December 2, 2009 by Dan White.

End of year tax reminders

Couple of Tips

The Home Renovation Tax Credit-Remember the feds are basically giving anyone who completes home renovations a 13.5% tax credit on the first $10,000 in expenses as long as they are completed by the end of January 2010. Virtually any true renovation expense is eligible, so long as the the expense is incurred before February 1, 2010.

Purchasing Business Assets- If you are thinking about purchasing office equipment or furniture as a small business owner, if you do it prior to the year end, you will be eligible to take advantage of the depreciation one year earlier.

This is the time to buy Computer equipment as you will be eligible to get a full 100% write-off for both Federal and Quebec purposes. This 100% deduction program actually expires at the end of January 2010, but why not write off the full expense now and reduce your 2009 taxes instead of waiting a full additional year.

If you want more information on this topic, please email danwhite@danwhite.ca

Dan White

Posted in Tax Topics | Print | No Comments »

December 2, 2009 by Dan White.

 This Bloomberg.com article reinforces the point I am making about swiss banking dangers in respect to doing a voluntary disclosure.

I am bugged over this latest round of CRA propaganda because it is not honest. Can’t we at least expect the Minister of Revenue for Canada to be honest with us?

Why not just be truthful and say, “We are going to do everything we can to nail every ass in Canada for every cent we can get, starting with offshore banking.” Instead he implies  that UBS is going to turn over the names of Canadians who bank in Switzerland.

I am not saying two wrongs make a right, but I am saying it is wrong to mislead Canadians for any reason.

If you read between the lines in what Revenue Minister Jean-Pierre Blackburn says; you will see the following.

Likely if names are released, it will be for amounts over a million dollars. (A swiss frank is worth slightly more than a Canadian dollar).

UBS has refused to turn over names to Canada. Canada is “threatening” that it will sue….. I guess if they actually do launch an action, it could be more believable, that names would be turned over, but I doubt it.

If 88 Canadians who banked in Switzerland came forward and have paid 14.3 million in taxes, that would be an average of $162,500 each. That is quite short of the million threshold that applies is the USA issue.  How many of those 88 were over the one million threshold?

But the most imporant question of all is. “Did those who did the Voluntary Disclosures and up paying less tax than if they had come clean without the disclosure?” What are the real numbers. What is the story behind the aftershocks.?

I have seen in first hand. A voluntary disclosure is often not the way to go.

If you have offshore wealth, be sure to talk to someone who is not selling the Voluntary Disclosure Program, to find out if it really is the right thing for you to do or if it is absolutely the wrong thing to do.

To learn more, go to www.tax-audit-solutions.com and www.danwhite.ca

If you have a serious tax issue, contact me dw@911taxes.com

Dan White

________

Here is the article by Alexandre Deslongchamps

Canada Has Tax Disclosures From 88 UBS Clients, Blackburn Says
Share Business ExchangeTwitterFacebook| Email | Print | A A A

Dec. 2 (Bloomberg) — Eighty-eight Canadian clients of UBS AG have contacted the country’s revenue agency to voluntarily disclose income they previously failed to report, Revenue Minister Jean-Pierre Blackburn said today.

Forty-one of those customers have reached settlements with the Canadian government, reporting C$15 million ($14.3 million) in previously undisclosed income, Blackburn said in an interview today. He didn’t say how much revenue the federal government will recover from the tax adjustments.

Canada has been trying for several months to recoup tax losses caused by citizens who hid assets in UBS accounts. UBS, Switzerland’s largest bank, said in August that it will divulge information on 4,450 accounts to settle a U.S. lawsuit that sought names of clients suspected of evading taxes.

Blackburn said the government is “very firm on this; we want the list of clients and we hope that UBS fully collaborates.” He added that the government will go to court if the discussions don’t yield “tangible results.”

Switzerland said last month it will turn over details of UBS AG accounts held by U.S. residents who had more than 1 million Swiss francs ($1 million) in undeclared assets to the U.S. Internal Revenue Service.

To contact the reporter on this story: Alexandre Deslongchamps in Ottawa at adeslongcham@bloomberg.net
Last Updated: December 2, 2009 10:42 EST

Posted in Tax Topics | Print | No Comments »

December 2, 2009 by Dan White.

Taking losses on rental property is not always a good idea. There is a lot to think about when you start using losses as a plan to reduce your taxes.

To learn more about proper records and what happens when you are audited go to

 www.tax-audit-solutions.com

and

www.danwhite.ca

Here is a good article from Andy Wong.

Andy Wong
Guest columnist
Monday, November 30, 2009

Previous columns

The taxman gets jumpy and may sniff around if you deduct losses from a rental property. Here is a reason why your losses may attract some unwanted attention.

Losses from a rental operation can be applied against other income such as wages. In essence, your rental loss is a tax deduction that nets you a refund and the taxman doesn’t like to hand out refunds unless there is a legitimate reason.

To be fair, the Canada Revenue Agency isn’t out to disallow all rental losses, per se. Rather the agency tries to distinguish between deductible losses from real rental operations and non-deductible losses where the operation involves a strong personal element. For instance, the tax courts have made it quite clear the CRA cannot disallow rental losses from legitimate rental operation. The key considerations are: Why did you buy and rent the property?

Was it a bona fide commercial activity, i.e., to make money, or was it a personal endeavor? If it was a commercial activity, the train stops there and the losses should be deductible.

The tax courts have also agreed losses from rental operations that involve a personal element are non-deductible if the operation isn’t conducted in a business-like manner. And what do ‘personal element’ and ‘business-like manner’ mean?

Say you owned a house with two bedrooms; your parent lives in one and while living in the same house, you rented the other bedroom to your girlfriend. Consequently you claimed rental losses from deducting a percentage of the house expenses against the rented bedroom. Is there a personal element involved? If yes, was the rental operation conducted in a business-like manner? If no, the rental losses are denied.

In Slagado versus the Tax Court of Canada, Nov. 5, 2008, involving the above facts, the judge quickly concluded there was a clear personal element because the taxpayer had rented out his bedroom to his girlfriend and they shared its use. Was the rental conducted in a business-like manner?

The taxpayer had charged annual rent of $1,950 for 2003 and 2004 and claimed rental losses of $5,827 and $3,426 for those years. It turned out his girlfriend didn’t even live in that property during 2003. The judge concluded there wasn’t a business-like arrangement because rent was charged to a non-existent tenant.

The above case is a reckless example of an illegitimate rental operation. The case of Landriault & Bercier versus the Tax Court of Canada, July 29, 2009, is more typical of rental losses that fail the smell test.

The taxpayers, a married couple, lived on the lower floor and rented the upper floor to their son at less than fair market value. They claimed rental losses of $7,523 and $4,836 for 2003 and 2004.

The judge concluded there was a personal element because the tenant was their son. Since the rent was below fair market value and the couple could not expect to make a profit at that rent level, there was no evidence the rental activities were carried out in a business-like manner.

He concluded the operation was a family arrangement to charge minimal rent to help defray the operating costs of the property and he denied their losses.

Andy Wong, CGA, CFP, is a tax consultant at MacKay LLP, Chartered Accountants, in Yellowknife. He can be reached at: andrewwong@yel.mackayllp.ca

Posted in Tax Topics | Print | No Comments »

December 2, 2009 by Dan White.

If you are being audited; Read This First!
Canada Revenue Agency (CRA) has one objective. Their sole reason for existing is to collect more and more money from Canadians. You are up against a well-oiled machine that is out to get as much booty from you as they possibly can. Don’t think for one second that there will be any kindness or overlooking of things when it comes to audits and collections.

To think that you are dealing with an agency that is set up for any other purpose than to collect revenue in Canada is not only naive, but it is missing the point that CRA’s mandate is to get as much money as they can.

CRA has risen to a new level of sophistication by way of technology. Data mining, snitch lines fed by disgruntled employees and angry X spouses have resulted in a never before numbers of audits.

CRA treats the collection of revenue as serious business, and if you don’t also treat it as serious business, your financial head is on the chopping block. Your savings and assets will be severed from your ownership by a well-orchestrated swing of the tax man’s axe.

There are so many audits going on by the now over seven thousand auditors in Canada, that CRA is six months behind in their case work. That does not mean that they will not get to it, what it does mean is that they will hire more auditors.

And just where are those auditors going to come from? Auditors already trained in the art of extraction of money? If you guessed the BC and Ontario provincial sales tax auditors, you are right. Good by to the PST auditors and Hello HST auditors. Thousands to trained hit men will join the ranks of CRA.

When the new auditors join the ranks of CRA, then the work will be all laid out for the new army of auditors who will speed up the audits.

If you have received that phone call or the letters from CRA telling you that you are going to be audited, then you need to get help before you talk to them.

Call us now at 1-905-668-4816 and tell the operator that this is a tax emergency.

If it is late at night, and you cannot sleep because of the stress this is causing you, and you just found us on the internet, then email us at info@tax-audit-solutions.com and use the word “EMERENCY” in the subject line. If you have just sent that email, you will hear from us first thing in the morning.

If you want to read on for more valuable insight into the workings of our tax regime, then read on;

You may not know that although Canada Revenue Agency is officially part of the
Government of Canada, since December, 2003, CRA has acted as an independent
agency working for the federal government and most of the provinces.
CRA administers most individual and corporate income taxes in Canada. It also
administers the Goods and Services Tax (GST) in all provinces except Quebec,
where Revenu Quebec administers both the QST and GST. In Nova Scotia, New
Brunswick and Newfoundland & Labrador, the GST has been replaced with the
Harmonized Sales Tax (HST) which is administered by CRA. On March 26, 2009, the
Government of Ontario proposed that the Ontario Retail Sales Tax be harmonized
with the GST on July 1, 2010. Although no announcement has been made, it is
likely this harmonized tax will also be administered by CRA.
The introduction of HST will cost Ontario taxpayers billions of dollars over the next
decade by taxing all kinds of essential items, such as heating fuel, gasoline and
everything that is currently PST exempt. If you write your MP and promise that the
next 5 generations of your family will never vote for the party if the bill passes, you
can defeat the HST. If you think your neighbour will look after that, it will pass for
sure. If you want to reduce your future taxes, this is one easy way to do so.
Governments do not enact bills that are wildly unpopular.
CRA has two main responsibilities: to collect taxes and administer tax law. There is
even a separate court, the Tax Court of Canada, to oversee justice with respect to
tax law. Unlike other courts in Canada, at Tax Court, you are considered guilty until
proven innocent.
CRA is a business, and like any business, it has to watch its bottom-line very
carefully. Auditing a taxpayer is expensive and, even though CRA gets its funding
from 10% of our taxes, they won’t waste the time and money required to perform
an audit unless they feel there is a good chance of making a decent return on their
investment.
What does this mean for you? It means that CRA has already pre-determined that
auditing you is a good investment. The auditor’s mandate is to go after you
aggressively to obtain the most money possible. Fairness is not part of the
mandate - maximum profit is the name of their game. If you don’t realize this from
the outset, you are in for a very rough ride.
We know that most taxpayers don’t try to cheat the tax man — it’s too difficult and
risky. However, most taxpayers don’t save all their receipts and keep audit-proof
books.  CRA relies on those statistics to gain leverage when auditing. They’re
hoping that because you have been honest and fair in preparing your tax returns,
that you expect them to return the favour, in kind. As you will discover exploring
this site, that is not likely to happen.
No, this is a battle. CRA has already targeted you and developed a strategy for
winning. You need to recognize that and arm yourself appropriately to prevent your
financial slaughter.
For more information go to www.tax-audit-solutions.com or www.danwhite.ca

Dan White

Posted in Tax Topics | Print | No Comments »

December 2, 2009 by Dan White.

I do not promote tax evasion, neither offshore or onshore. But for Canadians to go into a Tax Amnesty a.k.a. Voluntary Disclosure, thinking that coming clean by way of a Voluntary Disclosure, is always the best way to go is foolhardy.

So far 90 Canadians have lined up for slaughter. They knowingly committed tax evasion, they lived with it. Now out of fear that they may get caught, come willingly into the spiders webb.

I am not saying that they should not come clean. I am saying that there may be better ways to sleep at night.

Simply Stated. CRA is not having any luck getting the records from the United Bank of Switzerland.

To learn more about voluntary disclosure risks go to www.tax-audit-solutions.com  or www.danwhite.ca

Dan White

_______

Canada says could sue UBS over list of clients
Wed Dec 2, 2009 4:19pm EST

* Canada won’t say when it would start suing UBS

* 90 UBS clients have voluntarily revealed accounts

OTTAWA, Dec 2 (Reuters) - Canada, which is trying to clamp down on tax evasion, is prepared to take Swiss bank UBS (UBSN.VX) (UBS.N) to court if necessary to compel it to hand over details of Canadians who might be account holders, a government minister said on Wednesday.

Ottawa has been pressing UBS since early September for the names, but has had no success.

National Revenue Minister Jean-Pierre Blackburn said 90 people have voluntarily disclosed their UBS accounts to Ottawa. The government has reached deals with 44 of them, raising an extra C$15.3 million ($14.6 million) in tax revenue in the process.

“We are still discussing with UBS authorities to try to obtain that list of Canadians who are on their list, who have (accounts in) tax havens abroad,” he told reporters.

“It’s not easy. If we realize that it won’t be possible to obtain it, if they just try to obtain time, we will go (to) court to obtain this list.”

Blackburn did not say at what point the government would end the talks with UBS and go to court.

Earlier this year a high-profile U.S. lawsuit against UBS AG prompted the bank to agree to promise to reveal the names of 4,450 client accounts held by Americans.

Offshore private banking involves managing the wealth of rich clients from a foreign location. Some have exploited the system to avoid paying taxes, especially if transactions are carried out in traditional banking secrecy strongholds.

Last month U.S. officials said some 14,700 rich Americans, worried about a crackdown on offshore tax cheats, had turned themselves in under a government amnesty program.

($1=$1.05 Canadian) (Reporting by David Ljunggren; editing by Peter Galloway) ((david.ljunggren@reuters.com; +1 613 235 6745; Reuters Messaging: david.ljunggren.reuters.com@reuters.net))

Posted in Tax Topics | Print | No Comments »