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Opinion

Portland is installing turbines in water pipes to produce electricity, will Red Deer consider following suit?

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  • Portland is installing turbines in their water pipes to generate electricity. Available for 24 inch or 42 inch pipes, excellent for gravity fed water supply.
    This got me thinking about our city applications. Would it be worthwhile for someone at city hall to look into possible applications for Red Deer?
    If Red Deer had a guaranteed year round source of flowing water, should we harness it for Hydroelectricity? What if we had a flow rate that was only strong enough to power city buildings? Should we investigate it? If we knew parts of the equation could we not ask?
    City Councillor Buck Buchanan thinks it should be looked into. Why?
    The city has a guaranteed source that has been recently upgraded to 72,500 cubic meters per day. The source is our Wastewater Treatment Plant. It pumps treated water into the Red Deer River year round and it is not going to stop anytime soon.
    The raw wastewater goes through different cycles and/or processes before it is released as clean water. Treated wastewater leaves the plant area through a channel before being released into the Red Deer River.
    The upgraded capacity of Red Deer’s wastewater treatment plant is 72,500 cubic meters of water per day or 2.6 million cubic feet per day.
    The energy in these moving waters is being wasted. Why not harness it as Hydroelectricity.
    Hydroelectricity is electricity produced by movement of water. It is usually made with dams that block a river to make a reservoir or collect water that is pumped there. When the water is released, the pressure behind the dam forces the water down pipes that lead to a turbine. Our wastewater treatment plant acts like a dam as it holds back water for treatment.
    So just how do we get electricity from water? Actually, hydroelectric and coal-fired power plants produce electricity in a similar way. In both cases a power source is used to turn a propeller-like piece called a turbine, which then turns a metal shaft in an electric generator, which is the motor that produces electricity. A coal-fired power plant uses steam to turn the turbine blades; whereas a hydroelectric plant uses moving water to turn the turbine. The results are the same.
    People have been using the power of moving water to run water wheels and mills for more than 2,000 years. Modern power plants today convert that mechanical energy into electricity.
    Tides, ocean currents, waterfalls, rivers… Moving water is a constant source of energy ready to be harnessed. Hydroelectric energy is obtained by using a turbine to convert the kinetic energy of a river or waterfall into mechanical energy, and then an alternator to transform it into electrical energy.
    There are two main kinds of hydroelectric generating stations: reservoir, and
    run-of-river (ROR).
    A generating station with reservoir uses a dam to create an artificial lake. A run-of-river generating station has no reservoir but offers the advantage of producing electricity without having to store the water.
    Hydro power plants produce minimal greenhouse gases and are a source of clean, non-polluting energy. The evaporation/condensation cycle also makes hydro energy renewable. The above qualities pertain particularly to ROR plants, which produce energy from the natural water flow, which means that the impact on the landscape, ecosystem and neighbouring communities is considerably reduced. It also costs much less to produce electricity at an ROR plant.
    Such properties make ROR hydroelectricity a sensible choice, for economic, social and environmental reasons.
    Run-of-river generating stations are not very complicated. Flowing water is channelled through the intake and enters a penstock, which causes it to flow with greater speed and force to the turbine. The turbine is activated by the force of the water, and it, in turn, runs the alternator to produce electricity. The water then flows down the tailrace and returns to the river.
    The viability of a site and the electricity it can produce are determined by two factors: drop height and water flow volume.
    Hydroelectric energy has been in use for thousands of years. Ancient Romans built turbines, which are wheels turned by flowing water. Roman turbines were not used for electricity, but for grinding grains to make flour and breads.
    Water mills provide another source of hydroelectric energy. Water mills, which were common until the Industrial Revolution, are large wheels usually located on the banks of moderately flowing rivers. Water mills generate energy that powers such diverse activities as grinding grain, cutting lumber, or creating hot fires to create steel.
    Hydroelectric power is also very efficient and inexpensive. “Modern hydro turbines can convert as much as 90% of the available energy into electricity. The best fossil fuel plants are only about 50% efficient. In the US , hydropower is produced for an average of 0.7 cents per kilowatt-hour (kWh).
    Since we know we have a flow rate of 72,500 cubic meters per day, could we not ask an expert if we could harness it for hydroelectricity? If so how much could we produce and how much would it cost?
    Just asking.


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    Opinion

    Taxpayers DO have the right to remain silent

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  • A taxpayer-friendly unanimous Federal Court of Appeal ruling came out this week in MNR v Cameco [2019 FCA 67]. At issue was whether or not the Minister (through the CRA) has the authority to compel oral answers to oral questions from taxpayers or their employees.

    In his ruling, Justice of Appeal Rennie stated “…the Minister does not have the power to compel a taxpayer to answer questions at the audit stage…”, however, it may be in the best interest of the taxpayer to provide reasonable answers to reasonable questions in order to expedite the process. The full entire ruling can be found and read here

    This ruling simply re-confirms, that even in an audit, you (and your staff) have the right to remain silent, and that the Minister’s powers are limited to physical evidence.

    An exception to this is you are required to provide assistance in locating and providing that physical evidence, which may need to be orally.

    Personally, when dealing with a very large number of taxpayers on our own office, we want to be certain that the file that the CRA is talking about is the same file in front of us. As such, we are a firm believer in the Canadian Home Builders’ Association motto that is ironically supported by the Government of Canada: “Get it in Writing.”

    I am not advocating answering no questions, as the Minister (CRA) still has the ability to issue reassessments, thereby shifting burden of proof to the taxpayer further to disprove the reassessment.

    I am, however, advocating at a minimum to get those questions detailed, and in writing. This will help to provide clarity and allow for proper thought in your answers as opposed to stating something with unintended consequences.

    Here is a little example of what happens when you don’t get it in writing: in my dark-side days as a field auditor with the (then called) CCRA, we used to ask prying questions that the taxpayer had no idea they were answering.

    For example, in one particular circumstance I was reviewing a file where it was suggested that the taxpayer was doing under-the-table cash jobs. This meant I would have to be creative in figuring out the taxpayer’s cost of living, and ruling out other sources of income.

    Meeting in a quiet restaurant in a small Saskatchewan town, I was eventually able to have the taxpayer relaxed enough to think that we were having a normal conversation. Just a couple of ‘Riders fans that aren’t a fan of Ottawa, but hey, I have a job to do. When the taxpayer started complaining about the government, I joined in:

    “Hey, I hear you. I’m not some suit from Ottawa. I’m from Regina. I mean both the feds and the province already get enough out of me from tax on my smokes.”

    I don’t smoke.

    The taxpayer didn’t know that, but the anger was timely because the province had just raised up the cigarette tax the previous year so packs were well over $6 a pack.

    “Yeah I know”, the taxpayer said, “I smoke a pack a day”.

    Music to my ears as a tax auditor, the taxpayer just told me that they need ($6 x 365) = $2,190 of after-tax income just to feed their cigarette habit.

    I continued, “That’s terrible! Between getting our money on that, and getting it at the casino, it’s just crazy how much they make it hard to enjoy our weekends.”

    “Yeah, I don’t win nuthin’ at the casino either,” the taxpayer stated.

    To me I heard ‘I didn’t have any non-taxable casino winnings. In fact, the taxpayer likely had lost money in the year. This means the taxpayer needed to have more disposable income to gamble.’

    The conversation continued for a good 30 minutes. Once I was armed with more knowledge of the taxpayer’s lifestyle and spending habits, I went to work. Bank statements, receipts, mileage information, fuel costs, type of vehicle, etc.

    We would use information tools not only from Statistics Canada for price of fuel in different regions, we would also use websites like www.fueleconomy.gov that provide different estimated fuel consumption based on type of use and mileage going back to cars from the 1980s. Then we work backwards to see if the numbers made sense with respect to the taxpayer’s vehicle and costs.

    When it was all said and done, I used the results of our conversation against the taxpayer. When I was finished, I found over $30,000 in an income variance between the taxpayer’s living costs and change in net worth compared to what was reported. Not only that, but the taxpayer had already backed themselves into a corner because of the questions that were answered which I had documented.

    My guess is that in conclusion, the taxpayer thought they should have got the questions in writing instead of meeting me at a restaurant.


    Cory G. Litzenberger, CPA, CMA, CFP, C.Mgr is the President & Founder of CGL Strategic Business & Tax Advisors; you can find out more about Cory’s biography at http://www.CGLtax.ca/Litzenberger-Cory.html


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    Opinion

    Budget 2019 – Poor wording requires 2 ex-spouses within 5 years for Home Buyers Plan

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  • This is one of those rare times I hope I am wrong in my interpretation, and look forward to being proven wrong by my professional colleagues.

    On March 19, 2019 the federal government tabled its election-year budget. One of the newest and strangest provisions is the ability for people going through a separation or divorce to potentially have access to their RRSP under the Home Buyers Plan.

    Now in my article and podcast entitled: “Escape Room – The NEW Small Business Tax Game – Family Edition” with respect to the Tax On Split Income (TOSI) rules, I made a tongue in cheek argument that people will be better off if they split, because then the TOSI rules won’t apply.

    In keeping with the divorce theme, beginning in the year of hindsight, 2020, the federal government is giving you an incentive to split up and get your own place.

    However, there are a few hoops:

    On page 402 of the budget, under new paragraph 146.01(2.1)(a), at the time of your RRSP withdrawal under the Home Buyers Plan, you must make sure that:

    • – the home you are buying is not the current home you are living in and you are disposing of the interest in the current home within two years; or
    • – you are buying out your former spouse in your current home; and

    you need to:

    • be living separate and apart from your spouse or common-law partner;
    • have been living separate and apart for a period of at least 90 days (markdown October 3, 2019 on the calendar),
    • began living separate and apart from your spouse or common-law partner, this year, or any time in the previous 4 years (ok, you don’t have to wait for October); and…

    …here is where the tabled proposed legislation gets messy.

    Proposed subparagraph 146.01(2.1)(a)(ii) refers to where the individual

    • wouldn’t be entitled to the home buyers plan because of living with a previous spouse in the past 4 years that isn’t the current spouse they are separating from

    “(ii) in the absence of this subsection, the individual would not have a regular eligible amount because of the application of paragraph (f) of that definition in respect of a spouse or common-law partner other than the spouse referred to in clauses (i)(A) to (C), and…”

    The problem with the wording of this provision, is that it is written in the affirmative by the legislators using the word “and”. This means, you must be able to answer “true” to all the tests for the entire paragraph to apply.

    The way I read this, the only way to answer “true” to this subparagraph is if you have a second spouse (ie: spouse other than the spouse referred to) that you shared a home with and you split from in the past four years.

    If you have a second spouse that you shared a home with in the past four years, then “paragraph (f)” in the definition of “regular eligible amount” would apply and the answer would be “true”.

    If the answer is “true” you can then get access to your RRSP Home Buyers Plan.

    If you don’t have a second spouse then, even though “paragraph (f)” might be met, the phrase “spouse other than the spouse referred to” would not be met, and therefore the answer would be “false”.

    This would, in turn, cause the entire logic test of the provision to be “false” and so you would not be able to take out a “regular eligible amount” from your RRSP for the Home Buyers plan because you do not meet the provisions.

    If my interpretation is correct then I would really be curious as to what part of the economy they are trying to stimulate.

    In my opinion the legislation could be fixed with a simple edit:

    “(ii) in the absence of this subsection, the individual would not have a regular eligible amount because of the application of paragraph (f) of that definition in respect of:

    (A) a spouse or common-law partner; or

    (B) a spouse or common-law partner other than the spouse referred to in clauses (i)(A) to (C); and…”


    Cory G. Litzenberger, CPA, CMA, CFP, C.Mgr is the President & Founder of CGL Strategic Business & Tax Advisors; you can find out more about Cory’s biography at http://www.CGLtax.ca/Litzenberger-Cory.html


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