What is an alter ego trust An alter ego trust is an inter-vivos trust, which means it’s created during your lifetime, established after 1999. To qualify as an inter-vivos trust, you (the settlor) must be a Canadian resident aged 65 or older and the sole beneficiary of all income from the trust during your lifetime—no one else can receive or benefit from the income or capital of the trust while you’re alive. While you can appoint a third party as trustee or co-trustee, you can also appoint yourself. If you choose to be the trustee, it’s advisable to name an alternate trustee who can take over a ..read more

Introduction – The Canadian Foreign Tax Credit System An individual who is a Canadian tax resident is liable to pay Canadian income tax on worldwide income.  This could result in double taxation where that Canadian taxpayer is also subject to income tax in another jurisdiction on any part of that income. To ameliorate double taxation, if that foreign jurisdiction has the primary right to tax that income, then Canada’s system offers various mechanisms to reduce Canadian tax payable. The principal mechanism of relief from double taxation is the foreign tax credit system under section 126 of ..read more

What is a retiring allowance? A retiring allowance is a payment made by an employer to an employee when their employment is terminated. This payment is typically based on the employee’s length of service and their position within the organization. While the terms “retiring allowance” and “severance package” are often used interchangeably, they are not the same. A retiring allowance is just one part of a severance package, which may also include other forms of compensation, benefits, and incentives. Qualifying payments for a retiring allowance include: Payment for unused sick leave credits upo ..read more

Introduction: Mr. Cassidy’s Request for Taxpayer Relief Taxpayers may, under subsection 220(3.1) of the Income Tax Act (“Tax Act”), request relief for penalties and interest in what is referred to as a taxpayer relief application (formerly known as fairness application). Granting this application is at the Canada Revenue Agency’s (“CRA”) discretion, which the CRA’s reserves for limited circumstances. In Cassidy v Canada (Attorney General), Mr. Cassidy had made a taxpayer relief application for unpaid taxes, penalties, and interest arrears, totaling $54,059.69. His request was based on several ..read more

Introduction: Statute-Barred Tax Years & Statute-Barred Tax Audits Canada’s Income Tax Act sets out a “normal reassessment period,” after which the Canada Revenue Agency generally cannot reassess a person’s taxable income or tax payable. For most individual taxpayers, the normal reassessment period expires three years from the date that the CRA issued the taxpayer’s original tax assessment for the taxation year. Once the normal reassessment period for that taxation year has expired, that tax year is statute-barred, which means that the Canada Revenue Agency’s tax auditors can no longer aud ..read more

Introduction: Statute-Barred Tax Years & Statute-Barred Tax Audits Canada’s Income Tax Act sets out a “normal reassessment period,” after which the Canada Revenue Agency generally cannot reassess a person’s taxable income or tax payable. For most individual taxpayers, the normal reassessment period expires three years from the date that the CRA issued the taxpayer’s original tax assessment for the taxation year. Once the normal reassessment period for that taxation year has expired, that tax year is statute-barred, which means that the Canada Revenue Agency’s tax auditors can no longer aud ..read more

Introduction – CERB and CRB claims before the Federal Court The Canada Revenue Agency (“CRA”) has been assessing, and often denying, Canada Emergency Response Benefit (“CERB”) and Canada Revenue Benefit (“CRB”) claims. Recourse for those individual taxpayers denied CERB and CRB is to request a second review from the CRA. If that review fails to sway the CRA, then the taxpayer may bring their case before the Federal Court by way of judicial review. One case that ended up before the Federal Court was Cameron v. Canada (Attorney General), where the Canadian tax litigation lawyer for Michael Ian C ..read more

Introduction – Tax Exemptions for Charities To promote philanthropic ventures, the Canadian income tax regime offers generous tax benefits for people and organizations engaging in charitable activities. First, under the Canadian Income Tax Act, an organization that maintains registered charity status is tax-exempt on any income it receives. An organization may qualify as a “registered charity” for income tax purposes on application to the Canada Revenue Agency (“CRA”) where, generally speaking, it: (i) is constituted and operates exclusively for charitable purposes (i.e. relief of poverty, adv ..read more

Introduction: The Access to Information Act and The Privacy Act An Access to Information or Personal Information (ATIP) request allows a Canadian taxpayer to exercise his or her right to access records of government institutions, including personal information held by government institutions. The ATIP requests are governed by two different federal legislations: the Access to Information Act and the Privacy Act. The Access to Information Act provides individuals, who are Canadian citizens or permanent residents, or are present in Canada, and corporations present in Canada the right to ..read more

The Canada Revenue Agency (CRA) has revealed that $458 million in funds distributed to employers through a pandemic-era wage subsidy program have either been denied or adjusted. This decision is a consequence of an ongoing tax auditing process that is not yet complete. The CRA published a report on November 27, 2023, providing detailed insights into its audits of the Canada Emergency Wage Subsidy (CEWS) Program. While the primary focus of the findings pertains to the period ending March 31, 2023, the report also includes more recent figures up to September 29, 2023. The majority of CEWS claima ..read more