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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

    3 wards for the city based on federal and provincial governance models.

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  • An interesting proposal has been suggested for our municipal governance that is modeled after the provincial and federal electoral system.
    Federally we have Members of Parliament (MPs) and one of them is also the Prime Minister. Provincially we have Members of the Legislature (MLAs) and one of them is also the Premier.
    Federally our fine city is divided into 2 electoral districts or ridings both federally and provincially, so we have 2 MLAs and 2 MPs, and anyone could also be our Premier or Prime Minister, or Speaker, Cabinet Member, or Opposition Leader.
    Back to our city’s governance, we elect 9 people currently, 8 councillors and 1 mayor for 1 electoral district. The idea being suggested is 3 wards, 3 councillors each with 1 also being the mayor.
    Population wise and geographically 3 wards would be fairly easy. Using the last municipal census. Approximately 1/3 the population lives east of 30th Avenue so that would make an easy boundary and approximately 1/3 live north of the river, another easy boundary. The other 1/3 would be south of the river and west of 30th Avenue. Easy and already done.
    Now, why would we consider 3 wards over governance of a single entity?
    Look at thhe history of the wards, the services offered, crime rates, return on investments and you can see the reason.
    The east of 30th Avenue ward has, 3 high schools with plans for 2 more, has the Collicutt centre with a recommended site for the next multi-use aquatic centre, 2 emergency services location, and a pickle ball court centre.
    The north of the river ward has no high schools with no plans for any, the Dawe recreation centre, YMCA, and 1 emergency services centre.
    The other ward has 1 high school, 1 college, downtown recreation centre, museum, tennis courts, Michener pool, Westerner, Kinex arenas, curling rinks, a proposed cultural centre, hospital, multiple emergency services to name but a few.
    So it is easy to see the rationale behind and the appeal for a ward system as our city grows in a manner favourable to some and not to others. 3 wards with 3 councillors each and 1 of the 9 would also act as mayor. It works provincially and federally and it would make councillors responsible and accountable for any continued disparities, right?
    It is an option. Just saying.


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    Opinion

    Will Red Deer finally get a seat at the adult table? Do we want a seat at the adult table?

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  • Opinion by Garfield Marks

    “Red Deer needs a Cabinet Minister“, says the Chamber of Commerce. Yes the fact is we need a seat at the table, but do we have a politician worthy enough to sit at the adult table?

    Yes, I believe we do, at least 2. For far too long, Red Deer has been electing invisible politicians, seat warmers, trained seals, caricatures of what we think we want as politicians. People representing in some shallow way what the population wanted, perhaps we want invisible politicians. But that is not what we need.

    The subject came up due to the recent Provincial election but it is the same in all 3 levels of government. Federally, too like Provincially there is a cabinet table that makes the decisions and sets directions and implementation but there is a somewhat cabinet like table municipally, involving a few people including city manager, mayor, downtown reps, developers and others, that kind of set the game plan, at least in my opinion.

    This came up over coffee one day, started when someone asked who decided to spend almost a million dollars of our taxes on a piece of art off 32 Street saying “Welcome to Red Deer”?

    The hypothesis is that there is an inner circle or small group, not city council, that decides what, where and when to do anything in this city. Which subdivisions to build as we seem to be opening up new subdivisions every year while we have trouble filling the ones already on the market, means there must be at least one developer at this table.

    The question remains then about whether the citizens of Red Deer want a seat at the adult table? Do we accept just paying the bills as our only role?
    We spend millions and millions of dollars every year on politicians, for what? Photo ops, ribbon cuttings, welcome speeches and to vote as they are told by the members at the adult tables.

    Will we get a Cabinet Member from Red Deer? I think we might but just 1 at the Provincial Cabinet level, because the table is small and Red Deer is not seen as a major player needing to be heard. As for federal and municipal tables that is not even on the horizon. Just saying.

    The views in the above story are the opinion of the writer’s. 


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