Blog -

What is “The Postal Code Project”?

The Canada Revenue Agency (CRA) has launched a new scheme dubbed “The Postal Code Project”. Its purpose is to track high income earners living in wealthy neighbourhoods. It uses a systematic approach to identify those individuals and review whether they are reporting income accurately.

What does it mean for me?

For individuals residing in areas identified, there is a greater likelihood that the CRA will reassess tax returns. If reassessed, taxpayers may owe significantly more tax than what was initially paid. Not to mention the additional interest and penalties related to the reassessed figures. Therefore, it’s better to report your income accurately to avoid penalties and interest.

THE PROBLEM

The CRA audit divisions have been targeting sales in the GTA of what they deem to be a quick resale of a newly purchased pre-construction condos. If you resell within 6 to 8 months of getting title, you could face a reassessment for taxation on the full gain, 50% penalties on the amount reassessed, plus interest. This is the result of the CRA concluding that you bought the condo with a “profit motive” and not for personal usage. We call their technique a “pure tax grab” and it’s shameful! If this has happened to you, the Taxperts team may be able to get the penalties reversed.

We have been approached by numerous non-residents who have sold rental properties in Canada that have not been declared. Non-residents can make a voluntary disclosure on these dispositions and obtain penalty relief. Non-residents are not exempt from being audited by the CRA. Undeclared rental income, can be declared and receive penalty in certain circumstances. If you have undeclared rental income or undeclared real estate dispositions in Canada, it may jeopardize future business dealings in Canada.

If you are a non-resident with undeclared real estate dispositions or undeclared rental income, 

We apologize for the delay since our last blog post but the CRA has kept us busy! In earlier posts we discussed the audit practices of CRA vis-à-vis real estate. Many taxpayers believe they will not get caught selling assignments at a profit. We must emphasize that this is incorrect. The CRA is demanding lists of purchasers from the developers and comparing those lists to who is eventually registered on title. Any name on the former that does not appear on the latter is virtually guaranteed to be audited. Any

The Canada Revenue Agency (“CRA”) has been mailing out a questionnaire seeking information on all real estate properties owned by taxpayers in the last seven years. We have received many phone calls from taxpayers who have received this questionnaire. The worst calls are from those who have already submitted a completed questionnaire and are now being reassessed for huge sums of money based on the information they themselves provided to CRA. This situation could have likely been avoided.

These questionnaires are designed to get information for taxing purposes only. They do

A recent Tax Court of Canada case saw a taxpayer attempting to claim a tuition tax credit for private piano lessons. The taxpayer argued that the private instructors constituted an “education institution.” The Tax Court of Canada noted that the tuition tax credit was clearly intended to make post secondary education more accessible to students by offering them a tax credit. The Court proceeded to, not surprisingly, reject the taxpayers’ tuition tax credit.

There seems to be a fascination with the tuition tax credit. The Court has

Taxpayers (both individuals and corporations) facing large amounts of interest and penalties from the Canada Revenue Agency (“CRA”) do have a final avenue of potential relief. Taxpayers are largely unaware of the Taxpayer Relief Program where the CRA has the discretion to grant relief from the interest and penalties. The CRA will do so in cases of extraordinary circumstance (i.e. illness, divorce etc.), actions of the CRA (i.e. long delays in closing an appeal) and an inability to pay or financial hardship. These categories are broad and are not necessarily

Directors of a corporation can be held personally liable for HST and employee source deductions. Even if a director would be considered an “outside director,” meaning they have no day-to-day involvement in the company, they still may be held liable jointly and severally with the corporation. Directors with minimal financial experience or know-how may not be spared director’s liability solely for those reasons.

Where the CRA tries to hold a director personally liable for HST or employee source deductions, the only real defense for the director is the due diligence defense.

If you are a non-resident of Canada and are receiving rental income from real property located in Canada you have to remit non-resident (Part XIII) tax at the rate of 25% of the gross rental income paid to you. The tax has to be sent to CRA on or before the 15^th day of the month following the month the rental income was paid to you.

If you do not withhold and remit this non-resident tax, CRA will charge you compounded daily interest on the amount not withheld and remitted.