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Taxpayers DO have the right to remain silent

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7 minute read

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

CEO | Director, Canadian Tax Advisory CGL Strategic Business & Tax Advisors With the Income Tax Act always by his side on his smart-phone, Cory has taken tax-nerd to a whole other level. His background in strategic planning, tax-efficient corporate reorganizations, business management, and financial planning bring a well-rounded approach to assist private corporations and their owners increase their wealth through the strategies that work best for them. An entrepreneur himself, Cory started CGL with the idea that he wanted to help clients adapt to the ever-changing tax and economic environment and increase their wealth through optimizing the use of tax legislation coupled with strategic business planning and financial analysis. His relaxed blue-collar approach in a traditionally white-collar industry can raise a few eyebrows, but in his own words: “People don’t pay me for my looks. My modeling career ended at birth.” More info: https://www.CGLtax.ca/Litzenberger-Cory.html

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Economy

Net Zero Part 4 – IPCC Experts Say Doing Nothing Would Be Less Harmful

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Do you ever feel good when someone won’t tell you how much something costs – something you have to pay for?

No? Me neither.

But, when it comes to the Canadian government’s climate change agenda, and in particular the “Net Zero by 2050” strategy, that is where we are.

It is being forced on Canadians, who will end up paying the bill, but we are not being told what the price is today, or what the price will be tomorrow.

I will continue to dig to find out more. But in the meantime, let me share what an expert on the climate file says about what “doing nothing” would cost.

Yes, doing nothing.

But don’t take my word for it.

President Obama was (and remains) quite outspoken as an alarmist on the issue of climate change, talking often about the impending crisis.

But the former Democratic President’s senior Department of Energy official, Stephen Koonin, has just come out with a most sensible and distinctly non-alarmist perspective. His recently published book, Unsettled, suggests the alarmist climate change narrative is unfounded.

Stephen Koonin served as Undersecretary of Energy in former U.S. President Barack Obama’s administration. A PhD Physicist, he is a smart guy.

Referencing materials from the International Panel on Climate Change (IPCC) – an organization that is widely viewed by governments and media as the single most important source for information on climate change – Koonin demonstrates that the science of climate change is anything but settled, and that we are not in, nor should we anticipate, a crisis.

In fact, despite decades of apocalyptic warnings there is in fact remarkably little knowledge of what might happen. Over the last 5 decades of apocalyptic warning, life on earth has dramatically improved as our management of countless environmental challenges has improved.

What the evidence really shows is that as the global economy improves, our ability to deal with whatever mother nature throws at us improves. On that point, Koonin draws attention to what the IPCC experts say about the possible economic impacts of possible climate change-induced temperature changes.

Koonin notes that, according to the IPCC, a temperature increase of 3 degrees centigrade by 2100 – which some scientists say might happen – might create some negative environmental effects, which in turn would cause an estimated 3% hit to the economy in 2100.

But even as it makes these claims, the IPCC further predicts that the economy, in 2100, will be several times the size of the economy today (unless, of course, we interfere with it as the Net Zero by 2050 crowd wants us to do).  In other words, a strategy of doing nothing may or may not mean a temperature increase, the effects of which if bad, are expected to represent a small economic hit to the economy, but that economy will be much, much larger.

In Koonin’s words, this “translates to a decrease in the annual growth rate by an average of 3 percent divided by 80, or about 0.04 percent per year. The IPCC scenarios…assume an average global annual growth rate of about 2 percent through 2100; the climate impact would then be a 0.04 percent decrease in that 2 percent growth rate, for a resulting growth rate of 1.96 percent. In other words, the U.N. report says that the economic impact of human-induced climate change is negligible, at most a bump in the road.”

So this doesn’t sound like a crisis to me. It sounds like a very modest reduction in extraordinary economic growth. So from extraordinary economic growth to slightly less extraordinary economic growth.

Why do I draw attention to this?

Because Canada is pursuing a Net Zero by 2050 target with a whole bunch of policies that will kill economic growth.

The IPCC predicts significant global economic growth without all the things Trudeau and other Net Zero by 2050 advocates are pursuing – massive carbon taxes, additional carbon taxes called clean fuel standards (CFS), building code changes that will make a new home unaffordable, huge subsidies for pet projects, etc. In other words, the IPCC predicts growth without crazy and wasteful spending of taxpayer dollars that will hurt citizens.

So why are we allowing Trudeau and co to pursue these things?

We don’t know the full costs of Net Zero by 2050, but every signal we have is that it is absurdly expensive. AND (thank you Stephen Koonin for making this explicitly clear) the International Panel on Climate Change says ignoring the Net Zero by 2050 target and doing nothing will mean a much bigger economy.

Prime Minister Trudeau and the activists won’t tell you that.

Nor will they acknowledge what the IPCC actually says.

Let’s all applaud Stephen Koonin for trying to do so.

Green activists are driving a radical agenda screaming at us that the science is settled. As courageous scientists like Stephen Koonin note, science is never settled and to say it is settled is irresponsible. The activists say we have to radically change our economy, but don’t tell us how much that will cost – but the IPCC tells us doing absolutely nothing would result in only slightly less economic growth than we would otherwise have.

Governments are spending massive sums of your money on Net Zero by 2050.

Corporate interests commit to this radical agenda and hide behind rhetoric of doing the right thing, while they also seek out government subsidies (which taxpayers will pay for) to meet their absurd Net Zero by 2050 commitments.

All of us, as consumers, will foot the bill.

And none of it needs to happen.

 

Click here for more articles from Dan McTeague of Canadians for Affordable energy

Dan McTeague | President, Canadians for Affordable Energy

 

An 18 year veteran of the House of Commons, Dan is widely known in both official languages for his tireless work on energy pricing and saving Canadians money through accurate price forecasts. His Parliamentary initiatives, aimed at helping Canadians cope with affordable energy costs, led to providing Canadians heating fuel rebates on at least two occasions.

Widely sought for his extensive work and knowledge in energy pricing, Dan continues to provide valuable insights to North American media and policy makers. He brings three decades of experience and proven efforts on behalf of consumers in both the private and public spheres. Dan is committed to improving energy affordability for Canadians and promoting the benefits we all share in having a strong and robust energy sector.

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Environment

Emmy Award Winning Journalist reveals how “fact checkers” punish ‘tone’ even when the facts check out

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When one of media’s most successful journalists is constantly punished by Facebook Fact Checkers it makes for a compelling story all on it’s own.   Does a 19 time Emmy Award Winning Journalist not check his facts?  Well… turns out the facts aren’t the problem.  Enjoy some more revealing insight from John Stossel.

From StosselTV

Before Facebook censored it, my video, “Are We Doomed”, got more 24 million views. You can watch it here: https://www.youtube.com/watch?v=b8JZo… Now Facebook won’t show it to many people — not even to my subscribers. Facebook’s also punishing Stossel TV by showing our other videos less. All because Facebook foolishly gave Emmanuel Vincent, a recent PhD graduate from France, the power to censor. Vincent assembled a group of like-minded scientists into a group called Climate Feedback climatefeedback.org that declared parts of my video “misleading,” or “partially false.” What facts did the “fact-checkers” correct? NONE! There was not a single hard fact that in the video that was wrong. We address the censor’s claims here, listing our sources: https://www.johnstossel.com/climate-f… I asked one Vincent “reviewer,” the only one willing to be interviewed, why I deserve censorship even though our facts were correct.

After 40+ years of reporting, I now understand the importance of limited government and personal freedom. Libertarian journalist John Stossel is a zealous advocate of free markets, a syndicated columnist and Fox News contributor. Prior to joining Fox, John co-anchored ABC’s primetime newsmagazine show, 20/20. Stossel’s economic programs have been adapted into teaching kits by a non-profit organization, “Stossel in the Classroom.” High school teachers in American public schools now use the videos to help educate their students on economics and economic freedom. They are seen by more than 12 million students every year. Stossel has received 19 Emmy Awards and has been honored five times for excellence in consumer reporting by the National Press Club. Other honors include the George Polk Award for Outstanding Local Reporting and the George Foster Peabody Award.

 

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