is already an interested employer, Ontario Revenue Minister John Wilkinson said. The feds want “first crack” at the provincial workers affected by the policy change to work in Canadian Border Services Agency and the Canada Revenue Agency.

“The federal government is quite keen on our people because of their skill sets,” he said when he addressed the Greater Oshawa Chamber of Commerce on Wednesday.

There will be 1,271 full-time equivalent positions affected once the GST and PST become one federally administered tax. This is expected to affect 1,500 provincial employees in 13 revenue offices across the province.

The harmonized sales tax is set to be implemented on July 1, 2010.

News there might be fewer people working downtown is unfortunate but it’s hard to say whether it will affect small businesses in the downtown core, said Vivian Sled, office administrator, downtown Oshawa BIA.

“It’s too bad this is going to happen,” she said. “Downtown jobs are feet on the street and bums in the seats.”

But with the courthouse opening and a larger university presence possible, downtown restaurants will probably still have a busy lunch rush, she said.

And last time there were jobs taken out of the Ontario Ministry of Revenue’s downtown offices, Ms. Sled said the concern that it would mean fewer sales in retail shops and fewer patrons in coffee shops wasn’t warranted.

“We didn’t really see a drop,” she said. “There was a panic but it didn’t seem to affect us.”

In an interview, Oshawa Mayor John Gray said the possibility of job losses in the City “is wrong.

“Oshawa has seen its fair share of job losses. We don’t want to see any more job losses,” Mayor Gray said. “Here we are trying to revitalize our downtown.”

About 1,400 people work at the ministry office in Oshawa, he noted, and he doubted many of those who will be impacted would get jobs with the federal government.

“They probably won’t get jobs at the federal level and they’ll find themselves out on the street,” Mayor Gray stated.

Union officials could not be reached by press time.

Posted in Tax Topics | Print | No Comments »