Claiming Automobile Expenses

One of the more common expenses claimed by taxpayers are automobile expenses (applies to any motor vehicle such as a van, bus, pickup truck, station wagon, SUV, or other truck). Many individuals use their automobile for work or business and incur personal expenses in doing so. Read more

tax returns 2017

What If I Can’t Pay My Taxes?

Don’t panic!

You’re not alone; many taxpayers have found themselves in financial distress and unable to pay immediately. If you cannot pay the full amount of taxes you owe, you should still file your return (or extension) by the deadline and pay as much as you can to avoid penalties and interest.

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Lifetime Capital Gains Exemption (LCGE)

On January 1st, 2016, the LCGE increased to $824,176 of capital gains realized by an individual on qualified small business corporation shares. The LCGE has been indexed to inflation for the years following 2014. The new limits apply to any taxpayer who has claimed the LCGE previously.

For dispositions of qualified farm or fishing property, the LCGE increased to $1,000,000 on April 10, 2015.


CRA Investigates Small-Town Subcontractors

Recently, CRA auditors reviewed municipal building permits in smaller communities. The auditors were checking for unregistered small-town subcontractors’ worksites. The result was that of the over 8,000 building permits reviewed about 33% were for unregistered building contractors. More than $4,400,000 in tax was collected.

The CRA focuses on the construction industry because it continues to be a source of unreported income in the underground economy. CRA also investigated hardware stores in more than 18 communities looking for installers that failed to report their income. CRA found that approximately only 7% of the installers were non-filers. The voluntary disclosure program is available for building contractors to bring their reporting up to date.

Talk to a Padgett office for help.


Stop International Tax Evasion Program

To combat unreported foreign income, the Federal Government introduced the concept that Canada Revenue Agency (CRA) will pay financial rewards to individuals who provide information on major international tax evasion. CRA could pay up to 15% of federal tax collected if the reassessments are in excess of $100,000. Penalties, interest and provincial taxes will be excluded.

Persons requesting rewards will have to meet certain requirements. For example, persons who have been found guilty of tax evasion related to their offer of information will not be eligible for the rewards.


Director & Personal Liability

In a Tax Alert titled “Abuse of Source Deductions and GST/HST Amounts Held in Trust” CRA warned that businesses must hold source deductions and GST/HST amounts in trust for the government. Penalties and interest and possibly personal liability for the directors will be the result if this is not done.

Federal legislation allows CRA to collect unpaid amounts through garnishments, assessments of the directors, seizure and sale of the assets of the debtor corporation, an assessed director or a sole proprietor, and any other means of recovery.

Taxpayers who have not complied with this requirement may make a voluntary disclosure to CRA. The taxpayer will not be penalized or prosecuted if valid disclosures are made before CRA begins any compliance action against the taxpayer.

Taxpayers may only be required to pay the in trust amounts owing plus interest.