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Opinion

Wouldn’t we save money and have nicer lawns if we just did our business behind a bush?

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  • It costs $73/tonne to toss out my coffee cup. That is the cost of taking solid waste to the waste management site. It costs about $40 per month for my waste water to get treated and dumped into the river.
    Would it not be cheaper to just burn my solid waste in the back yard or dump it over the fence or drop it along some dirt road, or in some farmer‘s field? It might be cheaper in the short term but if everyone did it, I can only imagine.
    Speaking of farmers’ fields, you know they have manure spreaders for spreading manure on their fields. So manure is a good fertilizer, good for plants. Interesting because that is part of the reason why we pay $40 per month cleaning our wastewater.
    Would it not be cheaper if we all just did our business in our gardens or dumped it in the streets and let the rain wash it away or let it fertilize the ground?
    Can you imagine how much crop we could get if 7 billion people left their fertilizer on the ground? Now if only we had CO2 to help our crops grow?
    You can see where I am going with this and how foolish it appears, but the argument against carbon pricing is very similar.
    How many times have we heard that CO2 is not a pollutant but is a necessity for plant growth. Water is necessary too, but nobody wants a flood or a tsunami.
    It took many generations, plagues and courage to get the sewage off the streets and solid waste into landfills. It took generations to get recycling into the mainstream, it will take longer to accept a price on carbon.
    We have 3 levels of pollution solid, liquid and gas. We pay $73 per tonne to manage our solid waste and since carbon pricing is based on a solid’s scale why not charge $73 per tonne of carbon?
    We all understand about our need for clean air just as we understand our need for clean water and removing our trash. We recycle while many third world nations may not, we treat our wastewater while many third world nations may not, so why don’t we clean our air or at least make those who pollute, pay?
    My fire and flood insurance is going up due to increased fires and floods, due to climate change, due to CO2, and health care related costs are going up and the list goes on so I guess everyone is paying for our free air pollution.
    Shouldn’t the polluters pay a little bit more?
    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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