March 2015 Newsletter

Major changes affecting estate planning and testamentary trusts were recently made to the Income Tax Act. These changes were enacted by Bill C-43, the 2014 Budget second bill, passed in December 2014. They take effect January 1, 2016, and will apply to all testamentary trusts as of 2016, regardless of when the death occurred.

Even though your income tax return is prepared professionally and filed electronically, you may wish to check the CRA’s online system yourself to review amounts, balances, carryforwards, and other information on your file. The CRA’s “My Account” system is now quite sophisticated and can provide you with a lot of information.

In January 2014, the CRA began consultations on whether to introduce a system that requires tax preparers to be registered with the CRA. Some other countries, including the United States, already have such a requirement.

If your business purchases goods or services from other businesses, and you think some of them may not be complying with their tax obligations, there is a serious risk that you need to address. The risk is primarily in the GST/HST area.

The Income Tax Act (subsection 163(1)) provides an innocuous-looking penalty which can prove to be devastating.

The penalty in question applies if you file a return that fails to report some amount of income, and you also filed a return for any of the 3 preceding taxation years that failed to report some other amount of income.

Late Notice of Objection allowed because company did not have full information

Patterson Dental Canada Inc. v. The Queen, was an application for extension of time to file a GST objection. (The rules for GST objections are virtually identical to those for income tax objections.)