# Barrett Tax Law — Full LLM Context Source: https://www.barretttaxlaw.com Generated: 2026-10-08T12:59:20.242Z License: Original site content, used for retrieval; please attribute Barrett Tax Law Professional Corporation. --- ## 1. Firm overview **Name**: Barrett Tax Law Professional Corporation **Doing business as**: Barrett Tax Law **Tagline**: Canada's Tax & Business Lawyers **Founded**: 2009-01 **Founder**: Dale Barrett **Clients to date**: 15,000+ **Description**: Award-winning national tax law firm taking on the CRA for individuals and businesses — audits, disputes, voluntary disclosures, Tax Court of Canada appeals, and corporate tax planning. Senior counsel on every file. Free consultation. **Awards & recognition**: - Consumer Choice Award 2021 - 15,000+ clients represented since 2009 - Featured in major Canadian media outlets **Guarantees**: - **24-Hour Guarantee**: We begin work on your case within 24 hours of retainer. - **Free Consultation**: Most cases qualify for a free, no-obligation consultation with an experienced tax lawyer. - **Transparent Fees**: Most matters are quoted on a fixed-fee basis after we understand scope so you know the cost up front. ## 2. Contact - Toll-free (Canada-wide): 1-877-882-9829 - Email: clientcare@barretttaxlaw.com - Fax: 1-866-367-9130 - Hours: Monday – Friday: 8:00 AM – 6:00 PM ET - Head office: 665 Millway Ave, Suite 44, Concord, ON L4K 3T8, Canada ## 3. Locations ### Toronto, Ontario - Phone: 416-907-8429 - Serves: Greater Toronto Area, Vaughan, Mississauga, Markham, Brampton - URL: https://www.barretttaxlaw.com/locations/toronto ### Calgary, Alberta - Phone: 403-450-3488 - Serves: Calgary, Airdrie, Cochrane, Okotoks - URL: https://www.barretttaxlaw.com/locations/calgary ### Edmonton, Alberta - Phone: 780-665-1613 - Serves: Edmonton, St. Albert, Sherwood Park, Leduc - URL: https://www.barretttaxlaw.com/locations/edmonton ### Fort McMurray, Alberta - Phone: 780-747-2071 - Serves: Fort McMurray and Wood Buffalo region - URL: https://www.barretttaxlaw.com/locations/fort-mcmurray ### Ottawa, Ontario - Phone: 613-667-2419 - Serves: Ottawa, Kanata, Gatineau region - URL: https://www.barretttaxlaw.com/locations/ottawa ### Vancouver, British Columbia - Phone: 604-248-4861 - Serves: Vancouver, Burnaby, Richmond, Surrey, North Shore - URL: https://www.barretttaxlaw.com/locations/vancouver ### Winnipeg, Manitoba - Phone: 204-813-1917 - Serves: Winnipeg and surrounding region - URL: https://www.barretttaxlaw.com/locations/winnipeg ### Greater Toronto Area, Ontario - Phone: 416-907-8429 - Serves: Greater Toronto Area — Mississauga, Brampton, Markham, Vaughan, Richmond Hill, Oakville, Burlington - URL: https://www.barretttaxlaw.com/locations/greater-toronto-area ## 4. Lawyers ### Dale Barrett — Founder & Managing Tax Lawyer - Jurisdictions: Ontario, British Columbia, Alberta - URL: https://www.barretttaxlaw.com/our-lawyers/dale-barrett Dale Barrett is a Canadian tax lawyer, lecturer, and the #1 bestselling author of Tax Survival for Canadians: Stand Up to the CRA. He founded Barrett Tax Law in January 2009 and has represented thousands of clients in disputes with the Canada Revenue Agency, from individual audits to complex corporate reorganizations. Dale's practice focuses on the intersection of tax disputes, corporate tax planning, and estate planning. On the dispute side, he represents individuals, business owners, and professional corporations through every stage of a CRA matter — audits, proposal-letter responses, Notices of Objection, voluntary disclosures, taxpayer relief applications, CRA collections, and appeals to the Tax Court of Canada and the Federal Court. He has handled files involving net worth assessments, gross negligence penalties, unreported income, shareholder benefits, GST/HST, director's liability, and section 160 derivative liability. On the planning side, Dale works on section 85 rollovers, estate freezes, family trusts, Lifetime Capital Gains Exemption planning, and post-mortem and succession planning for incorporated professionals. He also advises on Canada-U.S. cross-border tax matters. Dale is the author of several books on Canadian tax and estate planning and founded Accountant Institute, a continuing professional development platform for Canadian accountants. He is a frequent CPD lecturer and has been featured in Canadian media on tax matters. He is licensed in Ontario, British Columbia, and Alberta. Highlights: - Founded Barrett Tax Law in 2009 - #1 bestselling author of Tax Survival for Canadians - Founder of Accountant Institute, a CPD platform for Canadian accountants - Frequent CPD lecturer on Canadian tax and estate planning - Featured in Canadian media on tax matters ### Elana Barrett — HR Manager - URL: https://www.barretttaxlaw.com/our-lawyers/elana-barrett Elana Barrett is the HR Manager at Barrett Tax Law and Barrett Legal, overseeing recruitment, onboarding, employee relations, and day-to-day team operations across both firms. ### Simone Barrett — Lawyer - Jurisdictions: Ontario, Florida - URL: https://www.barretttaxlaw.com/our-lawyers/simone-barrett Simone Barrett is a tax lawyer at Barrett Tax Law who works with individuals, families, entrepreneurs, and business owners when life, wealth, property, or business interests cross the Canada-U.S. border. She is licensed in both Ontario and Florida. Her practice focuses on cross-border tax planning and compliance. For Canadians moving to the United States — many of them heading to Florida — Simone advises on Canadian departure tax, U.S. tax residency, dual-status filing, cross-border trusts, U.S. real estate ownership, FIRPTA withholding, and ownership structures for Canadian buyers, with the goal of addressing the tax consequences before a move, purchase, sale, or change in residency triggers them. For Americans, dual citizens, and other U.S. persons living in Canada, Simone works on the parallel U.S. tax system that follows them across the border: U.S. income tax filings, treaty-based positions, FBAR and FATCA reporting, PFIC and CFC analysis, TFSA and RESP reporting, and the Streamlined Foreign Offshore Procedures for those catching up on past filings. She also advises business owners and high-net-worth families on corporate ownership, family trusts, succession planning, treaty residency, Section 116 clearance certificates for non-resident dispositions of taxable Canadian property, and cross-border restructurings. Whether a client is buying a Florida property, planning a move, managing a family trust, or preparing a Canadian business for a U.S. future, Simone helps them move forward with a clear cross-border tax plan. Highlights: - Licensed in both Ontario and Florida - Experienced in Canada-U.S. cross-border tax planning and compliance - Works on departure tax, treaty residency, and U.S. estate-tax exposure - Handles FATCA / FBAR reporting and the Streamlined Foreign Offshore Procedures - Advises on FIRPTA and Section 116 clearance certificates on cross-border property dispositions ### Robyn Szilagy — Operations Manager - URL: https://www.barretttaxlaw.com/our-lawyers/robyn-szilagy Robyn Szilagy is the Operations Manager at Barrett Tax Law and Barrett Legal, overseeing day-to-day firm operations, intake workflow, and internal systems across both practices. ### Matthew Rochester — Lawyer - Jurisdictions: Ontario - URL: https://www.barretttaxlaw.com/our-lawyers/matthew-rochester Matthew Rochester is a Canadian tax lawyer at Barrett Tax Law. His practice focuses on disputes with the Canada Revenue Agency, working with individuals, professionals, and incorporated clients across Canada from the firm's Concord head office. On the dispute side, Matthew works on CRA audit defence, proposal-letter responses, Notices of Objection, voluntary disclosures, taxpayer relief applications, and appeals to the Tax Court of Canada. He helps clients respond to reassessments involving unreported income, gross negligence penalties, shareholder benefits, and GST/HST exposure, and he assists clients facing CRA collections activity. Alongside his dispute work, Matthew handles corporate-tax matters for owner-managed businesses, including the day-to-day tax questions that arise for incorporated professionals and small-business owners. He is experienced in translating the mechanics of the Income Tax Act into practical steps clients can act on, and in preparing the documentary record that CRA matters turn on. Matthew is licensed in Ontario and works with clients across the country who are dealing with the CRA or planning around their corporate tax position. Highlights: - Practice focuses on CRA disputes and audit defence - Works on Notices of Objection, voluntary disclosures, and Tax Court of Canada appeals - Handles corporate-tax matters for owner-managed businesses - Licensed in Ontario; serves clients across Canada ### Darryl Getz — Paralegal - URL: https://www.barretttaxlaw.com/our-lawyers/darryl-getz Darryl Getz is a paralegal at Barrett Tax Law, working alongside the firm's tax lawyers on file preparation, CRA correspondence, and document drafting for audit, voluntary disclosure, and Tax Court files. ### Chloe Ursomarzo — Paralegal - URL: https://www.barretttaxlaw.com/our-lawyers/chloe-ursomarzo Chloe Ursomarzo is a paralegal at Barrett Tax Law, supporting the firm's tax practice with file preparation, CRA correspondence, and document drafting on audit, voluntary disclosure, and Tax Court matters. ### Sarah Girgenti — Paralegal - URL: https://www.barretttaxlaw.com/our-lawyers/sarah-girgenti Sarah Girgenti is a paralegal at Barrett Tax Law, working alongside the firm's tax lawyers on file preparation, CRA correspondence, and document drafting for audit, voluntary disclosure, and Tax Court files. ### Julean Burger — Team Member - URL: https://www.barretttaxlaw.com/our-lawyers/julean-burger Julean Burger is a member of the Barrett Tax Law and Barrett Legal team. ### Nicole Barrett — Team Member - URL: https://www.barretttaxlaw.com/our-lawyers/nicole-barrett Nicole Barrett is a member of the Barrett Tax Law and Barrett Legal team. ### Farrukh Shahzad — Chartered Professional Accountant (CPA) - URL: https://www.barretttaxlaw.com/our-lawyers/farrukh-shahzad Farrukh Shahzad is a Chartered Professional Accountant (CPA) at Barrett Tax Law, providing accounting analysis on audit-defence files, voluntary disclosures, and corporate matters where the tax-law work intersects with financial-statement and bookkeeping review. ## 5. Tax services ### Voluntary Disclosures Program (VDP) - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/voluntary-disclosure - Summary: Correct unreported income, unfiled returns, or offshore assets through the CRA's Voluntary Disclosures Program. We've filed thousands of VDP submissions to cut penalties and avoid prosecution. The Voluntary Disclosures Program lets Canadian taxpayers correct unreported income, unfiled returns, and undisclosed offshore assets before the CRA contacts them. A successful submission can eliminate gross-negligence penalties and the risk of criminal prosecution, while limiting interest exposure. How we help: - Anonymous pre-disclosure consultation to assess eligibility - Drafting and filing of complete VDP packages - Negotiation with CRA officers throughout the review - Representation if the disclosure is denied or downgraded - Coordination with accountants for amended returns ### Unreported Offshore Income - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/unreported-offshore-income - Summary: Unreported offshore income? With the CRA receiving account data from 100+ jurisdictions, our tax lawyers file voluntary disclosures covering foreign income, T1135 gaps, and offshore accounts. The CRA receives offshore account data from over 100 jurisdictions through the Common Reporting Standard. If you have unreported foreign income, dividends, rental income, or capital gains, voluntary disclosure is usually the only path to avoid gross-negligence penalties or prosecution. How we help: - T1135 Foreign Income Verification analysis - Common Reporting Standard exposure assessment - Disclosure of foreign trusts, partnerships, and PFICs - Coordination with cross-border accountants ### Unreported Domestic Income - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/unreported-domestic-income - Summary: Disclose unreported Canadian income — tips, cash, rental, or freelance earnings — to the CRA before an audit. Our tax lawyers file voluntary disclosures that cut penalties. Free consultation. Unreported tips, side-business revenue, cash payments, rental income, or freelance income can all be corrected through voluntary disclosure — often before the CRA flags an audit. How we help: - Side-business and gig-economy income - Real-estate flipping and rental income - Cash businesses and tip income - Crypto-to-fiat conversions ### Unreported Offshore Assets - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/unreported-offshore-assets - Summary: Didn't report offshore accounts, foreign trusts, or Specified Foreign Property over $100,000 on Form T1135? Barrett Tax Law files CRA voluntary disclosures to reduce penalties. Free consultation. Specified Foreign Property over $100,000 must be reported on Form T1135. Missed reporting carries severe penalties, but voluntary disclosure can substantially reduce or eliminate them. How we help: - Foreign real estate and bank accounts - Foreign-held investments and trusts - Specified Foreign Property over $100,000 CAD - Late T1135 penalty relief ### Unreported Cryptocurrency Transactions - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/unreported-cryptocurrency - Summary: Have unreported crypto gains? Barrett Tax Law files voluntary disclosures for Canadians with untaxed Bitcoin, Ethereum, NFT, staking, and DeFi income. Free consultation. The CRA treats cryptocurrency as a commodity. Disposals — including crypto-to-crypto trades, NFT sales, staking, and DeFi yields — generate taxable events. Unreported gains can be corrected through the Voluntary Disclosures Program. How we help: - Capital gains vs. business income characterization - Crypto-to-crypto, NFT, staking, and DeFi events - Reconstruction of historical wallet activity - Coordination with crypto-specialist accountants ### Overstated Expenses - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/overstated-expenses - Summary: Correct overstated business or rental expenses through the CRA's Voluntary Disclosures Program before reassessment, avoiding gross-negligence penalties and limiting interest. Free consultation. Overstated business or rental expenses can be corrected through voluntary disclosure before the CRA reassesses, avoiding gross-negligence penalties and limiting interest exposure. How we help: - Sole-proprietor and corporate expense disclosures - Personal-use add-backs and shareholder benefits - GST/HST input tax credit corrections ### CRA Audit Representation - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/audit-representation - Summary: Canadian tax lawyers manage your CRA audit from the first letter through reassessment. We control the information flow, deal with the auditor, and challenge errors before they become assessments. From the first audit letter through proposal letters and reassessment, our tax lawyers manage the auditor on your behalf. We control the flow of information, conduct the audit at our offices when possible, and challenge errors before they become assessments. How we help: - Income tax, GST/HST, and payroll audits - Net-worth assessments and lifestyle audits - Pre-proposal-letter response and rebuttals - Notice of Objection if reassessment is wrong - Tax Court of Canada appeals when needed ### Voluntary Disclosure - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/voluntary-disclosure-overview - Summary: Unreported income, unfiled returns, or offshore assets? Our lawyers run an anonymous VDP eligibility review and draft your full disclosure before the CRA finds you. Free consultation. If you have unreported income, unfiled returns, or undisclosed offshore assets, voluntary disclosure is usually the right move — but only before the CRA contacts you. Our lawyers run an anonymous eligibility review and draft a complete VDP submission. How we help: - Anonymous, no-name eligibility review - Track 1 (general) vs. Track 2 (limited) classification - Penalty and interest mitigation - Criminal-prosecution risk reduction ### Tax Court of Canada Representation - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/tax-court-of-canada - Summary: Denied your Notice of Objection? Barrett Tax Law litigates Informal and General Procedure appeals at the Tax Court of Canada, from pleadings and discoveries through trial. Free consultation. When a Notice of Objection is denied or running out of time, the Tax Court of Canada is the next forum. We handle Informal and General Procedure appeals from pleadings through trial. How we help: - Informal and General Procedure appeals - Pleadings, discovery, and settlement conferences - Trial preparation and advocacy - GST/HST and income-tax appeals ### Tax Disputes & Notices of Objection - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/tax-disputes-and-objections - Summary: Disagree with a CRA reassessment? Barrett Tax Law drafts Notices of Objection within the 90-day deadline and argues your case to the CRA Appeals Division. Free consultation. A Notice of Objection must be filed within 90 days of a Notice of Reassessment (or one year for individuals seeking an extension). We draft objections that put your strongest legal arguments on the record and engage the CRA Appeals Division. How we help: - 90-day Notice of Objection deadlines - Late-filing extension applications - CRA Appeals Division negotiation - Settlement and partial-allowance strategies ### Tax Planning for Business Owners - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/business-owner-tax-planning - Summary: Forward-looking Canadian tax planning for incorporated business owners: compensation, holding structures, the capital gains exemption, and exit or family transfer. Free consultation. Most Canadian business owners pay more tax than they need to — not because they're aggressive, but because the planning around their corporation, their compensation, and their eventual exit hasn't been touched in years. We build forward-looking tax plans that fit the business as it actually runs. How we help: - Owner-manager compensation review (salary vs. dividends vs. capital dividends) - Holding-company / opco-holdco structure analysis - Lifetime Capital Gains Exemption (LCGE) qualification planning - Family trust structures for income splitting and estate planning - Section 85 rollovers and corporate reorganizations - Estate freeze planning to lock in current value - Charitable-giving strategies through the corporation ### Estate Freeze - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/estate-freeze - Summary: Cap your corporation’s value at today’s amount and pass future growth to your children or a family trust — outside your estate and deemed disposition at death. Free tax-lawyer consult. An estate freeze caps the value of your corporation at today's fair market value in your hands, while issuing new growth shares to a family trust, your children, or another holding entity. Future appreciation accrues to the new shareholders — outside your estate, outside your eventual deemed disposition at death, and outside your share of any future tax-on-gain. How we help: - Section 86 share-conversion freeze (single-corporation freeze) - Section 85 rollover freeze (transfer to a holdco) - Section 51 conversion freeze (when share rights need amendment) - Family trust as the growth-share holder - Coordination with the Lifetime Capital Gains Exemption - Price-adjustment clauses and tax-rule-change protection - Refreezing when value declines after the initial freeze ### Lifetime Capital Gains Exemption Planning - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/lifetime-capital-gains-exemption - Summary: Shelter over $1M of gain when you sell qualifying small-business (QSBC) shares. Barrett Tax Law structures your Lifetime Capital Gains Exemption early and can multiply it across family. The Lifetime Capital Gains Exemption shelters over $1 million of gain on the sale of qualifying small-business-corporation (QSBC) shares — and, with proper planning, can be multiplied across family members. Most business owners qualify in principle; the planning value is in structuring early enough that the qualification tests are met when the sale happens. How we help: - QSBC share qualification analysis (24-month, 50%, 90% tests) - Purification transactions to remove non-active assets - Crystallization of accrued gain when QSBC status is at risk - Family-trust structures for multiplying the exemption - Section 110.6(8) anti-avoidance review - Coordination with sale-process timing - AMT (alternative minimum tax) modelling ### Tax Arrears Negotiation & Payment Plans - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/tax-arrears-negotiation - Summary: Owe the CRA and can't pay in full? Experienced Canadian tax lawyers negotiate payment arrangements, halt collection, and pursue Taxpayer Relief on penalties and interest. Free consultation. If you owe the CRA and cannot pay in full, we negotiate realistic payment arrangements, halt aggressive collection, and pursue Taxpayer Relief for penalties and interest where appropriate. How we help: - Payment plans with CRA Collections - Wage garnishment and bank seizure releases - Requirement-to-Pay defence - Taxpayer Relief applications for penalties and interest ### Owner-Manager Compensation Planning - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/owner-manager-compensation - Summary: Salary, dividends, capital dividends or shareholder-loan repayments? Barrett Tax Law reviews your owner-manager compensation mix every year to cut the tax you pay. Free consultation. The salary-vs-dividend question is the largest annual tax-planning lever for most owner-managed Canadian corporations. The right mix depends on the corporation's tax pools, the owner's other income, family situation, RRSP room, CPP profile, and intended use of the corporate cash. We review it every year. How we help: - Salary vs. eligible dividends vs. ineligible dividends modelling - Capital dividend account (CDA) tracking and capital-dividend planning - RDTOH refund analysis on taxable-dividend distributions - GRIP balance management for eligible-dividend optimization - TOSI (tax on split income) screening on family-member dividends - Shareholder-loan repayment patterns and tax timing - RRSP / pension / CPP coordination with corporate distributions ### Family Trust Tax Planning - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/family-trust-tax-planning - Summary: We design, settle, and administer discretionary family trusts that split income into lower brackets, keep growth outside your estate, and pass control to the next generation. Free consultation. A discretionary family trust is the most flexible vehicle in Canadian tax planning. Used well, it allocates income to family members in lower brackets, holds growth shares so that future appreciation builds outside the founder's estate, and serves as the central tool for transferring control to the next generation. We design, settle, and administer family trusts as part of the broader business-and-estate plan. How we help: - Discretionary trust deed drafting (settlor, trustees, beneficiary class) - Trust as growth-share holder in an estate freeze - Income allocation strategy under TOSI and attribution rules - 21-year deemed-disposition planning and rollouts - Section 75(2) attribution-rule navigation - Multiplied Lifetime Capital Gains Exemption across beneficiaries - Trust wind-up, restate, or convert into a corporate beneficiary ### Tax Crime Representation - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/tax-crime-representation - Summary: Facing tax evasion or fraud charges from the CRA Criminal Investigations Program in Canada? Our tax lawyers defend you against prosecution, prison, and steep fines. Free consultation. Tax evasion and tax fraud charges from the CRA Criminal Investigations Program carry the risk of imprisonment, fines of up to 200% of tax evaded, and a permanent record. Engage counsel before speaking to investigators. How we help: - CRA CIP search-warrant response - Section 231.1, 231.2, and 231.3 audit-power challenges - Charter applications and disclosure motions - Plea, sentencing, and appeal representation ### Holding Company Tax Strategy - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/holding-company-tax-strategy - Summary: An opco-holdco structure moves retained earnings out of operating-creditor risk and enables tax-deferred dividends, with a platform for future estate freezes. Barrett Tax Law. Free consultation. A holding company sitting above the operating company is one of the standard Canadian corporate structures for business owners with meaningful retained earnings. It moves accumulated wealth out of the operating business (away from operating-creditor risk), enables tax-deferred dividend distributions, and creates the platform for future estate-freeze and capital-gains-exemption planning. How we help: - Section 85 rollover to create the holdco structure tax-deferred - Connected-corporation dividend planning (Part IV refundable tax) - Safe-income calculation and tracking - Inter-corporate loan structuring to avoid Section 15 deemed dividends - Asset protection and creditor isolation - Holdco as growth-share holder in a future estate freeze - Integration with insurance planning (corporate-owned life insurance) ### Succession Tax Planning for Family Businesses - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/succession-tax-planning - Summary: Tax planning to pass your Canadian family business to the next generation: estate freezes, capital-gains exemptions, and intergenerational-transfer rules, coordinated years ahead. Free consult. The tax planning for transferring a Canadian family business to the next generation can save hundreds of thousands of dollars — sometimes millions — when the structure is set up years before the transfer happens. We coordinate the estate-freeze, capital-gains-exemption, intergenerational-transfer-rule, and corporate-reorganization moves that produce a tax-efficient succession. How we help: - Estate freeze structuring with succession in mind - Bill C-208 intergenerational-transfer planning (ITA s. 84.1) - Multiplied LCGE planning across family members - Share-class engineering to align voting and economic control - Section 85 rollover of pre-transfer dividends to next-gen holdco - Post-mortem pipeline planning (bump strategy) - Earn-out and vendor-takeback financing analysis ### Tax Planning - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/tax-planning - Summary: Canadian tax-planning lawyer who structures family trusts, holdcos, estate freezes, and remuneration to cut your lifetime tax while staying onside of GAAR and CRA. Free consultation. Good tax planning happens years before a return is filed. We design family-trust, holdco, estate-freeze, and remuneration structures that lower lifetime tax while staying onside of GAAR and recent CRA positions. How we help: - Family trusts and income splitting (TOSI-aware) - Holding-company and operating-company structures - Estate freezes and Section 86 reorganizations - Remuneration: salary vs. dividends planning ### Charitable Giving Tax Strategy - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/charitable-giving-tax-strategy - Summary: Donate securities, cash, or capital property to shelter tax. Barrett Tax Law coordinates the asset, vehicle, and timing of your gift to maximize Canadian donation relief. Free consultation. Canadian charitable-giving rules reward thoughtful donors generously — donations of publicly-traded securities are tax-free on the accrued gain, donations through a private foundation give the donor control over the gift's deployment, and large-gift planning can shelter the bulk of a transaction year's tax. The planning question is which asset, which vehicle, and when. How we help: - Donation of publicly-traded securities (zero inclusion on gain) - Private foundation establishment and operation - Donor-advised funds at community foundations - Corporate vs. personal donation receipts - Gift planning around a business sale or windfall - Bequest planning in the will + life-insurance gifts - Cultural-property gifts and ecological-gift programs ### Post-Mortem Tax Planning - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/post-mortem-tax-planning - Summary: A Canadian shareholder's death triggers a deemed-disposition tax on private-company shares. We use pipeline, bump, and loss-carryback planning within the 36-month window to recover it. When a Canadian shareholder dies owning private-company shares, the terminal T1 triggers a deemed disposition that often produces a significant capital-gains tax. Coordinated post-mortem planning — pipeline, bump, and loss-carryback — can recover much of that tax. The 36-month statutory window starts the day of death. How we help: - Pipeline planning under Section 84(2) for tax-efficient cash extraction - Section 164(6) loss-carryback for crystallized estate losses - Section 88(1) bump strategy on amalgamated corporations - Coordination with the spousal rollover under Section 70(6) - Estate-freeze unwind options for ongoing operating businesses - Insurance-funded post-mortem tax planning - Executor compensation and trustee-tax-on-split-income screening ### Taxpayer Relief Applications - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/taxpayer-relief-application - Summary: The Minister can cancel or waive CRA penalties and interest for extraordinary circumstances, CRA error, or hardship. We draft RC4288 relief applications grounded in IC07-1 and the case law. The Minister has discretion to cancel or waive penalties and interest in cases of extraordinary circumstances, CRA error, or financial hardship. We draft persuasive RC4288 applications grounded in the case law and IC07-1. How we help: - Form RC4288 applications - Extraordinary circumstances and CRA error - Financial hardship submissions - Second-level review and Federal Court judicial review ### Investment Holding Tax Planning - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/investment-holding-tax-planning - Summary: Where you hold investments shapes after-tax returns. We coordinate asset placement across TFSAs, RRSPs, RESPs, non-registered, and corporate accounts to cut your lifetime tax. Free consultation. Where you hold an investment matters as much as which investment you hold. Asset-location decisions across TFSAs, RRSPs, RESPs, non-registered accounts, and corporate investment portfolios produce after-tax-return differentials that compound over decades. We coordinate placement strategy with the broader tax plan. How we help: - Asset-location strategy across registered and non-registered accounts - Corporate investment income — passive-investment-income rules and SBD grind - Refundable Part I tax (Part IV / RDTOH) tracking for active investors - Capital-loss harvesting and superficial-loss-rule compliance - Donation-of-securities planning for appreciated public holdings - Foreign-content exposure under T1135 reporting - Coordination with retirement-income drawdown sequence ### CPP/EI Rulings and Worker-Status Disputes - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/cpp-ei-rulings-disputes - Summary: CRA ruled your contractor is really an employee? Back-dated CPP/EI source deductions, penalties and interest follow. We request rulings, appeal to the Minister, and take cases to Tax Court. A CRA ruling that your contractor is really an employee can trigger source-deduction assessments, penalties, and interest going back years. We help workers and payers request rulings, appeal them to the Minister, and carry worker-status disputes to the Tax Court of Canada. How we help: - Request a CPP/EI ruling on worker status - Appeal an adverse ruling to the Minister - Appeal to the Tax Court of Canada - Apply the control and integration factors - Challenge source-deduction assessments - Respond to penalties and interest on payers - Document genuine contractor relationships ### CRA Collections, Garnishment & Requirements to Pay - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/cra-collections-and-garnishment - Summary: Facing CRA wage garnishment, a requirement to pay, or a frozen bank account? Our tax lawyers know the limits on CRA collection powers and the 10-year deadline, and act fast to protect you. When the CRA decides to collect a tax debt, it can garnish your wages, freeze your bank account, redirect money owed to you, and register a certificate in Federal Court — often without going before a judge first. Knowing the limits on these powers, and acting before they escalate, is the difference between a manageable arrangement and a financial crisis. How we help: - Responding to requirements to pay and wage garnishment - Lifting or reducing frozen bank account holds - Negotiating payment arrangements with CRA collections - Reviewing the 10-year collections limitation period - Pausing collection during a valid objection or appeal - Taxpayer relief requests for interest and penalties - Defending against asset seizure and Federal Court certificates ### CRA Liens, Certificates and Asset Seizure - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/cra-liens-and-asset-seizure - Summary: Facing a CRA lien, Federal Court certificate, or asset seizure? Learn how writs and deemed trusts work, how liens can be challenged or lifted, and how our tax lawyers can help. Free consultation. When the CRA registers a certificate in the Federal Court, your tax debt gains the force of a court judgment, opening the door to liens on your home, writs against your property, and the seizure of goods. Understanding the certificate, the deemed trust, and your options is the first step to protecting what you own. How we help: - Federal Court certificate and writ response - Real-property lien challenges and discharges - Seizure and sale of goods defence - Deemed-trust and priority disputes - Negotiated arrangements to lift enforcement - Collections holds during disputes - Procedural and limitation-period review ### Capital Gains Tax Planning - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/capital-gains-tax-planning - Summary: Plan before you sell. Barrett Tax Law helps Canadians reduce capital gains tax using reserves, crystallization, the superficial-loss rule, and disposition timing. Free consultation. When you sell an asset that has grown in value, the tax you owe is rarely fixed in stone. Canada taxes only one-half of a capital gain, and a series of rules on reserves, exemptions, loss timing, and the year of disposition can change how much of that gain is taxed and when. Planning ahead, before the sale closes, is almost always more effective than reacting after the fact. How we help: - Structuring dispositions to use the one-half inclusion rate - Claiming capital gains reserves on deferred proceeds - Crystallizing gains to lock in exemptions - Coordinating the lifetime capital gains exemption - Loss planning and the superficial-loss rule - Claiming allowable business investment losses - Timing dispositions across tax years ### Denied Input Tax Credits (ITCs) - Audience: business - URL: https://www.barretttaxlaw.com/tax-services/input-tax-credit-denials - Summary: The CRA disallowed the GST/HST you paid on business purchases over documentation or timing issues? Our Canadian tax lawyers challenge ITC denials on objection and appeal. Free consultation. When the Canada Revenue Agency denies your input tax credits, it disallows the GST/HST you paid on business purchases and reassesses you for the difference, plus interest and sometimes penalties. Many ITC denials turn on documentation and timing rather than on whether the tax was actually paid, which is precisely why they can be challenged. How we help: - Reviewing the basis for the CRA's ITC denial - Curing documentary and registration-number deficiencies - Responding to GST/HST audit proposals - Filing objections to denied input tax credits - Appeals to the Tax Court of Canada - Protecting claims against the four-year time limit - Distinguishing commercial from non-commercial use ### GST/HST Audits, Objections and Appeals - Audience: business - URL: https://www.barretttaxlaw.com/tax-services/gst-hst-audits-and-disputes - Summary: Facing a CRA GST/HST audit? Canadian tax lawyers defend your input tax credits, challenge reassessments, and meet strict objection and Tax Court appeal deadlines. Free consultation. A GST/HST audit is not really about the tax you owe today — it is about money the Canada Revenue Agency says you collected, or claimed back, on every transaction over years of operation. Because GST/HST you collect is treated as a trust held for the Crown, the stakes and the collection pressure are different from an ordinary income tax dispute, and the deadlines to object and appeal are strict. How we help: - Defending input tax credit denials on audit - Disputing exempt versus taxable supply findings - GST/HST on real property and construction - Holding the CRA to the four-year reassessment limit - Filing objections under the Excise Tax Act - Appeals to the Tax Court of Canada - Managing collection of trust-fund GST/HST ### GST/HST New Housing Rebate Disputes - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/gst-hst-new-housing-rebate-disputes - Summary: CRA often denies or claws back the GST/HST New Housing Rebate over the primary-residence test. Canadian tax lawyers help you object and recover it. Free consultation. The GST/HST New Housing Rebate can return thousands of dollars on a new or substantially renovated home, but the Canada Revenue Agency denies and claws back these rebates often. The deciding issue is usually whether the home was acquired as a primary place of residence, and the facts around intention, occupancy, and title are where most disputes are won or lost. How we help: - Respond to a denied housing rebate - Defend a clawed-back rebate on audit - Address primary-residence and intention questions - Sort out assignment and flip situations - Untangle bare-trustee and name-on-title issues - Object to a notice of assessment - Appeal to the Tax Court of Canada ### GST/HST Registration and Compliance - Audience: business - URL: https://www.barretttaxlaw.com/tax-services/gst-hst-registration-and-compliance - Summary: Find out when your business must register for GST/HST, how the $30,000 threshold and Quick Method work, and how to file correctly. Avoid CRA penalties and interest. Free consultation. Almost every business that sells taxable goods or services in Canada eventually crosses paths with the GST/HST system. Getting registration, collection, and remittance right from the start avoids assessments, penalties, and interest that can build quietly for years. We help businesses understand when they must register, how to file, and how to stay onside. How we help: - Determining when registration is mandatory - Voluntary registration and timing decisions - Choosing the regular method or Quick Method - Non-resident GST/HST registration - Place-of-supply and rate questions - Fixing late or missed registrations - Correcting collection and remittance errors ### GST/HST on Real Estate Transactions - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/gst-hst-on-real-estate - Summary: Selling or buying property in Canada? Our tax lawyers sort out GST/HST on new vs. used, residential vs. commercial, assignments, and self-assessment. Free consultation. Whether a sale of real property carries GST/HST is one of the most misunderstood questions in Canadian tax. The answer turns on whether the property is new or used, residential or commercial, and on rules that can shift the obligation to pay onto the buyer. Getting it wrong can turn a closing into a six-figure CRA assessment. How we help: - Determining whether a property sale is taxable or exempt - Self-assessment of GST/HST by registrant purchasers - Self-supply assessments under section 191 - Change-of-use and assignment sale issues - Bare trust and agency structuring questions - Recovering input tax credits on commercial property - Objections and appeals on GST/HST reassessments ### GST/HST: Non-Residents, Imports and Place of Supply - Audience: business - URL: https://www.barretttaxlaw.com/tax-services/gst-hst-place-of-supply-cross-border - Summary: Cross-border GST/HST help for non-residents, importers, and digital businesses: place-of-supply rules, carrying-on-business tests, ETA 218 self-assessment, zero-rated exports. Free consultation. Cross-border GST/HST turns on two deceptively simple questions: where is a supply made, and who has to account for the tax. Non-resident suppliers, importers, and digital-economy businesses all live or die by the place-of-supply rules in the Excise Tax Act, and getting them wrong can mean unregistered liability, denied input tax credits, or a reverse-charge bill the CRA assesses years later. How we help: - Applying the place-of-supply rules to your transactions - Assessing the carrying-on-business-in-Canada test - Non-resident GST/HST registration and security - Self-assessment under section 218 on imported supplies - Simplified registration for the digital economy - Confirming zero-rated treatment of exports - Responding to cross-border GST/HST audits ### Gross Negligence Penalties (Subsection 163(2)) - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/gross-negligence-penalties - Summary: Facing a 50% gross negligence penalty under subsection 163(2)? The CRA must justify it, not you. Our Canadian tax lawyers fight these penalties on objection and appeal. Free consultation. A gross negligence penalty under subsection 163(2) of the Income Tax Act adds 50% to the tax you allegedly understated, over and above the tax and interest the CRA says you owe. The law places the burden of justifying this penalty on the Minister, not on you, which is precisely why it can be challenged. How we help: - Reviewing whether the 163(2) penalty was properly assessed - Forcing the CRA to meet its burden of proof - Filing objections to gross negligence penalties - Appeals to the Tax Court of Canada - Separating innocent errors from gross negligence - Coordinating with your accountant on the record - Responding to penalty and audit proposals ### Income Splitting and the TOSI Rules - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/income-splitting-and-tosi - Summary: Canadian tax lawyers on the TOSI rules: how income split with family is taxed, which excluded-amount exceptions still apply, and how prescribed-rate loans and family trusts work. Free consult. Splitting income across a family can lower a household's overall tax, but since 2018 the tax on split income (TOSI) has applied the highest marginal rate to many amounts paid to family members from a private business. Understanding the excluded-amount exceptions, and the planning that still works, is the difference between a sound structure and an unexpected reassessment. How we help: - Assess whether TOSI applies to family income - Identify available excluded-amount exceptions - Document the excluded-business and excluded-shares tests - Apply the reasonable-return analysis correctly - Structure prescribed-rate loans to split investment income - Review family trust distributions for TOSI exposure - Respond to a CRA reassessment invoking section 120.4 ### Judicial Review of CRA Decisions in the Federal Court - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/federal-court-judicial-review - Summary: When the Tax Court can't hear a discretionary CRA decision — denied relief or a rejected disclosure — Federal Court judicial review under s. 18.1 may be your remedy. Free consultation. Not every dispute with the CRA can go to the Tax Court. When the Agency exercises discretion — refusing taxpayer relief, rejecting a voluntary disclosure, or issuing a requirement to pay — the path to challenge that choice often runs through judicial review in the Federal Court. How we help: - Confirm whether your CRA decision belongs in Federal Court - Meet the strict 30-day filing deadline - Build the record the court will review - Frame the argument under the reasonableness standard - Seek to have the decision sent back for reconsideration - Coordinate with objections and Tax Court appeals where they overlap ### Payroll Source Deductions and Trust-Fund Disputes - Audience: business - URL: https://www.barretttaxlaw.com/tax-services/payroll-source-deduction-disputes - Summary: Facing CRA source-deduction assessments, remittance penalties, a deemed-trust claim, a PIER review, or s.227.1 director liability? We help businesses and directors respond. Free consultation. When an employer withholds income tax, CPP, and EI from a paycheque, that money is held in trust for the Crown the moment it is deducted. CRA treats unremitted source deductions as one of the most serious accounts it collects, and it can pursue the corporation, its directors, and even related parties. We help businesses and directors respond to remittance penalties, deemed-trust claims, PIER assessments, and director-liability notices. How we help: - Disputing failure-to-remit penalties under s.227(9) - Defending director liability under s.227.1 - Responding to PIER assessments - Challenging deemed-trust collection claims - Worker-classification and CPP/EI ruling disputes - Filing objections and Tax Court appeals - Negotiating arrears and remittance arrangements ### RRSP Over-Contribution Penalty Tax - Audience: individual - URL: https://www.barretttaxlaw.com/tax-services/rrsp-over-contribution-penalty - Summary: Charged the 1%-per-month RRSP over-contribution tax? Canadian tax lawyers help you file the T1-OVP, remove the excess, and ask the CRA to waive the penalty. Free consultation. Contributing more to your RRSP than your deduction limit allows can trigger a tax of 1% per month on the excess for every month it stays in the plan. Understanding how the over-contribution arose, how to remove it, and when the Canada Revenue Agency will waive the tax is often the difference between a manageable fix and a mounting penalty. How we help: - Calculate your cumulative excess amount - Prepare and file the T1-OVP return - Withdraw excess contributions correctly - Use Forms T3012A and T746 - Request a waiver of the tax - Respond to CRA penalty assessments - Object to disputed over-contribution tax ### SR&ED Claim Disputes and Reviews - Audience: business - URL: https://www.barretttaxlaw.com/tax-services/sred-claim-disputes - Summary: The CRA reviews SR&ED claims closely and reduces or denies many. Our Canadian tax lawyers contest eligibility and expenditure findings through objections and appeals. Free consultation. An SR&ED claim can be worth a great deal to a Canadian business, which is exactly why the Canada Revenue Agency reviews these claims closely and reduces or denies a large share of the dollars claimed. Most disputes come down to two questions the CRA asks separately: was the work eligible scientific research and experimental development, and were the expenditures properly calculated and supported. Both are contestable, and both have strict deadlines. How we help: - Responding to CRA technical eligibility reviews - Responding to financial reviews of SR&ED expenditures - Defending the systematic investigation and uncertainty tests - Contesting denied or reduced section 127 tax credits - Building contemporaneous documentation arguments - Filing objections under the Income Tax Act - Appeals to the Tax Court of Canada ### Section 160: Liability for Another Person’s Tax Debt - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/section-160-derivative-liability - Summary: Section 160 lets the CRA pursue you for a relative's tax debt after a below-value, non-arm's-length transfer, with no limitation period. Learn the four conditions and your defences. Section 160 of the Income Tax Act lets the CRA pursue you for someone else's tax debt when property was transferred to you for less than it was worth and you were not dealing at arm's length. There is no limitation period on these assessments, so a transfer from years ago can resurface. Understanding the four conditions and the available defences is the first step. How we help: - Reviewing section 160 assessments for errors - Valuing transferred property and consideration - Arm's-length and fair-market-value arguments - Filing Notices of Objection on derivative assessments - Tax Court of Canada appeals - Negotiating with CRA Collections - Spousal, dividend, and corporate transfer reviews ### Shareholder Loans and Benefits (Section 15) - Audience: business - URL: https://www.barretttaxlaw.com/tax-services/shareholder-loans-section-15 - Summary: Took cash out of your corporation as a loan or draw? Section 15 can tax it as income. Learn the one-year repayment rule, deemed-interest charge, exceptions, and planning options to stay onside. When an owner pulls money out of their corporation as a loan or draw, section 15 of the Income Tax Act can turn that cash into taxable income. The most common trap is the shareholder loan that is not repaid within a year of the company's year-end, but a deemed-interest charge and broader benefit rules can apply as well. Understanding the rules, the exceptions, and the planning options is the first step to staying onside. How we help: - Reviewing shareholder loan and draw balances - Applying the one-year repayment rule - Assessing 15(1) benefit exposure - Calculating the deemed-interest benefit - Reviewing bona-fide-loan and employee exceptions - Objecting to section 15 reassessments - Salary, dividend, and repayment planning ### Statute-Barred Years and the Normal Reassessment Period - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/statute-barred-reassessments - Summary: Canadian tax lawyers explain the normal reassessment period under ITA 152(3.1) and the narrow exceptions in 152(4) that let the CRA reopen a statute-barred year. Free consultation. After the normal reassessment period closes, a tax year is generally settled and the Canada Revenue Agency cannot simply reopen it. Understanding when a year becomes statute-barred, and the narrow exceptions that let the CRA reassess anyway, is often the decisive issue in audit defence. How we help: - Confirm whether a year is statute-barred - Hold the CRA to the normal reassessment period - Challenge reopening under subsection 152(4) - Test the misrepresentation and waiver grounds - Put the Minister to the burden of proof - Object and appeal time-limit reassessments - Review waivers before you sign anything ### Surplus Stripping and Section 84.1 - Audience: business - URL: https://www.barretttaxlaw.com/tax-services/surplus-stripping-and-section-84-1 - Summary: Section 84.1 can turn a non-arm's-length share sale into a deemed dividend, not a capital gain. Canadian tax lawyers assess GAAR risk and the intergenerational-transfer rules. Free consultation. Converting what should be a taxable dividend into a lower-taxed capital gain can save a great deal of tax, but section 84.1 of the Income Tax Act exists precisely to stop it. Whether a non-arm's-length share transfer triggers a deemed dividend, or fits within the genuine intergenerational-transfer rules, often turns on details that are easy to get wrong. How we help: - Assess section 84.1 exposure before you transfer - Structure non-arm's-length share sales carefully - Apply the intergenerational-transfer rules correctly - Evaluate deemed-dividend and paid-up-capital outcomes - Weigh GAAR risk on surplus-stripping plans - Coordinate with post-mortem pipeline planning - Defend a reassessment that invokes 84.1 or GAAR ### TFSA Over-Contributions and Advantage Tax - Audience: individual - URL: https://www.barretttaxlaw.com/tax-services/tfsa-over-contribution-and-advantage-tax - Summary: Hit with the 1%-per-month TFSA over-contribution tax or a 100% advantage tax? Canadian tax lawyers help you correct the excess, file Form RC243, and request a CRA waiver. Free consultation. A Tax-Free Savings Account is meant to be simple, but putting in more than your room allows can trigger a tax of 1% per month on the excess, and certain transactions can attract an advantage tax of 100%. Understanding how the over-contribution arose, how to fix it, and when the Canada Revenue Agency will cancel the tax often makes the difference between a quick correction and a growing liability. How we help: - Reconstruct your TFSA contribution room - Calculate the monthly excess amount - Remove the over-contribution correctly - File Form RC243 where required - Request a waiver of the tax - Respond to advantage tax assessments - Object to disputed TFSA tax ### Tax Planning for Incorporated Professionals - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/tax-planning-for-incorporated-professionals - Summary: Canadian tax lawyers help incorporated professionals plan around TOSI income-splitting limits, the passive income grind, and salary versus dividends. Free consultation. Incorporating a professional practice can defer tax on income left inside the corporation, but the advantages are narrower than they once were. The TOSI rules curtail income splitting with family, the passive income grind erodes the small business rate as investments accumulate, and the shares of many professional corporations do not qualify for the lifetime capital gains exemption. Sound planning starts with understanding exactly which benefits a professional corporation still delivers. How we help: - Assess whether incorporation suits your practice - Plan salary, dividends and RRSP room together - Apply the TOSI rules to family compensation - Manage the passive income grind on retained earnings - Review whether shares qualify for the capital gains exemption - Coordinate with the professional body's incorporation rules - Respond to a CRA reassessment of the corporation ### Tax on Separation and Divorce - Audience: individual - URL: https://www.barretttaxlaw.com/tax-services/tax-on-separation-and-divorce - Summary: How Canadian tax law applies when a relationship ends: spousal and child support, the 73(1) spousal rollover, RRSP and pension transfers, the family home, and equalization. Free consultation. Separation and divorce reorder a family's finances, and the Income Tax Act treats almost every piece of that reordering as a taxable event of some kind. Support payments, the division of property, the family home, RRSPs and pensions each carry their own rules, and the difference between getting them right and wrong is often thousands of dollars a year. This page explains, in general terms, how Canadian federal tax law applies when a relationship ends. How we help: - Structuring deductible spousal support correctly - Distinguishing child support from spousal support - Using the 73(1) spousal rollover on property - RRSP transfers on marriage breakdown under 146(16) - Principal residence designation after separation - Pension income splitting and credit transfers - Responding to CRA reassessments of support ### Tax-Efficient Business Sales - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/tax-efficient-business-sales - Summary: Selling your Canadian business? An asset sale versus a share sale can swing 25-40% of your after-tax proceeds. We plan the sale structure with your M&A team. Free consultation. The single largest tax event in most business-owners' lives is the sale of the business. The difference between an unplanned and a planned sale is typically 25-40% of the after-tax proceeds. We work alongside the M&A team to design the sale structure two-to-three years in advance. How we help: - Asset-sale vs. share-sale tax modelling - QSBC purification for LCGE eligibility at sale - Earn-out structuring to defer tax on contingent consideration - Vendor-takeback note structuring (capital reserve under s. 40(1)(a)(iii)) - Section 22 elections for receivables and inventory - Section 88(1) bump on post-sale amalgamation - Coordination with post-sale wealth-management transition ### The Principal Residence Exemption - Audience: individual - URL: https://www.barretttaxlaw.com/tax-services/principal-residence-exemption - Summary: Canada's principal residence exemption can shelter your home-sale gain from tax, but it isn't automatic. Learn the change-of-use, reporting, and anti-flipping rules. Free consultation. For most Canadian families the home is the largest asset they own, and the principal residence exemption is what lets the gain on it escape tax. The exemption is generous but it is not automatic, and a series of rules on family units, changes in use, mandatory reporting, and short holding periods decide how much of the gain is actually sheltered. Misunderstanding any one of them can turn a tax-free sale into a reassessment. How we help: - Calculating the principal residence exemption formula - Designating the right property for the right years - Change-of-use elections under 45(2) and 45(3) - Reporting a principal residence disposition correctly - Responding to anti-flipping reassessments - Partial business or rental use of a home - Objecting to a denied exemption claim ### Unfiled Tax Returns - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/unfiled-returns - Summary: Years of unfiled tax returns? Our Canadian tax lawyers bring you current via voluntary disclosure or a filing strategy that minimizes penalties and gross-negligence exposure. Free consultation. Years of unfiled returns are a serious problem — but rarely the disaster taxpayers fear. Through voluntary disclosure or careful filing strategy, we bring you current and minimize penalties and interest. How we help: - Multi-year filing strategies - Voluntary disclosure for non-filers - Net-worth-assessment defence - Director's-liability mitigation for corporate non-filers ### Corporate Tax Restructuring - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/corporate-tax-restructuring - Summary: Reorganize your corporation without triggering accrued gains. Barrett Tax Law handles Section 85, 86, 87, 88 and 51 tax-deferred rollovers and files the elections on time. Free consultation. Canadian corporate tax law provides a suite of tax-deferred reorganization mechanics — Section 85 transfers, Section 86 share-class conversions, Section 87 amalgamations, Section 88 wind-ups, Section 51 conversions. Choosing the right one (and getting the election forms filed on time) is the difference between a successful restructure and a costly accidental tax trigger. How we help: - Section 85 rollover (asset/share transfer to a corporation) - Section 86 share-class freeze (single-company freeze) - Section 87 amalgamation (combining two corporations) - Section 88(1) wind-up (subsidiary into parent) - Section 51 share-rights conversion - Butterfly transactions for tax-free corporate splits - Tax cost-base step-up and bump strategies ### Net Worth Audits - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/net-worth-audits - Summary: CRA net-worth audits estimate income from your lifestyle and assets, often overstating it. Our tax lawyers rebuild the audit, flag auditor errors, and roll back unsupported income. Free consult. Net-worth audits estimate income from changes in your assets and lifestyle. They are inherently imprecise and frequently overstated. We rebuild the audit, identify auditor errors, and roll back unsupported additions to income. How we help: - Source-and-application analysis - Opening and closing net-worth reconstruction - Personal expenditure assumption challenges - Pre-assessment proposal-letter response ### Director's Liability - Audience: business - URL: https://www.barretttaxlaw.com/tax-services/directors-liability - Summary: Directors can face personal liability for a corporation's unremitted GST/HST and payroll source deductions. We raise the due-diligence defence, challenge the assessment, and file your objection. Directors can be held personally liable for unremitted GST/HST and source deductions. We raise the due-diligence defence, challenge the underlying assessment, and file timely Notices of Objection. How we help: - Due-diligence defence (Buckingham, Soper) - Section 227.1 and ETA s.323 assessments - Resignation and limitation-period arguments - Underlying-assessment challenges ### Tax Shelter & Donation Scheme Disputes - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/tax-shelter-disputes - Summary: Facing CRA reassessment over a charitable donation tax shelter or disputed arrangement? We defend participants individually and in group challenges. Free consultation. If you participated in a charitable donation tax shelter or other CRA-disputed arrangement, you may be facing reassessment with significant penalties. We defend participants individually and as part of group strategies. How we help: - Gifting tax shelter reassessments - Sham, GAAR, and reasonable-expectation defences - Penalty mitigation - Group/lead-case strategy ### Cross-Border Tax — Canada and the United States - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/cross-border-tax-overview - Summary: Canada-US cross-border tax counsel for individuals, families, and businesses: treaty planning, FATCA/FBAR, departure tax, and US estate-tax exposure handled together. Book a free consultation. Tax problems that straddle the Canada-US border are rarely solved by looking at one country at a time. Our cross-border practice, led by Simone Barrett — admitted in Ontario and Florida — coordinates Canadian and US federal tax positions so the two systems work together rather than against you. How we help: - Canada-US treaty residency, withholding, and tie-breaker analysis - Departure tax and Section 128.1 planning before leaving Canada - FATCA, FBAR, and Streamlined Foreign Offshore filings - US estate-tax exposure for Canadians owning US property - FIRPTA withholding on Canadian dispositions of US real estate - Section 116 certificates on US dispositions of taxable Canadian property - Cross-border trust planning under ITA s. 94 and the US throwback rules ### U.S. Citizens Living in Canada: Tax Compliance - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/us-citizens-in-canada-tax-compliance - Summary: Living in Canada with a U.S. passport or green card means filing in two tax systems for life. We map your treaty position, build the annual U.S. package, and tame TFSA, PFIC, and RESP traps. A U.S. citizen or green-card holder who lives in Canada stays inside the U.S. tax system for life. The United States taxes its citizens and lawful permanent residents on their worldwide income wherever they live, so a person with an entirely Canadian paycheque, bank account, and mortgage still owes the IRS an annual return plus a stack of disclosure forms — often with no U.S. tax actually due. The work is reconciling two tax systems, claiming the right treaty relief, and steering clear of the Canadian accounts that quietly become U.S. problems. How we help: - U.S. persons file annually with the IRS on worldwide income no matter where they live (citizenship-based taxation) - FBAR (FinCEN Form 114) is required when foreign accounts together exceed US$10,000 at any point in the year - FATCA Form 8938 thresholds for those abroad start at US$200,000 (single) / US$400,000 (married filing jointly) of specified foreign assets - Double tax is relieved through foreign tax credits (Form 1116) and the foreign earned income exclusion (Form 2555, US$130,000 for 2025) - A TFSA is not tax-free to the IRS, and Canadian mutual funds and ETFs are PFICs with a punitive default regime (Form 8621) - RRSPs and RRIFs are protected by treaty Article XVIII(7), with the deferral now automatic under Rev. Proc. 2014-55 ### PFICs: Canadian Mutual Funds and ETFs for U.S. Persons - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/pfic-canadian-mutual-funds - Summary: Canadian mutual funds and ETFs are PFICs for U.S. persons. How the section 1291 regime, QEF and mark-to-market elections, and Form 8621 work — and the planning options. Almost every Canadian mutual fund and exchange-traded fund is a passive foreign investment company (PFIC) in the eyes of the IRS, and for a U.S. citizen or green-card holder living in Canada that label changes everything. Without a timely election, the default section 1291 regime strips away the favourable capital-gains treatment, taxes gains and large distributions at the highest U.S. rate, and adds a compounding interest charge — on top of a separate Form 8621 for each fund, every year. This page explains how the PFIC rules work on both sides of the border, the elections that can soften them, and why many U.S. persons in Canada ultimately restructure their portfolios. How we help: - Canadian mutual funds, ETFs, and many pooled and segregated funds are PFICs for U.S. tax purposes — the foreign-corporation test catches them regardless of how they are taxed in Canada. - The default section 1291 regime taxes excess distributions and gains as ordinary income, allocates them back over the holding period at the highest U.S. rate (37% for 2018–2025), and adds an interest charge. - Each PFIC generally requires its own Form 8621 every year; a limited de minimis exception (US$25,000 single / US$50,000 joint, US$5,000 indirect) only removes some annual reporting, not tax on distributions or sales. - A QEF election (section 1295) can preserve capital-gain character but needs a PFIC Annual Information Statement; several major Canadian fund families now provide one, but it has to be confirmed fund by fund, and the mark-to-market election (section 1296) needs marketable stock and taxes gains as ordinary income. - PFICs inside an RRSP or RRIF are generally relieved from PFIC tax and Form 8621 under the Canada-U.S. treaty; PFICs inside a TFSA or RESP usually are not. - The practice is led by Simone Barrett, admitted in Ontario and Florida; cross-border investment planning is handled file by file. ### TFSAs, RESPs and RDSPs: U.S. Tax Treatment - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/tfsa-resp-us-tax-treatment - Summary: How the IRS treats Canadian TFSAs, RESPs and RDSPs for U.S. citizens and green-card holders: foreign-trust rules, Forms 3520/8621, treaty limits and how to fix missed filings. A Tax-Free Savings Account, Registered Education Savings Plan or Registered Disability Savings Plan is tax-free in Canada, but the Internal Revenue Service does not see it the same way. For a U.S. citizen or green-card holder living in Canada, the income inside these plans can be taxable in the United States each year, and the accounts can trigger foreign-trust, PFIC and foreign-account reporting that has nothing to do with the Canada Revenue Agency. Barrett Tax Law helps U.S. persons understand how these registered plans are treated on both sides of the border and how to bring their U.S. filings into order. How we help: - TFSA, RESP and RDSP earnings are tax-free in Canada but are generally taxable to a U.S. person on Form 1040, with no Canadian tax to claim as a foreign tax credit. - These plans are often analyzed as foreign trusts, raising Forms 3520 and 3520-A; Rev. Proc. 2020-17 exempts qualifying RESPs and RDSPs from those forms, but typically not TFSAs. - Canadian mutual funds or ETFs held inside any of these accounts can be passive foreign investment companies (PFICs), triggering Form 8621 and punitive PFIC tax rules. - The Canada-U.S. tax treaty defers tax on RRSPs and RRIFs under Article XVIII, but does not extend that deferral to TFSAs, RESPs or RDSPs. - Balances feed the FBAR (FinCEN Form 114, US$10,000 aggregate threshold) and FATCA Form 8938 reporting. - Missed years can often be corrected through the IRS Streamlined Filing Compliance Procedures. ### GILTI and Subpart F: U.S. Shareholders of a Canadian Corporation - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/gilti-subpart-f-ccpc-us-shareholders - Summary: U.S. owners of a Canadian corporation face CFC rules: Subpart F, GILTI/NCTI, Form 5471, the section 962 election and high-tax exception. Cross-border guidance from Barrett Tax Law. If you are a U.S. citizen or green-card holder who owns shares of a Canadian corporation, the U.S. controlled-foreign-corporation rules can reach into that company's profits before a single dollar is ever paid out to you. Subpart F income, the GILTI inclusion (renamed net CFC tested income, or NCTI, beginning in 2026), and annual Form 5471 reporting create a timing and character mismatch with Canadian corporate tax that can produce double taxation if it is not planned for. Barrett Tax Law, whose cross-border practice is led by Simone Barrett (admitted in Ontario and Florida), helps U.S. shareholders of Canadian companies understand these inclusions, evaluate the section 962 election and the high-tax exception, and coordinate both countries' rules. How we help: - A U.S. citizen or resident who owns 10% or more of a Canadian corporation is generally a 'U.S. shareholder' of a controlled foreign corporation (CFC) and must file Form 5471 each year. - Subpart F income (such as passive dividends, interest, rents and royalties under sections 952 and 954) and the GILTI/NCTI inclusion are taxed to the U.S. shareholder currently, before any actual distribution. - Form 5471 penalties start at US$10,000 per corporation per year and can climb to US$60,000 per corporation, and a missing form can hold the entire U.S. return's limitation period open. - Beginning in tax years after December 31, 2025, the OBBBA renames GILTI as NCTI, cuts the section 250 deduction from 50% to 40%, raises the effective C-corporation rate to roughly 12.6%, lifts the deemed-paid foreign tax credit to 90%, and removes the QBAI (10% tangible-return) exclusion. - A section 962 election lets an individual be taxed at the 21% corporate rate and access the section 250 deduction and indirect foreign tax credits, but later distributions can be taxed again. - The high-tax exception can remove income taxed abroad above roughly 18.9% from the inclusion; whether it helps depends on the company's Canadian effective rate and the facts. ### Departure Tax — Leaving Canada - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/departure-tax-planning - Summary: Leaving Canada triggers a deemed disposition of most assets under Section 128.1. We help you defer, post security, or restructure to shrink the departure-tax bill. Free consultation. Canada's departure tax — the deemed disposition under Section 128.1 of the Income Tax Act — treats most of your worldwide assets as sold the day you leave. Planning ahead can defer the tax, post security in lieu of payment, or restructure holdings so the deemed gain is smaller. How we help: - Section 128.1 deemed-disposition analysis for all categories of property - Election to defer payment (Form T1244) with adequate security - Excluded-property categorization (TCP, RRSP/RRIF, employer stock options) - Pre-departure cost-base step-ups and corporate reorganizations - Returning-resident rule (subsection 128.1(6)) for round-trip migrations - Coordination with US pre-immigration cost-base planning ### Renouncing U.S. Citizenship: The Exit Tax - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/renouncing-us-citizenship-exit-tax - Summary: Renouncing U.S. citizenship and the section 877A exit tax: covered-expatriate tests, the mark-to-market deemed sale, Form 8854 certification, and the consular renunciation process. Renouncing U.S. citizenship is a deliberate legal act with two separate dimensions: a State Department process that ends your nationality, and a tax process under Internal Revenue Code section 877A that can impose a one-time "exit tax" on the way out. The two do not happen automatically together, and the most expensive mistakes are made by people who handle the consulate appointment without first working through the covered-expatriate tests and the Form 8854 certification. Barrett Tax Law, led on cross-border matters by Simone Barrett (admitted in Ontario and Florida), helps Canadian-resident U.S. citizens and long-term green-card holders understand the exit-tax exposure before they renounce, so the timing and the filings line up. How we help: - Section 877A applies to "covered expatriates": those whose net worth is US$2 million or more, OR whose average annual U.S. net income tax for the 5 years before expatriation exceeds an indexed threshold (US$206,000 for 2025; US$211,000 for 2026), OR who fail to certify 5 years of U.S. tax compliance - A covered expatriate is deemed to have sold all worldwide property at fair market value the day before expatriation; net gain above the exclusion amount (US$890,000 for 2025; US$910,000 for 2026) is taxed - Long-term green-card holders count too: an LTR is someone who held a green card in at least 8 of the prior 15 tax years, and giving up that status can also trigger the exit tax - Form 8854 is the expatriation statement and the place you certify 5-year tax compliance; failing to file it makes you a covered expatriate regardless of net worth or income - Renouncing citizenship is a State Department act (an in-person oath of renunciation on Form DS-4080, the Form DS-4081 statement of understanding, and a Certificate of Loss of Nationality) that is separate from the IRS filing obligations - Deferred income such as IRAs and certain pensions, and gifts or bequests later received by U.S. persons, are subject to special expatriation rules beyond the basic mark-to-market ### Canadians Renting Out U.S. Property: 1040-NR and the 871(d) Election - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/us-rental-income-1040nr - Summary: Canadians renting U.S. property face 30% gross withholding unless they make the IRC s.871(d) election to be taxed on net income via Form 1040-NR. ITIN, depreciation, FIRPTA explained. If you are a Canadian who rents out a U.S. property, the default U.S. rule is unforgiving: a flat 30% tax is withheld on your gross rents, with no deduction for mortgage interest, property tax, repairs, or depreciation. The Internal Revenue Code section 871(d) election lets you flip to U.S. taxation on net rental income at graduated rates, filed on Form 1040-NR — almost always a far better result. Barrett Tax Law helps Canadians make and document this election correctly, coordinate the Canadian reporting, and plan ahead for the FIRPTA withholding that arrives when the property is eventually sold. How we help: - Default U.S. tax on a Canadian's gross U.S. rents is 30%, withheld at source under IRC s.1441 with no deductions allowed. - The IRC s.871(d) election treats the rental as a U.S. trade or business, so you are taxed on net income at graduated rates on Form 1040-NR. - The election is made by attaching a statement to a timely Form 1040-NR; Form W-8ECI given to the payer stops the 30% gross withholding. - Allowable deductions include mortgage interest, property taxes, insurance, repairs, management fees, and mandatory depreciation. - A U.S. ITIN (Form W-7) is generally required to file Form 1040-NR; Canada taxes the same rental income, with foreign tax credit relief. - On sale, FIRPTA generally requires 15% gross withholding on the sale price (Form 8288), reducible with a Form 8288-B certificate. ### U.S. Gift Tax for Canadians - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/us-gift-tax-for-canadians - Summary: How U.S. gift tax applies to Canadians: situs rules for U.S. real estate vs. shares, the 2026 annual exclusion, why the treaty offers no gift-tax credit, and planning. A Canadian who has never lived in the United States can still trigger U.S. gift tax simply by giving away the wrong kind of U.S. property. The rules turn entirely on what is given and where it sits: a gift of U.S. real estate or tangible property located in the U.S. can be taxed, while a gift of shares or other intangibles usually is not. Because the Canada-U.S. treaty's unified-credit relief applies to estate tax at death but not to lifetime gifts, the safest gifts are often the ones planned before the transfer, not after. How we help: - U.S. gift tax reaches a non-resident, non-citizen donor only on gifts of U.S.-situs real property and tangible personal property located in the United States. - Gifts of intangibles - shares of U.S. corporations, bonds, and U.S. bank deposits - are generally outside the U.S. gift tax for non-resident, non-citizen donors. - The 2026 annual per-donee exclusion is US$19,000; gifts to a non-U.S.-citizen spouse have a larger 2026 exclusion of US$194,000. - Non-resident, non-citizen donors get no lifetime unified credit for gift tax, and the treaty's unified-credit proration applies only to estate tax - not gifts. - Taxable U.S.-situs gifts are reported on Form 709-NA, with rates climbing to a maximum federal rate of 40%. - Restructuring how and what you give - and using exclusions deliberately - can keep many cross-border gifts out of the U.S. gift tax net entirely. ### The U.S. LLC Trap for Canadian Owners - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/us-llc-canadian-owners-hybrid - Summary: Why a U.S. LLC can double-tax a Canadian owner: CRA treats it as a corporation, the U.S. as a flow-through. Learn the timing trap, treaty limits, and structuring alternatives. A U.S. limited liability company is one of the most misunderstood structures a Canadian can own. The United States usually treats an LLC as a flow-through, taxing the Canadian member directly on its share of income, while the Canada Revenue Agency treats the same LLC as a corporation. That single mismatch in classification can produce double taxation, a denied or wasted foreign tax credit, and unrecoverable U.S. tax. Barrett Tax Law helps Canadians who already hold an LLC, and those weighing whether to use one, understand the trap before it costs them and plan a structure that both countries can live with. How we help: - The U.S. typically treats an LLC as a flow-through (disregarded entity or partnership); the CRA treats the same LLC as a corporation under the Income Tax Act. - Timing mismatch: the U.S. taxes the Canadian member as income is earned, while Canada taxes only when a distribution is made — so foreign tax credits under ITA s.126 can be lost. - Treaty Article IV(6) gives treaty benefits to U.S.-resident LLC members on Canadian-source income; it does not fix a Canadian resident's tax on the LLC's own income. - Article IV(7)(b), added by the Fifth Protocol (signed 2007, in force December 15, 2008) and effective for amounts paid on or after January 1, 2010, is an anti-hybrid rule that mainly bites the Canadian-ULC mirror structure used by U.S. owners. - For individuals, excess non-business-income foreign tax credits cannot be carried forward or back, so a year-of-mismatch can permanently strand U.S. tax. - Alternatives — a U.S. limited partnership, a C-corporation, or holding through a Canadian corporation — each change the analysis and should be modelled before incorporating. ### Permanent Establishment: Doing Business Across the Border - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/permanent-establishment-canada-us - Summary: Doing business across the Canada-US border? Whether you owe tax turns on having a permanent establishment under treaty Article V. We map the PE risk and the filings. When a Canadian or U.S. business sells, hires, or operates across the border, the question that decides whether it owes income tax in the other country is whether it has a permanent establishment (PE) there. Under Article V of the Canada-U.S. tax treaty, business profits are taxable only where a PE exists, so understanding what creates one — a fixed place of business, a dependent agent, a long construction site, or extended on-site services — is the difference between a treaty exemption and an unexpected return, withholding, and penalties on the other side of the border. How we help: - PE analysis under treaty Article V: fixed place of business, dependent agent, and the deemed services-PE rule - Article V(9) services-PE: 183 days in any 12 months plus the gross-revenue or connected-project test - Construction or installation projects that run more than 12 months under Article V(3) - U.S. branch profits tax reduced from 30% to 5% under the treaty, with the first C$500,000 exempt - Treaty-based protective filings: Form 1120-F with Form 8833, or the Canadian T2 with Schedule 91 - State nexus and Regulation 105 / Regulation 102 withholding that the federal treaty does not switch off ### Cross-Border Trusts - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/cross-border-trusts - Summary: Cross-border trusts trigger overlapping Canadian and US rules: Section 94, grantor-trust classification, throwback income, and FATCA. We design and remediate these structures. Free consultation. Trusts with one foot in Canada and one foot in the US carry a thicket of overlapping rules: Section 94 of the Canadian Income Tax Act, the US grantor-trust regime, throwback rules on accumulated income, FATCA reporting, and treaty residency. We design and remediate cross-border trust structures so each system reaches the conclusion you want. How we help: - Section 94 deemed-resident-trust analysis for non-resident trusts with Canadian contributors or beneficiaries - US grantor-trust vs. non-grantor-trust classification under IRC §§671–679 - Form 3520 / 3520-A reporting for US persons connected to foreign trusts - Throwback-rule modelling under IRC §§665–668 for accumulated trust income - Form 8938 and FATCA reporting for trust beneficiaries - Cross-border distribution planning to avoid double taxation - Migration of trusts between Canadian and US trustees ### Regulation 105 and 102 Withholding on Non-Residents - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/regulation-105-non-resident-withholding - Summary: Regulation 105 imposes 15% withholding on fees paid to non-residents for services in Canada, plus Reg 102 on non-resident employees. Learn waivers, treaty relief, and T4A-NR. When a non-resident earns fees, commissions, or other service income for work performed in Canada, the payer is generally required to withhold 15% of the gross amount under Regulation 105 of the Income Tax Regulations — and to withhold under Regulation 102 on remuneration paid to non-resident employees who work in Canada. The withholding is not a final tax; it is a deposit against any Canadian liability that may ultimately be assessed. With advance planning, a Canada-US treaty waiver or a reduced-withholding waiver can often release some or all of the funds before the work begins. Barrett Tax Law, led by Simone Barrett (admitted in Ontario and Florida), helps US individuals and businesses navigate Regulation 105 and 102 withholding, the waiver process, and T4A-NR reporting. How we help: - Regulation 105 requires 15% withholding on the gross fees, commissions, or other amounts paid to a non-resident for services rendered in Canada (other than employment) — verified at 15%. - Regulation 102 requires withholding on the portion of employment remuneration that relates to duties a non-resident employee performs in Canada. - A Form R105 waiver (treaty-based or income-and-expense) can reduce or eliminate Reg 105 withholding; file it at least 30 days before services begin or the first payment. - Qualifying non-resident employers can avoid routine Reg 102 withholding for qualifying non-resident employees by certifying on Form RC473. - Payers report Reg 105 amounts on the T4A-NR slip, due to the non-resident and CRA by the last day of February following the calendar year. - Services performed in Quebec attract an additional 9% provincial withholding, with its own separate waiver process through Revenu Quebec. ### T1134 and T106: Foreign Affiliate and Non-Arms-Length Reporting - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/t1134-t106-foreign-affiliate-reporting - Summary: Canada-US foreign reporting for business: Form T1134 (foreign affiliates, FAPI), Form T106 (non-arm's-length transactions), section 247 transfer pricing, thresholds, deadlines and penalties. If a Canadian business owns part of a foreign corporation or transacts with related non-residents, the Canada Revenue Agency expects two information returns most owners have never heard of: Form T1134 for foreign affiliates and Form T106 for non-arm's-length cross-border dealings. The dollar amounts are reporting thresholds, not taxes — but missing the filings carries day-rate and gross-negligence penalties that dwarf the work of filing, and the same numbers feed the transfer-pricing rules under section 247 of the Income Tax Act. Barrett Tax Law helps Canadian companies and their owners identify what they hold abroad, file on time, and document related-party pricing before a question becomes an assessment. How we help: - Form T1134 reports foreign affiliates — generally a foreign corporation in which you (alone or with related parties) own at least 10% of any class of shares — and is due 10 months after the tax year-end for years beginning after 2020. - A dormant or inactive foreign affiliate is generally exempt from the detailed T1134 supplement where its cost amount is under CAD$100,000, its assets never exceeded CAD$1,000,000 in fair market value, and gross receipts were under CAD$100,000. - Form T106 is required when total transactions with all non-arm's-length non-residents exceed CAD$1,000,000 in the year; it is due 6 months after the corporate year-end. - T106's per-non-resident de minimis reporting threshold rose to CAD$100,000 for tax years beginning in 2022 and later (CAD$25,000 before that). - Section 247 transfer-pricing rules can recharacterize related-party prices and add a 10% penalty on large net adjustments; contemporaneous documentation must be in place by the filing-due date. - T1134 late-filing penalties run at $25/day (max $2,500); a false-statement or omission penalty is the greater of $24,000 or 5% of the cost of the affiliate's shares and indebtedness, and ignoring a CRA demand to file adds a further $1,000/month penalty (up to $24,000). ### Tax Residency and the Treaty Tie-Breaker - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/residency-and-treaty-tiebreaker - Summary: How Canada and the US determine tax residency, what happens when you are resident of both, and how the Canada-US treaty Article IV tie-breaker resolves dual residence. Tax residency is the single fact that decides whether Canada, the United States, or both can tax your worldwide income — and the two countries use very different tests to reach that answer. When their rules overlap and you come out resident of both, Article IV of the Canada-US tax treaty supplies an ordered tie-breaker (permanent home, centre of vital interests, habitual abode, then citizenship) that assigns you to one country for treaty purposes. Getting residency right is the foundation of every other cross-border filing decision, and getting it wrong can mean double taxation, missed elections, or unexpected exit-tax exposure. How we help: - Canada taxes on residency: you can be a factual resident through residential ties, or a deemed resident if you sojourn 183+ days in a calendar year (Income Tax Act s.250(1)(a)). - The US taxes citizens and green-card holders on worldwide income regardless of where they live, plus anyone meeting the substantial presence test. - Substantial presence: 31+ days in the current year and a weighted 183 days over three years — current-year days, plus 1/3 of prior-year days, plus 1/6 of days two years back. - If you are resident of both countries, Article IV(2) of the Canada-US treaty applies an ordered tie-breaker to assign you to one country for treaty purposes. - The Form 8840 closer-connection exception can help snowbirds avoid US residency, but it is not available to green-card holders, who must instead use the treaty tie-breaker. - Claiming Canadian treaty residence on the US side generally means filing Form 1040-NR with Form 8833 attached — and for long-term green-card holders it can trigger the s.877A expatriation rules. ### Pre-Immigration Tax Planning: Before Becoming a Canadian Resident - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/pre-immigration-tax-planning-canada - Summary: Plan before becoming a Canadian resident: the s.128.1(1) fair-market-value step-up, pre-arrival crystallization, trust and compensation timing, and treaty residence rules. The Canadian tax bill you carry for the rest of your life is largely set in the months before you land. When you become a Canadian resident, subsection 128.1(1) of the Income Tax Act treats almost all of your worldwide property as freshly acquired at fair market value on your arrival date — a cost-base “step-up” that can permanently shelter gains that accrued before you moved, but only if your records and your transactions are ordered correctly first. Barrett Tax Law, led by Simone Barrett (admitted in Ontario and Florida), helps individuals and families plan the arrival side of a cross-border move before residency is triggered. How we help: - Subsection 128.1(1) deems most property acquired at fair market value on the day you become a Canadian resident — a step-up that can shelter pre-arrival accrued gains - The step-up does not apply to taxable Canadian property (Canadian real estate, certain Canadian shares), which keeps its original cost base - Residency is fixed by significant residential ties (CRA Folio S5-F1-C1) or, for sojourners, the 183-day deemed-resident rule under paragraph 250(1)(a) - Dual residence is resolved by the Canada-US treaty Article IV tie-breaker: permanent home, centre of vital interests, habitual abode, then nationality - The 60-month immigration-trust exemption under section 94 was repealed in the 2014 federal budget and is no longer available - Pre-arrival crystallization, valuations, and compensation timing must be documented before the arrival date — not reconstructed afterward ### Pre-Emigration Planning: Leaving Canada for the United States - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/pre-emigration-tax-planning-us - Summary: Pre-emigration tax planning for Canadians moving to the U.S.: coordinate departure tax, the Article XIII(7) basis election, RRSP deferral, and the dual-status first year. Moving from Canada to the United States triggers tax consequences in both countries at the same moment, and the most valuable planning happens before you arrive. Canada imposes a departure (deemed-disposition) tax on the way out, while the U.S. begins to tax your worldwide income once you become a resident there — and the two systems do not automatically line up. Coordinating the timing of the move, the U.S. cost-basis position of your assets, your RRSP treaty election, and your dual-status first-year return can prevent the same gain from being taxed twice and avoid costly information-return penalties. Barrett Tax Law, led on cross-border matters by Simone Barrett (admitted in Ontario and Florida), works through the U.S. side of an emigration in coordination with the Canadian departure plan. How we help: - Canada's departure tax under ITA s.128.1(4) deems you to have sold most property at fair market value on the day you stop being a Canadian resident - The U.S. has no automatic basis step-up on arrival — Article XIII(7) of the Canada-U.S. treaty lets you elect a deemed U.S. sale and repurchase at FMV to align your U.S. cost base with the Canadian departure value - Article XVIII(7) defers U.S. tax on income accruing inside an RRSP or RRIF; under Rev. Proc. 2014-55 the election is automatic for eligible individuals and Form 8891 is obsolete - Your first U.S. year is usually a dual-status return: nonresident before your residency starting date, resident after, with worldwide income taxed only from that date - U.S. residents file FBAR (FinCEN 114) when foreign accounts exceed US$10,000 in aggregate, plus FATCA Form 8938 above higher thresholds - If you are already a long-term green-card holder or U.S. citizen, the s.877A expatriation rules (net worth $2M / average net income tax over $206,000 for 2025) can apply when you later sever U.S. ties ### Cross-Border Retirement Accounts: RRSP, 401(k), IRA and Roth - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/cross-border-retirement-accounts-rrsp-401k-ira - Summary: How RRSPs, RRIFs, 401(k)s, IRAs and Roth IRAs are taxed across the Canada-US border: treaty deferral elections, withholding rates, transfers and FBAR. Free consultation. Retirement savings that cross the Canada-US border carry a hidden second tax system. An RRSP, RRIF, 401(k), IRA or Roth IRA that is fully sheltered in one country can become taxable, double-taxed or burdened with penalty filings in the other unless the Canada-US tax treaty is applied carefully and the right elections are made on time. Barrett Tax Law helps individuals and families align both countries' rules before a move, a withdrawal or a transfer locks in an avoidable result. How we help: - Article XVIII(7) of the Canada-US treaty lets US persons defer US tax on undistributed RRSP and RRIF growth; Form 8891 was made obsolete after 31 December 2014 and Rev. Proc. 2014-55 now treats the election as automatic. - RRSP and RRIF withdrawals paid to a US resident face 25% Canadian non-resident withholding, reduced to 15% under Article XVIII(2) for periodic pension payments such as a properly structured RRIF stream. - A 401(k) or IRA generally keeps its tax-deferred status in Canada under the treaty, but there is no direct cross-border rollover; an indirect transfer to an RRSP under ITA paragraph 60(j) has strict conditions. - Cashing out a 401(k) or IRA before age 59 1/2 can trigger the 10% IRC section 72(t) early-distribution tax, which CRA accepts as creditable for Canadian foreign-tax-credit purposes. - A Roth IRA can stay tax-free for a Canadian resident only if a one-time treaty election is filed and no contribution is made to it after Canadian residency begins. - RRSPs, RRIFs, 401(k)s and IRAs are generally reportable on the FBAR (US$10,000 aggregate) and may be reportable on Form 8938, separate from any income tax owed. ### US-Canada Estate Planning - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/us-canada-estate-planning - Summary: Cross-border estate planning for Canadians with US ties. We coordinate wills, QDOT planning, and the Canada-US treaty credit to avoid double tax at death. Free consultation. Estate planning that crosses the Canada-US border touches Canadian capital-gains-at-death rules, US estate tax, QDOT planning for non-citizen spouses, and the Canada-US treaty estate-tax credit. Coordinated wills, beneficiary designations, and asset titling avoid the common double-tax traps. How we help: - Coordinated Canadian and US wills - US estate-tax exposure analysis for Canadians owning US-situs assets - Qualified Domestic Trust (QDOT) planning where the surviving spouse is not a US citizen - Spousal rollover (ITA s. 70(6)) and US marital deduction coordination - Canada-US treaty Article XXIX-B (estate-tax credit) analysis - Beneficiary-designation review for cross-border families ### Foreign Tax Credits and Avoiding Double Taxation - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/foreign-tax-credits-canada-us - Summary: How Canada-US foreign tax credits work under ITA s.126, Form 1116, and treaty Article XXIV — plus the timing, character, and LLC traps that cause double taxation. When the same income is taxed in both Canada and the United States, the foreign tax credit is the main mechanism that keeps you from paying twice — but only if the two systems line up on timing, character, and source. Our cross-border practice, led by Simone Barrett (admitted in Ontario and Florida), coordinates the Canadian credit under ITA section 126 with the US credit on Form 1116 and the relief rules in Article XXIV of the Canada-US treaty, so the credit you are entitled to is actually the credit you receive. How we help: - Canadian foreign tax credit under ITA s. 126, computed per country and split between business and non-business income - US foreign tax credit under IRC s. 901/904 on Form 1116, with separate general and passive baskets - Treaty Article XXIV relief, including the re-sourcing rules for US citizens resident in Canada - Non-business-income credit capped at 15% of gross foreign property income, with the excess handled under s. 20(11)/(12) - Common timing and character mismatches that strand a credit — including the US LLC hybrid that breaks relief - Separate AMT credit calculations on both sides (US s. 59(a) Form 1116; Canada s. 127.5/127.54) ### US Estate Tax for Canadians - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/us-estate-tax-for-canadians - Summary: Own US real estate or US-corporation shares? Canadians can owe US estate tax at death. We map your treaty unified credit and US-situs exposure. Free consultation. If you are a Canadian who owns US real estate, US-corporation shares, or other US-situs assets, US estate tax can apply at your death — even with no other US connection. The Canada-US tax treaty provides a prorated unified credit, but the math depends on the size of your worldwide estate and the value of your US-situs holdings. How we help: - US-situs asset classification (real estate, US-corp shares, tangible personalty) - Treaty Article XXIX-B prorated unified credit modelling - Pre-mortem restructuring (Canadian corp, partnership, irrevocable trust) - Life-insurance funding of projected US estate-tax exposure - Form 706-NA preparation and protective-claim filings - Coordination with Canadian deemed-disposition planning at death ### Snowbird Tax Planning - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/snowbird-tax-planning - Summary: Canadian snowbirds who winter in the US can be deemed US tax residents under the substantial-presence test. We use Form 8840 and treaty tie-breaker analysis to keep you Canadian. Free consult. If you spend more than a third of the year in the United States across a rolling three-year window, the IRS can treat you as a US tax resident — exposing your worldwide income to US tax. The closer-connection statement (Form 8840) and the Canada-US treaty's residency tie-breaker keep most snowbirds on the Canadian side, but the analysis isn't automatic. How we help: - Substantial-presence-test calculation (the 31/183 day formula) - Form 8840 closer-connection statement preparation - Treaty Article IV residency tie-breaker analysis - Canadian-residency consequences of US-side filings - Florida domicile / non-resident filing positions - Estate-tax exposure review for snowbirds with US real estate ### FATCA and FBAR Compliance - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/fatca-fbar-compliance - Summary: US citizens and green-card holders in Canada must file annual US returns, FBARs, and Form 8938 even when no tax is owed. We handle the filings and penalty risk. Free consultation. A US citizen or green-card holder living in Canada is subject to US tax on worldwide income and to two parallel disclosure regimes — FBAR (FinCEN 114) for foreign financial accounts and Form 8938 (FATCA) for specified foreign financial assets — with penalty schedules that can dwarf the underlying tax. How we help: - Annual Form 1040 preparation for US persons in Canada (with treaty positions) - FBAR (FinCEN Form 114) filings for foreign financial accounts over US$10,000 - Form 8938 (FATCA) statement of specified foreign financial assets - PFIC analysis for Canadian mutual funds and ETFs (Form 8621) - Form 3520 / 3520-A for foreign trust connections (TFSA, RESP) - Streamlined Foreign Offshore Procedures for past non-filers ### Streamlined Filing Procedures - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/streamlined-filing-procedures - Summary: IRS Streamlined Foreign Offshore Procedures for US persons whose non-filing was non-willful: three years of amended returns, six years of FBARs, no civil penalty if accepted. Free consultation. If you're a US person who hasn't been filing US returns or FBARs and your non-filing was non-willful, the IRS's Streamlined Foreign Offshore Procedures provide a structured path to compliance: three years of amended Form 1040s, six years of FBARs, and a signed certification — without civil penalty if accepted. How we help: - Eligibility analysis (non-willful conduct, non-US-resident status, no IRS contact) - Three-year amended Form 1040 package preparation - Six-year FBAR back-filing - Streamlined certification (Form 14653) drafting - PFIC and foreign-trust elections incorporated into the package - Coordination with the Canadian Voluntary Disclosure Program if needed ### FIRPTA Withholding for Canadian Sellers of US Real Estate - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/firpta-canadian-sellers - Summary: Selling US real estate as a Canadian? FIRPTA withholds up to 15% of the gross price at closing. We file Form 8288-B to reduce the hold-back to your actual US tax owed. Under the Foreign Investment in Real Property Tax Act (FIRPTA), a US buyer of US real estate from a non-resident foreign person must withhold up to 15% of the gross sale price and remit it to the IRS. The withholding is not the final tax — it's an advance against the actual US tax liability — but the cash impact at closing is substantial. How we help: - FIRPTA withholding rate analysis (0% / 10% / 15% tiers) - Form 8288 / 8288-A withholding agent compliance - Withholding-certificate applications (Form 8288-B) to reduce hold-back - Form 1040-NR preparation for the actual gain calculation - Refund-claim filing where withholding exceeds the actual tax - Coordination with Canadian capital-gains and foreign-tax-credit positions ### Section 116 Clearance Certificates - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/section-116-clearance - Summary: Non-residents selling Canadian real estate or private shares must obtain a CRA Section 116 clearance certificate to avoid 25% withholding on the sale price. We file it. Free consultation. A non-resident selling taxable Canadian property — Canadian real estate, shares of certain private Canadian corporations, partnership interests deriving value from Canadian real estate — must obtain a Section 116 clearance certificate from the CRA. Without it, the purchaser is required to withhold 25% (or higher, in some cases) of the gross sale price. How we help: - Taxable-Canadian-property classification under ITA s. 248(1) and 116 - Form T2062 (or T2062A for depreciable property) preparation - Pre-closing certificate applications to reduce purchaser withholding - Post-closing variance reconciliation with the final T1 / T2 - Coordination with treaty-based reduced-rate positions - Application for refund where the clearance was over-conservative ### Tax Planning for New Canadian Residents - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/tax-planning-new-canadian-residents - Summary: New Canadian residents get a one-time fair-market-value cost-base reset on worldwide assets under ITA s. 128.1(1)(b). Plan before your residency date to shelter pre-arrival gains. When you become a Canadian tax resident, paragraph 128.1(1)(b) of the Income Tax Act gives you a one-time fair-market-value cost-base reset on most of your worldwide assets — sheltering all pre-arrival appreciation from Canadian tax. The window for planning closes the day Canadian residency begins. How we help: - Step-up at residency under ITA s. 128.1(1)(b) — deemed acquisition at FMV - Exception categories (Canadian real property, business interests carried on in Canada) - Pre-immigration trust planning for high-net-worth families - Coordination with US exit-tax (IRC s. 877A) where leaving the US - RRSP / 401(k) / IRA contribution and rollover analysis - Foreign-affiliate planning before the move ### Canadian Tax Planning Before Relocation - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/canadian-tax-planning-before-relocation - Summary: Plan before you leave Canada: cut s. 128.1 departure-tax exposure, reposition TFSA, RESP and mutual-fund holdings, and restructure your corporation while still resident. Free consultation. Canadian tax planning before a relocation focuses on minimizing the Section 128.1 departure-tax exposure, cleaning up account positions that would be tax-disadvantaged after the move (Canadian mutual funds, TFSAs, RESPs), and restructuring closely-held corporations while they're still under Canadian tax rules. How we help: - Canadian departure-tax modelling and Form T1244 deferral elections - Disposition or restructuring of PFIC-classified Canadian mutual funds - TFSA and RESP closure or restructuring before US residency begins - Pre-immigration trust planning for accumulated wealth - Treaty residency planning for the year of move - Coordination with the US exit-tax analysis (if applicable) ### Cross-Border Real Estate - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/cross-border-real-estate - Summary: Buying US real estate as a Canadian, or Canadian property as a US owner? Get the ownership structure right at purchase to control income tax, estate tax, withholding, and CRA audit risk. Whether it's a Florida condo bought by a Canadian or a Toronto rental held by an American, cross-border real estate structures have lifetime consequences for income tax, estate tax, capital-gains treatment, withholding obligations, and audit risk. Choosing the right structure at the purchase stage avoids costly restructuring later. How we help: - Direct vs. corporate vs. partnership vs. trust ownership analysis - FIRPTA exposure modelling for Canadian buyers of US property - Section 116 / TCP analysis for US buyers of Canadian property - Imputed-rent (ITA s. 15) review for corporate-owned snowbird residences - US estate-tax exposure quantification under treaty Article XXIX-B - Provincial transfer-tax and foreign-buyer surcharge analysis (Ontario, BC) ### Cross-Border M&A (Canada-US) - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/cross-border-m-and-a - Summary: Tax guidance for Canada-US cross-border M&A: asset-vs-share structuring, treaty residency, Section 116 clearance, GILTI and branch profits. Experienced counsel and a free consultation. Cross-border deals between Canadian and US companies — Canadian buyer of US target, US buyer of Canadian target, cross-border merger of equals — bring tax issues that are routinely missed in the closing rush: treaty residency of the surviving entity, Subpart F / GILTI inclusions, branch profits tax, transfer pricing on integration, and the choice between asset and share deals. How we help: - Asset-vs.-share deal analysis on both sides of the border - Section 85 rollover and Section 351 exchange coordination - Treaty Article IV residency for the post-closing surviving entity - Branch profits tax (IRC s. 884) on US activities of Canadian acquirers - Subpart F and GILTI exposure for Canadian targets of US acquirers - Transfer pricing on post-closing intercompany flows - Section 116 clearance for non-resident sellers of TCP ### US IRS Audits and Florida Tax Disputes - Audience: individual, business - URL: https://www.barretttaxlaw.com/tax-services/us-irs-and-florida-representation - Summary: Barrett Tax Law represents clients in IRS audits, Office of Appeals proceedings, and Florida state tax disputes. Counsel admitted in both Florida and Ontario. Free consultation. Barrett Tax Law represents clients in US federal IRS examinations, Office of Appeals proceedings, and Florida-state tax matters. Simone Barrett is admitted in Florida (The Florida Bar) and Ontario (Law Society of Ontario), so she can represent clients in matters of US federal tax law, Florida state tax law, and Canadian tax law. For US-state tax matters outside Florida, the firm engages locally-admitted counsel. How we help: - IRS examination representation (correspondence, office, field audits) - IRS Office of Appeals representation - US Tax Court petitions - Streamlined Foreign Offshore submissions for past non-filing - Florida Department of Revenue audits and appeals - Florida sales-and-use tax issues for Canadian sellers - Coordination with Canadian CRA-side proceedings ## 6. Corporate services ### Corporate-Owned Life Insurance: Tax Treatment - Audience: business - URL: https://www.barretttaxlaw.com/corporate-services/corporate-owned-life-insurance-tax - Summary: Canadian tax lawyers on corporate-owned life insurance: exempt policies, the tax-free death benefit, the capital dividend account credit, and 20(1)(e.2) premiums. Free consultation. A corporation that owns life insurance on a key person or shareholder can receive the death benefit tax-free and, in most cases, credit much of it to the capital dividend account so it flows out to surviving shareholders without further tax. The tax treatment of the policy, the premiums, and the eventual payout is governed by precise rules in the Income Tax Act, and the details determine whether the plan works as intended. How we help: - Confirm a policy's exempt status and tax treatment - Plan the capital dividend account credit on death - Structure corporate insurance for a buy-sell agreement - Use insurance to equalize an estate among heirs - Assess the collateral-insurance deduction under 20(1)(e.2) - Coordinate insurance with post-mortem and succession plans - Address valuation of policies on a transfer or reorganization ### The Capital Dividend Account (CDA) - Audience: business - URL: https://www.barretttaxlaw.com/corporate-services/capital-dividend-account - Summary: Canadian tax lawyers help private corporations pay tax-free capital dividends, get the 83(2) election and CDA balance right, and avoid the Part III penalty. Free consultation. The capital dividend account lets a private corporation flow certain tax-free amounts out to its Canadian-resident shareholders as a tax-free capital dividend. Used correctly it is a valuable planning tool; calculated wrongly it can trigger a heavy penalty tax. Getting the balance and the election right matters. How we help: - Calculate and reconstruct the CDA balance - File the subsection 83(2) capital dividend election - Verify the CDA with the CRA before paying - Manage late-filed capital dividend elections - Respond to Part III penalty tax assessments - Use the 184(3) election to fix an over-election - Coordinate CDA planning with life insurance ### The Small Business Deduction and Associated Corporations - Audience: business - URL: https://www.barretttaxlaw.com/corporate-services/small-business-deduction-and-associated-corporations - Summary: Canadian tax lawyers on the small business deduction (ITA s.125): how association, passive income, and taxable capital grind down your $500,000 business limit before the CRA reassesses. The small business deduction can cut the corporate tax rate on the first $500,000 of active business income roughly in half, but the rule is hedged with traps. If your corporation is associated with others, holds too much taxable capital, or earns too much passive investment income, the business limit shrinks or disappears entirely — often without anyone noticing until the CRA reassesses. How we help: - Confirming eligibility for the section 125 deduction - Allocating one business limit across associated corporations - Untangling the section 256 association rules - Managing the taxable capital and passive income grinds - Structuring to preserve access to the small business rate - Defending CRA reassessments that deny the deduction - Specified partnership income and the deduction ### Business Incorporations - Audience: business - URL: https://www.barretttaxlaw.com/corporate-services/business-incorporations - Summary: Federal and provincial business incorporations with tax-aware share structures built by a Canadian tax lawyer for dividends, income splitting, and a future sale. Free consultation. Incorporation is more than a registration — the share structure you set up determines what you can do with the corporation for the next 30 years. We incorporate with tax planning in mind. How we help: - Federal (CBCA) and provincial (OBCA, ABCA, BCBCA) incorporation - Multi-class share structures with discretionary dividends - Family trust and holdco-ready structures - Initial bylaws, minute book, and CRA registrations ### Business Sales & Acquisitions - Audience: business - URL: https://www.barretttaxlaw.com/corporate-services/business-sales-acquisitions - Summary: Buying or selling a Canadian business? We structure asset and share sales to protect your after-tax outcome, then paper and close the deal. Free consultation with a tax lawyer. Whether you are buying or selling, the difference between an asset sale and a share sale can change the after-tax outcome by hundreds of thousands of dollars. We structure, paper, and close the transaction. How we help: - Asset vs. share sale analysis - Lifetime Capital Gains Exemption (LCGE) qualification - Letter of intent, APA/SPA, and ancillary agreements - Closing and post-closing tax compliance ### Corporate Reorganizations - Audience: business - URL: https://www.barretttaxlaw.com/corporate-services/corporate-reorganizations - Summary: Restructure your company without triggering tax. A Canadian tax lawyer handles section 85 rollovers, estate freezes, butterfly transactions, and amalgamations. Free consultation. Reorganizations let you change ownership, freeze value, multiply the LCGE, or split a company without triggering tax — when done right. How we help: - Section 85 rollovers - Estate freezes and family-trust integration - Butterfly transactions (paragraph 55(3)(b)) - Amalgamations and wind-ups (s. 87 and s. 88) ### Shareholder Agreements - Audience: business - URL: https://www.barretttaxlaw.com/corporate-services/shareholder-agreements - Summary: Shareholder agreements drafted by a Canadian tax lawyer — share transfers, drag-along and shotgun clauses, exits and succession, integrated with your corporate tax plan. Free consultation. A shareholder agreement is the constitution of your company. We draft agreements that survive disputes, exits, and succession — and that integrate cleanly with the underlying tax plan. How we help: - Share-transfer restrictions and rights of first refusal - Drag-along, tag-along, and shotgun clauses - Valuation mechanics and dispute resolution - Estate-freeze and family-trust integration ### Succession Planning - Audience: business - URL: https://www.barretttaxlaw.com/corporate-services/succession-planning - Summary: Plan the tax-efficient transfer of your Canadian business to the next generation, so it survives your retirement, disability, or death without losing half to the CRA. Free consultation. Succession planning ensures your business survives your retirement, disability, or death — and that the next generation does not lose half of it to tax. How we help: - Estate freezes and family-trust planning - Section 84.1 anti-surplus-stripping awareness - Bill C-208 / intergenerational transfer rules - Insurance and capital-dividend-account planning ### Estate Planning - Audience: individual, business - URL: https://www.barretttaxlaw.com/corporate-services/estate-planning - Summary: Tax side of estate planning for Canadians: deemed disposition, post-mortem pipeline planning, the capital-dividend account, and US-estate-tax exposure. We work with you or your lawyer. We work alongside your estate-planning lawyer or directly with you on the tax components — deemed disposition, post-mortem pipeline planning, capital-dividend account, and US-estate-tax exposure. How we help: - Deemed disposition and capital-gains rollover - Post-mortem pipeline and bump planning - Capital Dividend Account utilization - US estate tax for Canadian residents ### Amalgamations - Audience: business - URL: https://www.barretttaxlaw.com/corporate-services/amalgamations - Summary: Statutory and triangular amalgamations under section 87 of the Income Tax Act to simplify your corporate group, use losses, and integrate acquisitions. Free consultation with Barrett Tax Law. Amalgamations can simplify a corporate group, allow loss utilization, and integrate acquired companies — provided the section 87 rules are met. How we help: - Vertical and horizontal short-form amalgamations - Triangular amalgamations and squeeze-outs - Loss-streaming under s. 111(5) - Integration with reorganization plans ### Section 85 Rollovers - Audience: business - URL: https://www.barretttaxlaw.com/corporate-services/section-85-rollovers - Summary: Section 85 lets you transfer assets to a Canadian corporation tax-deferred when incorporating a sole proprietorship, freezing an estate, or restructuring a group. Free consultation. Section 85 lets you transfer assets to a corporation on a tax-deferred basis — essential for incorporating a sole proprietorship, freezing an estate, or restructuring a group. How we help: - Form T2057 and joint elections - Elected amount optimization - Boot, paid-up capital, and adjusted cost base mechanics - Coordination with estate freezes and reorganizations ### Butterfly Transactions - Audience: business - URL: https://www.barretttaxlaw.com/corporate-services/butterfly-transactions - Summary: Butterfly transactions split a corporation among shareholders tax-free under paragraph 55(3)(b) — for divorce, partnership separation, or family succession. Talk to an experienced tax lawyer. Butterfly transactions split a corporation among shareholders on a tax-deferred basis — useful for divorce, partnership separation, or family succession. How we help: - Paragraph 55(3)(b) and (3.1) compliance - Pro-rata distribution of cash, near-cash, and business property - Coordination with valuation and accounting ### Personal Real Estate Corporations (PREC) - Audience: business - URL: https://www.barretttaxlaw.com/corporate-services/personal-real-estate-corporation - Summary: Ontario real estate agents and brokers can earn commissions through a PREC to access the small-business deduction and tax deferral. We handle PREC setup and structuring. Free consultation. Personal Real Estate Corporations let licensed Ontario real-estate professionals receive commissions through a corporation, capturing the small-business deduction and deferral benefits. How we help: - RECO-compliant PREC incorporations - Family member share structures - Tax planning and remuneration strategy ### Offshore Incorporations - Audience: business - URL: https://www.barretttaxlaw.com/corporate-services/offshore-incorporation - Summary: Offshore incorporations for Canadian residents, structured to meet FAPI rules and T1134 reporting and stay onside with the CRA. Experienced tax lawyers, free consultation. Offshore corporations can serve real commercial purposes — but for Canadian residents they trigger FAPI, T1134, and substantial reporting. We structure offshore entities that work and stay onside. How we help: - Jurisdiction selection and substance considerations - FAPI and Foreign Affiliate rules - T1106, T1134, and T1135 compliance ### Contracts & Agreements - Audience: business - URL: https://www.barretttaxlaw.com/corporate-services/contracts-and-agreements - Summary: Commercial contract drafting and review for Canadian businesses: service, supply, NDA, employment and contractor agreements built to avoid CRA characterization surprises. Service agreements, supply agreements, NDAs, employment and contractor agreements — drafted to protect your business and avoid CRA-characterization surprises (e.g., personal services business). How we help: - Independent-contractor vs. employee analysis - Service, supply, and licensing agreements - NDAs and confidentiality agreements - Commercial leases ### Commercial Leases - Audience: business - URL: https://www.barretttaxlaw.com/corporate-services/leases - Summary: Barrett Tax Law drafts, reviews, and negotiates commercial leases for Canadian tenants and landlords, catching hidden cost escalations in long-term agreements. Book a free consultation. Commercial leases routinely run 10–20 years and contain hidden cost escalations. We negotiate and review leases on both sides of the table. How we help: - Net, gross, and percentage-rent leases - Renewal and expansion options - Tenant and landlord representation ### Business Advisory Services - Audience: business - URL: https://www.barretttaxlaw.com/corporate-services/business-advisory-services - Summary: Retainer-based legal and tax advice for Canadian small and mid-market companies: board minutes, contract reviews, payroll and contractor questions, and CRA correspondence. Free consult. Many of our corporate clients work with us on a retainer basis for ongoing legal and tax advice — board minutes, contract reviews, payroll and contractor questions, and CRA correspondence. How we help: - Outsourced general-counsel services - Annual minute-book maintenance - Contract review and CRA correspondence ### Business Start-Up Planning - Audience: business - URL: https://www.barretttaxlaw.com/corporate-services/business-start-up-planning - Summary: Canadian founders: structure your start-up before incorporating to support financing rounds, a future exit, and tax-efficient compensation. Book a free consultation with our tax lawyers. We work with founders before incorporation to design a structure that supports financing rounds, future exits, and tax-efficient compensation. How we help: - Founder share structures and vesting - SR&ED and CCPC eligibility planning - Co-founder and contractor agreements ## 7. FAQs (general) **Q: What does Barrett Tax Law do?** A: Barrett Tax Law is a Canadian tax law firm that represents individuals and businesses in disputes with the Canada Revenue Agency and in tax planning. The practice covers CRA audits and reassessments, Notices of Objection, appeals to the Tax Court of Canada, the Voluntary Disclosures Program, tax-debt and collections matters, director and derivative (section 160) liability, and GST/HST disputes. On the planning side, the firm advises owner-managers and incorporated professionals on corporate structure, the Lifetime Capital Gains Exemption, estate freezes and succession, and Canada–U.S. cross-border issues. Because tax lawyers can assert solicitor-client privilege, a tax lawyer is often retained where an accountant cannot protect sensitive communications. Initial consultations are free. **Q: Is the consultation really free?** A: Yes. Most cases qualify for a free, no-obligation consultation with one of our tax lawyers. During the call we'll review your situation, explain your options, and give you a clear quote if you decide to retain us. **Q: What does a tax lawyer do that an accountant does not?** A: A tax lawyer focuses on the legal side of tax — disputes, litigation, and the structuring of transactions in light of the law and anti-avoidance rules. That includes representing taxpayers in CRA audits and objections, appearing at the Tax Court of Canada, defending penalties and director or derivative liability, and designing reorganizations such as section 85 rollovers and estate freezes. The most practical distinction is privilege. Communications with a lawyer are generally protected by solicitor-client privilege, while communications with an accountant generally are not and can be demanded by the CRA. Where the facts are sensitive or the matter could become contentious, that protection matters. Lawyers and accountants often work together — the accountant on the numbers and filings, the lawyer on strategy, privilege, and the legal record. Barrett Tax Law regularly coordinates with a client's existing accountant. **Q: Should I incorporate my new business or operate as a sole proprietor?** A: It depends on your numbers and your tolerance for risk. A sole proprietorship is the quickest and least expensive structure to start and run: there is no separate tax return, and you simply report the business profit on your personal T1. The trade-offs are that all of the profit is taxed in your hands in the year it is earned, and there is no liability shield — if the business is sued, you are sued. A corporation is a separate legal person. It can shield your personal assets from most business liabilities, and a qualifying Canadian-controlled private corporation pays a much lower rate on active business income up to $500,000 (roughly 12.2% in Ontario), which lets you leave surplus profit in the company on a tax-deferred basis. A useful rule of thumb: if your business reliably earns more than you need to live on, a corporation is often the sensible choice; if there is no surplus at month-end, the simplicity of a proprietorship may win. A free consultation can help you weigh the structures against your actual situation before you commit. **Q: Do you serve all of Canada?** A: Yes. Barrett Tax Law represents clients across Canada. We have offices and local phone lines in Toronto, Calgary, Edmonton, Fort McMurray, Ottawa, Vancouver, and Winnipeg, plus a national toll-free line at 1-877-882-9829. **Q: Who is Barrett Tax Law and what areas does the firm handle?** A: Barrett Tax Law is a Canadian boutique tax law firm that represents individuals and businesses in their dealings with the Canada Revenue Agency. The firm's work spans CRA audits and disputes, voluntary disclosures, Tax Court of Canada litigation, collections matters, and corporate and estate tax planning. The firm was founded in 2009 and has represented many thousands of clients across Canada. Its head office is in Concord, Ontario (Vaughan), and it serves clients nationwide. You can reach the firm toll-free at 1-877-882-9829 (1-877-8-TAXTAX). Most matters qualify for a free, no-obligation consultation, and most are quoted on a fixed-fee basis once scope is understood, so the cost is known before work begins. **Q: What does a tax lawyer do that an accountant cannot?** A: Accountants prepare returns and financial statements. Tax lawyers represent you when those returns are challenged, audited, or prosecuted — and our communications are protected by solicitor–client privilege, which accountant communications generally are not. **Q: What should I do if I receive a letter from the CRA?** A: First, identify what the letter is and what it requires. A CRA letter may open an audit, ask for documents, propose adjustments (a proposal letter), confirm a reassessment, or start collection action — and each carries its own deadline and its own implications. Note any date by which a response is required. Do not ignore it, and be careful about responding off the cuff. What you say and produce can shape your later objection and appeal position, and casual admissions can be difficult to undo. If the letter proposes adjustments or penalties, or if significant amounts are involved, get advice before responding. A free consultation can help you understand the letter, the deadline, and the right next step. Acting early — while options are still open — is usually far better than waiting until a deadline is near. **Q: Will the CRA criminally prosecute me?** A: Most CRA disputes are civil. Criminal prosecution is reserved for serious tax evasion or fraud, usually involving deliberate misrepresentation. If you have unreported income, a voluntary disclosure is one of the standard ways to reduce criminal-prosecution risk. **Q: Is the first consultation really free?** A: Yes. Most matters qualify for a free, no-obligation consultation with an experienced tax lawyer. The consultation is a chance to describe your situation, get a clear sense of the options and likely path, and receive a fee structure in writing before you commit to anything. You can reach the firm toll-free at 1-877-882-9829 (1-877-8-TAXTAX) to arrange a confidential consultation. The head office is in Concord, Ontario (Vaughan), and the firm serves clients across Canada. **Q: Are my communications with a tax lawyer confidential?** A: Yes. Communications between you and your lawyer for the purpose of obtaining legal advice are generally protected by solicitor-client privilege, one of the most strongly protected confidences in Canadian law. In practical terms, the CRA generally cannot compel disclosure of privileged communications. This is an important difference from working with an accountant or other non-lawyer representative, whose communications and working papers can generally be demanded by the CRA. Where the facts are sensitive — unreported income, offshore assets, or potential penalties — that protection can be significant. Privilege has limits and can be waived inadvertently, so it should be handled with care. A consultation can explain how privilege applies to your particular situation. **Q: How fast can you start on my case?** A: We typically begin work within 24 hours of being retained. For audit deadlines, Notices of Objection, and other time-sensitive matters, we move immediately. **Q: What if I have unfiled tax returns from many years ago?** A: We routinely handle 5+ years of unfiled returns. Through the Voluntary Disclosures Program — applied for before the CRA contacts you — we can usually eliminate gross-negligence penalties and limit interest exposure. **Q: How long do I need to keep my business records, and do I need original receipts?** A: As a general rule, keep your records for six to seven years. Under the Income Tax Act the six-year period runs from the end of the tax year the records relate to. Although the Canada Revenue Agency can ordinarily reassess income tax for three years and GST/HST for four, keeping records a little longer is wise because the agency can reach back further where it suspects fraud or gross negligence. Records tied to buying or selling property should be kept indefinitely, because you need them to compute the correct capital gain on disposition. On receipts: strictly speaking, the Income Tax Act does not require an original receipt to claim most business expenses — but if an auditor asks for the original and you can only produce a photocopy, scan, or credit card statement, the expense may be denied. The practical answer is to keep everything an auditor might want, including originals (plus a scan, since some receipts fade), and to back up your records offsite. **Q: What does a Canadian tax lawyer actually do?** A: A Canadian tax lawyer advises on and litigates tax matters. On the dispute side, that means representing taxpayers in CRA audits, filing Notices of Objection, and appearing at the Tax Court of Canada and the Federal Court — work that requires legal training and rights of audience an accountant does not have. On the planning side, it means structuring transactions, corporations, and estates to be tax-efficient and defensible. Two features distinguish a tax lawyer from an accountant: solicitor-client privilege, which protects sensitive communications from disclosure to the CRA, and the ability to argue a case in court. Tax lawyers and accountants frequently work together, with the lawyer handling disputes, privileged questions, and complex planning while the accountant handles compliance. ## 8. FAQs — Voluntary Disclosures Program **Q: What is the Voluntary Disclosures Program (VDP) and should I use it?** A: The Voluntary Disclosures Program lets a taxpayer come forward to correct inaccurate or incomplete past filings — unreported income, unfiled returns, or missed foreign-asset reporting — before the CRA contacts them. A valid disclosure can provide relief from penalties and partial interest, and protection from prosecution for the disclosed conduct. To qualify, the disclosure generally must be voluntary (before any CRA enforcement action), complete, involve the application or potential application of a penalty, include information at least one year overdue, and include payment of the estimated tax. Whether you should use it depends on your exposure and timing — once the CRA has your information, the disclosure may no longer be considered voluntary. A tax lawyer can assess eligibility under privilege before anything is filed. **Q: What is the difference between a CRA audit and a voluntary disclosure?** A: The difference is who starts it and why. A CRA audit is initiated by the CRA: it selects your file, identifies the years and issues, and reviews your affairs, often with penalties and interest in play. A voluntary disclosure is initiated by you, before the CRA contacts you, to correct unreported income, unfiled returns, or missed information returns. The consequences differ accordingly. In an audit, you are defending against the CRA's proposed adjustments and penalties. In an accepted voluntary disclosure, the CRA agrees not to refer the matter for criminal prosecution and provides relief from certain penalties, although the underlying tax and interest remain payable. Timing is what separates the two paths. The Voluntary Disclosures Program is only available while the matter is still voluntary — that is, before the CRA has begun an enforcement action about it. Once an audit letter arrives, the disclosure route generally closes for the matters under review. **Q: Am I eligible for the CRA Voluntary Disclosures Program?** A: The Voluntary Disclosures Program applies five tests. The disclosure must be voluntary (the CRA has not already started an enforcement action against you or a related person about the matter — the most commonly failed test), complete (all years, entities, related parties, and tax types), and it must involve a penalty. There must also be information that is at least one year past due, and the applicable tax must be paid or a payment arrangement made. Whether you qualify for the General Program (broader relief, including no gross negligence penalty and partial interest relief) or the Limited Program (narrower relief) depends on the facts, including whether the conduct involved intentional behaviour. The eligibility analysis is fact-specific and time-sensitive, because voluntary status can be lost the moment the CRA makes contact. A confidential consultation can confirm whether your situation still qualifies and which program is realistic. **Q: What is the difference between the General Program and the Limited Program under the VDP?** A: The Voluntary Disclosures Program has two tracks. The General Program offers fuller relief: no gross negligence penalties on the disclosed amounts, relief from criminal prosecution for the disclosed matters, and partial interest relief. It is intended for taxpayers whose non-compliance was not the result of intentional conduct. The Limited Program offers narrower relief — protection from criminal prosecution and from gross negligence penalties, but other penalties may still apply and there is no interest relief. It is generally directed at situations involving an element of intentional conduct or larger, more sophisticated non-compliance. Which track applies turns on the facts, and the framing of the application matters. The underlying tax owing and interest are payable under either program. **Q: Will I be prosecuted if I make a voluntary disclosure?** A: If a disclosure is accepted under either the General or the Limited Program, the CRA does not refer the disclosed matter for criminal prosecution. That protection is one of the central benefits of coming forward voluntarily rather than waiting to be found. The protection applies only to the matters actually disclosed. It does not cover issues left out of the disclosure, which is one reason completeness — including all years, entities, and tax types — is essential. An incomplete disclosure can be rejected and can leave undisclosed matters exposed. Because the stakes include criminal exposure, the eligibility and completeness analysis should be done carefully before anything is filed. **Q: Can I make a voluntary disclosure during an audit?** A: Generally not for the issues the CRA has already raised. The Voluntary Disclosures Program requires that the disclosure be voluntary — meaning the CRA has not yet begun an enforcement action against you about the matter. Once you receive an audit letter, voluntary status is generally lost as to the matters under audit. There may still be eligibility for years, entities, or issues that fall outside the audit's scope and that the CRA has not contacted you about. For example, if a current audit covers one year, unrelated issues in an earlier year or a separate corporation may still qualify. The analysis is delicate and time-sensitive. The key point is that the door can close quickly. If you think there are unaudited exposures, the time to assess voluntary disclosure is before the audit reaches them. **Q: Can I make a voluntary disclosure about offshore assets or T1135 filings?** A: Yes. Undisclosed offshore income and assets, and missed Form T1135 (Foreign Income Verification Statement) filings, are among the most common subjects of voluntary disclosures. Form T1135 is required where the cost of specified foreign property exceeds the $100,000 threshold, and missed filings carry their own penalties. Offshore disclosures are often multi-year and may involve coordinated personal, corporate, and trust filings, so completeness is especially important. Where there is a parallel US filing obligation, the Canadian disclosure can be coordinated with the US side so both jurisdictions are addressed together. As with any disclosure, the matter must still be voluntary — assessed before the CRA makes contact. Given the penalties that attach to offshore non-compliance, early advice is worthwhile. **Q: How long does a voluntary disclosure take and what will it cost?** A: Simple disclosures — one tax year, a single tax type, a modest amount — often resolve within roughly six to twelve months of submission. Complex disclosures involving offshore assets, multiple years, or multiple entities can take twelve to twenty-four months or longer. On cost, simple disclosures can typically be quoted as a fixed fee. Complex, multi-year or offshore disclosures are usually billed hourly with an upfront retainer, with a written estimate provided after the consultation. Separately, the disclosure itself triggers the underlying tax owing plus interest, and any penalties not relieved under the applicable program. A consultation will give you a realistic sense of both the timeline and the fee structure for your particular situation. **Q: Am I eligible for the Voluntary Disclosures Program?** A: Generally yes, as long as the CRA has not yet contacted you about the matter you wish to disclose, the disclosure is voluntary, complete, and at least one year overdue, and involves a penalty. **Q: What is the IRS Streamlined Foreign Offshore Procedure and who qualifies?** A: The Streamlined Foreign Offshore Procedures are an IRS program for US persons living outside the United States who fell out of compliance with US filing obligations without intending to. The submission consists of three years of amended income tax returns, six years of FBARs, and a signed certification that the conduct was non-willful. To qualify, the taxpayer must be a non-US-resident in at least one of the three relevant years, must not already be under IRS examination or criminal investigation, and must be able to certify truthfully that the non-compliance was non-willful — that is, due to negligence, inadvertence, mistake, or a good-faith misunderstanding of the law. Where the conditions are met, the program is generally penalty-free. The non-willful certification is the central document, and an inaccurate one carries serious consequences, so the facts should be assessed carefully before filing. Where the Canadian side also has unreported income, the package is often coordinated with a Canadian voluntary disclosure. **Q: What happens if I do not disclose voluntarily?** A: If the CRA discovers the issue first, you face gross-negligence penalties (up to 50% of the tax owing), full interest, and potential criminal prosecution for tax evasion under section 239 of the Income Tax Act. **Q: How long does a VDP submission take?** A: Drafting takes 2–6 weeks for most cases. CRA review typically takes 6–18 months. Interest continues to accrue until the file closes, but penalties and prosecution are off the table once you have an acknowledgement letter. **Q: I have several years of unfiled tax returns. What should I do first?** A: Start by taking stock before you file anything. Work out how many years are unfiled, whether there is unreported income behind them or only unfiled returns, and whether the Canada Revenue Agency has already contacted you about the issue. Those three facts determine your strongest route. Where there are balances owing or unreported income and the CRA has not yet reached you, the Voluntary Disclosure Program is worth examining first, because it offers penalty relief, partial interest relief, and protection from prosecution. Where the years would produce refunds or nil balances, simply filing them is usually enough. The order matters: if the VDP applies, the disclosure is made before the returns are filed, because catching up by filing first can be treated as non-voluntary and forfeit the relief. **Q: Will I go to jail for not filing my taxes in Canada?** A: For the overwhelming majority of non-filers, no. Most non-filing is handled entirely within the civil system through penalties, assessments, and collections. Prosecution is reserved for a narrow band of conduct. Failure to file under subsection 238(1) is a summary offence that can carry a fine and, in persistent cases, up to twelve months' imprisonment, but it is pursued sparingly. Tax evasion under subsection 239(1) — which requires a deliberate intent to evade — is the serious charge, and simply being behind on filing is not evasion. The surest way to take the prosecution branch off the table is to come forward first. A valid disclosure under the Voluntary Disclosure Program provides protection from prosecution for the disclosed conduct. **Q: Can I still use the Voluntary Disclosure Program if I have unfiled returns?** A: Often, yes — unfiled returns are one of the most common reasons people use the program. The Voluntary Disclosure Program rests on four conditions: the disclosure must be voluntary, complete, involve a penalty, and be at least one year overdue. Unfiled returns that carry balances owing fit the program well, because the late-filing penalty supplies the penalty condition and the overdue returns supply the timing condition. The condition to watch is "voluntary." Once the CRA issues a demand to file or otherwise contacts you about the unfiled years, the disclosure may no longer count as voluntary and the relief can close. Our step-by-step VDP eligibility guide walks through all four conditions. ## 9. FAQs — CRA Audits **Q: What questions should I ask before hiring a CRA audit representation provider?** A: Start with who will actually handle your file. Ask whether a lawyer will represent you, whether your communications will be protected by solicitor-client privilege (accountants and bookkeepers generally cannot offer this), and who your day-to-day contact will be. Privilege matters because anything you tell a non-lawyer representative can later be demanded by the CRA. Ask about scope and fees up front. Find out whether the engagement is quoted as a fixed fee or billed hourly, what is and is not included, and what happens if the audit expands or proceeds to a Notice of Objection or the Tax Court. At Barrett Tax Law most matters are quoted on a fixed-fee basis once scope is understood, so the cost is known before work begins. Ask about experience with your specific issue — unreported income, shareholder benefits, a net-worth assessment, GST/HST, or gross negligence penalties — and how the representative plans to preserve your objection and appeal rights while the audit is still open. A representative who is already thinking about the objection stage is protecting your downstream options. Finally, confirm how deadlines will be tracked. Audit query and proposal-letter deadlines are short, and a missed deadline can narrow your options. A clear answer on how the firm diaries CRA deadlines tells you a lot. **Q: How long does CRA audit representation typically take?** A: It varies widely with the complexity of the file. A simple, single-issue audit can resolve in roughly three to six months. Complex business audits, GST/HST audits, or audits spanning multiple years and entities can run eighteen months to three years or longer. The timeline is driven by the number of issues, how quickly documents can be assembled, the auditor's workload, and whether the file proceeds past the proposal-letter stage to reassessment, objection, or appeal. Responding promptly and completely to audit queries tends to keep a file moving; silence or weak responses tend to escalate and lengthen it. We diary every CRA and statutory deadline at the outset and keep you informed at each stage so you always know where the file stands. **Q: What is the difference between a CRA audit and a voluntary disclosure?** A: The difference is who starts it and why. A CRA audit is initiated by the CRA: it selects your file, identifies the years and issues, and reviews your affairs, often with penalties and interest in play. A voluntary disclosure is initiated by you, before the CRA contacts you, to correct unreported income, unfiled returns, or missed information returns. The consequences differ accordingly. In an audit, you are defending against the CRA's proposed adjustments and penalties. In an accepted voluntary disclosure, the CRA agrees not to refer the matter for criminal prosecution and provides relief from certain penalties, although the underlying tax and interest remain payable. Timing is what separates the two paths. The Voluntary Disclosures Program is only available while the matter is still voluntary — that is, before the CRA has begun an enforcement action about it. Once an audit letter arrives, the disclosure route generally closes for the matters under review. **Q: How can a tax lawyer help me with a CRA audit?** A: A tax lawyer manages the relationship with the auditor so you are not navigating it alone. That includes responding to information requests, framing the facts and law, protecting privileged communications, meeting the short deadlines on audit queries and proposal letters, and pushing back on positions that are not supported by the Income Tax Act . If the audit results in a reassessment you disagree with, the same lawyer can carry the matter into a Notice of Objection and, if necessary, an appeal to the Tax Court of Canada. Getting advice early — before you answer the first letter — usually preserves the most options, because what you say and produce during the audit shapes everything that follows. **Q: What should a Canadian taxpayer expect during a CRA audit?** A: A CRA audit usually follows a predictable sequence. It begins with a letter identifying the years and issues under review and requesting documents by a deadline. The auditor then gathers information — reviewing returns, financial statements, bank records, and third-party data — and may visit a business or interview the taxpayer. Next come written audit queries about specific transactions or deductions, each carrying an implicit deadline. Before reassessing, the auditor issues a proposal letter (sometimes called a "30-day letter") setting out the proposed adjustments, the legal basis, and any proposed penalties. This is usually the most important stage — the last clean opportunity to shape the record before a reassessment is issued. If the matter is not resolved at the proposal stage, the CRA issues a Notice of Reassessment, which starts the clock on your right to file a Notice of Objection. Throughout the process, what you say and produce can affect your later objection and appeal position, so responses should be considered carefully. **Q: How do I claim home office expenses without running into trouble with the CRA?** A: You can claim a share of your home's carrying costs equal to the share of your home used for business. If your home is 1,000 square feet and your office is a 110-square-foot room, you can claim 11%. A renter can claim that percentage of rent, heat, and power; an owner can claim that percentage of mortgage interest, property tax, heat, and power. Home office claims are heavily audited because they are often estimated or inflated. Measure the actual space rather than eyeballing it, and do not include questionable items like gardening or pool maintenance. Because people move and later cannot show a former office, it is wise to document the office now — take photos, draw a floor plan, calculate the square footage, and keep the records in case the CRA ever asks. **Q: What happens if the CRA audits me or reassesses my taxes?** A: An audit is the CRA's review of your returns and records. It can be limited to one issue or expand to several years. The auditor typically sends information requests, then a proposal letter setting out adjustments they intend to make, giving you a window to respond before a reassessment is issued. If you disagree with the reassessment, you can file a Notice of Objection , generally within 90 days of the reassessment (individuals have until the later of that date or one year after the return's filing deadline). If the objection does not resolve it, the next step is an appeal to the Tax Court of Canada. Penalties and interest can be added, so responding carefully and on time matters. **Q: How many years back can the CRA audit or reassess?** A: The normal reassessment period is three years from the date of the original Notice of Assessment for individuals and Canadian-controlled private corporations, and four years for other corporations and mutual fund trusts. Within that window the CRA can generally reassess without showing anything special. The CRA can reassess outside the normal period if the requirements of subparagraph 152(4)(a)(i) are met — broadly, a misrepresentation attributable to neglect, carelessness, or wilful default, or fraud. Certain matters, such as some GST/HST and offshore items, have their own rules. Because the open-period question can be its own line of defence, it is worth confirming which years are genuinely within the CRA's reach before responding to an audit that reaches back several years. **Q: What should I do if I receive a letter from the CRA?** A: First, identify what the letter is and what it requires. A CRA letter may open an audit, ask for documents, propose adjustments (a proposal letter), confirm a reassessment, or start collection action — and each carries its own deadline and its own implications. Note any date by which a response is required. Do not ignore it, and be careful about responding off the cuff. What you say and produce can shape your later objection and appeal position, and casual admissions can be difficult to undo. If the letter proposes adjustments or penalties, or if significant amounts are involved, get advice before responding. A free consultation can help you understand the letter, the deadline, and the right next step. Acting early — while options are still open — is usually far better than waiting until a deadline is near. **Q: What is a penalty recommendation report and why should I ask for it?** A: When a CRA auditor proposes a gross negligence penalty under subsection 163(2), the recommendation is supposed to be documented in an internal "penalty recommendation report." That report sets out the facts and reasoning the auditor relied on to conclude the penalty was warranted, and it is one of the most useful documents in a penalty defence. Much like a defective speeding ticket, if there is a flaw in the penalty recommendation report — or if no report exists at all — the penalty can be dismissed. Whenever a gross negligence penalty is challenged, ask to see the penalty recommendation report. It frequently reveals that the penalty was recommended on thin or boilerplate grounds that cannot survive the reverse onus that applies to these penalties in court. **Q: Do I need a vehicle log to claim car expenses for my business?** A: In practice, yes. It is fine to use one vehicle for both business and personal driving, but on audit you need to be able to separate the two, and a vehicle log is what auditors look for. Many businesses simply pick a percentage, and auditors know it is a guess — which makes the deduction easy to deny. A log is simple: record each business trip with the date, destination, reason, and the starting and ending odometer readings, and take odometer readings at the start and end of the year. Divide business kilometres by total kilometres to get your business-use percentage, then claim that share of fuel, insurance, licensing, interest, leasing costs, and maintenance. With a log that adds up, an auditor will generally allow the expense. **Q: What is a CRA proposal letter and how should I respond to it?** A: A proposal letter (often called a "30-day letter") is the CRA's notice, before it reassesses, of the adjustments it intends to make, the legal basis for them, and any penalties it proposes to apply. It is usually the last opportunity to influence the file before a reassessment is issued. The right response is a written submission, filed within the deadline, that marshals the relevant evidence and makes the legal argument against the proposed adjustments and penalties. Where helpful, we ask for a meeting with the auditor and team leader. A strong, timely response sometimes resolves issues before reassessment; even where it does not, it builds the record for a later objection. Ignoring a proposal letter, or responding thinly, tends to lock in the CRA's position. Treat it as the important stage it is. **Q: Why does the CRA's net worth audit so often overstate my income?** A: The net worth (or "lifestyle") method estimates income indirectly — by measuring the increase in a taxpayer's net worth over a period and adding the family's cost of living — rather than from the taxpayer's actual records. Because it rests on assumptions rather than evidence, it routinely produces errors that inflate income. The most common error is failing to net out transfers between a taxpayer's own accounts, so that money moved back and forth between a chequing account and a line of credit is counted as income each time. Another is using Statistics Canada averages for the cost of living, which seldom match a particular household's real spending. The method is meant to be a last resort, used only where there is no other reasonable way to determine income — yet auditors often reach for it even when good books and records were available. **Q: How do I choose CRA audit representation in Toronto?** A: Look past slogans and check a few concrete things. Confirm who will actually handle your file and their experience with CRA disputes of your type and size; ask whether a lawyer (who can assert solicitor-client privilege and appear at the Tax Court) or only an accountant will represent you. Ask how fees work — fixed-fee, hourly, or staged — and get it in writing. Ask how CRA deadlines will be tracked, because audit-query and proposal-letter windows are short and a missed one narrows your options. Finally, make sure you can reach the person doing the work. Barrett Tax Law serves Toronto and the GTA and offers a free initial consultation to scope the matter before you commit. **Q: Should I hire a tax lawyer or an accountant for a CRA dispute?** A: Both have a role, and they are not interchangeable. Accountants are well suited to preparing returns, reconstructing records, and handling routine CRA correspondence. A tax lawyer becomes important when the dispute turns on the law — when penalties are proposed, when the file may proceed to a Notice of Objection or the Tax Court of Canada, or when the matter could expose you to significant liability. One difference is decisive: communications with a lawyer are generally protected by solicitor-client privilege, while communications with an accountant generally are not and can be demanded by the CRA. Where the facts are sensitive, that protection matters. In many files the lawyer and accountant work together — the accountant on the numbers, the lawyer on strategy, privilege, and the legal record. Barrett Tax Law regularly coordinates with a client's existing accountant. **Q: Can I make a voluntary disclosure during an audit?** A: Generally not for the issues the CRA has already raised. The Voluntary Disclosures Program requires that the disclosure be voluntary — meaning the CRA has not yet begun an enforcement action against you about the matter. Once you receive an audit letter, voluntary status is generally lost as to the matters under audit. There may still be eligibility for years, entities, or issues that fall outside the audit's scope and that the CRA has not contacted you about. For example, if a current audit covers one year, unrelated issues in an earlier year or a separate corporation may still qualify. The analysis is delicate and time-sensitive. The key point is that the door can close quickly. If you think there are unaudited exposures, the time to assess voluntary disclosure is before the audit reaches them. **Q: Should I sign a CRA waiver to extend the reassessment period?** A: A waiver lets the CRA reassess a tax year after the normal reassessment period — generally three years for personal and corporate income tax, four years for GST/HST — has otherwise closed. Signing one gives up the protection of a statute-barred year, which can be a significant right to surrender. A waiver should never be signed without first consulting legal counsel. An auditor who cannot meet the normal reassessment deadline may be unable to reassess at all unless the taxpayer voluntarily extends the window. If you or your client is presented with any waiver in the course of an audit, objection, or other dealing with the CRA, get advice before signing. **Q: How long do I have to keep my tax and business records in Canada?** A: As a general rule, keep records for at least six years from the end of the tax year to which they relate. Even though the CRA usually reassesses only three or four years back, it can reach further back where it suspects fraud or gross negligence, so keeping records a year or two beyond the minimum is sensible. Some records should essentially never be discarded — purchase and sale agreements, share transactions, and registries needed to calculate a capital gain on a future sale. Keep originals where you can, since an auditor who asks for an original receipt may disallow an expense supported only by a scan or a credit-card statement, and back everything up off-site. **Q: Do I need a tax lawyer to handle a CRA audit, or can I do it myself?** A: It depends on the audit. Many audits are narrow, low-stakes, and document-driven — a query about a specific deduction or receipt — and these are often reasonable to handle yourself by simply providing the records requested. For a small matter, professional fees could exceed the tax at issue, which makes self-representation the sensible choice. The calculus changes when the stakes and legal complexity rise. A tax lawyer becomes valuable where the CRA is reconstructing your income indirectly (such as a net-worth assessment), where gross-negligence penalties are proposed or foreseeable, where the audit reaches beyond the normal reassessment period, or where the facts are sensitive or carry any criminal potential. In those situations, solicitor-client privilege, control over the scope of disclosure, and framing the law before adjustments harden into an assessment can change the outcome. A practical middle path is to get a single read early — even on an audit you intend to handle yourself — to confirm it really is routine and to flag the warning signs that would change the answer. Many matters begin self-represented and bring in counsel only if they escalate. **Q: What is a net worth assessment and how is it challenged?** A: A net worth assessment is an indirect method the CRA uses to estimate unreported income. Instead of auditing transactions directly, the CRA measures the change in your assets, liabilities, and personal spending over a period and treats unexplained increases as unreported income. It is commonly used where records are incomplete or where the CRA suspects cash income. Net worth assessments are estimates, and estimates can be wrong. They are challenged by reconstructing the true picture — identifying non-taxable sources of funds (gifts, loans, inheritances, transfers between accounts, sale proceeds), correcting valuation and opening-balance errors, and documenting personal expenditures accurately. Each correction reduces the alleged unreported income. Because the burden often shifts to the taxpayer to displace the CRA's assumptions, careful evidence-gathering is central. These files frequently also involve gross negligence penalties, which can be contested on their own grounds. **Q: What should an individual taxpayer facing a CRA audit know about getting representation?** A: You are allowed to have someone represent you, and you do not have to deal with the CRA alone. For individuals, the value of representation is usually in three places: responding to information requests without volunteering more than is asked, meeting the short deadlines, and recognizing when an auditor's position is not supported by the law. A tax lawyer can also protect privileged communications and carry the matter into an objection or a Tax Court appeal if needed. Getting advice before you respond to the first letter generally preserves the most options. An initial consultation is free, which lets you understand your position before deciding how to proceed. **Q: Should I let a CRA auditor visit my business?** A: Sometimes a site visit is routine and appropriate; for many business audits it is expected. The point is that the visit should be planned rather than improvised. Decide in advance who will be present, what records will be available, and which topics are within and outside the scope of the audit. A surprise or unstructured visit is rarely required and rarely helps. Casual conversation during a visit can introduce facts into the file that complicate the matter. With representation, the visit is managed so that the auditor gets the information they are entitled to without the file drifting into unrelated territory. If you are unsure whether to agree to a visit or how to prepare for one, that is exactly the kind of question to raise at a consultation before responding to the auditor. **Q: How long do I need to keep my business records, and do I need original receipts?** A: As a general rule, keep your records for six to seven years. Under the Income Tax Act the six-year period runs from the end of the tax year the records relate to. Although the Canada Revenue Agency can ordinarily reassess income tax for three years and GST/HST for four, keeping records a little longer is wise because the agency can reach back further where it suspects fraud or gross negligence. Records tied to buying or selling property should be kept indefinitely, because you need them to compute the correct capital gain on disposition. On receipts: strictly speaking, the Income Tax Act does not require an original receipt to claim most business expenses — but if an auditor asks for the original and you can only produce a photocopy, scan, or credit card statement, the expense may be denied. The practical answer is to keep everything an auditor might want, including originals (plus a scan, since some receipts fade), and to back up your records offsite. **Q: How do I challenge a net-worth assessment at the Tax Court?** A: A net-worth assessment estimates your income from the growth in your wealth plus your living expenses, treating the unexplained increase as unreported income. The appeal attacks the methodology: showing the auditor understated your opening net worth, identifying non-taxable sources (gifts, loans, inheritances, sales of personal property, accumulated savings) that explain apparent increases, correcting misvalued or double-counted assets, and challenging inflated personal-expenditure estimates. Every dollar traced to a non-taxable source comes out of the assessment. **Q: Who is at risk of a CRA audit?** A: Self-employed individuals, cash-business owners, real-estate flippers, large charitable donors, taxpayers with offshore assets, and high-income earners with year-over-year income changes are statistically more likely to be audited. **Q: When does an auditor's interest in my file turn into a criminal investigation?** A: A regular CRA audit aims to assess additional tax and penalties; a criminal investigation aims to build a case for charges such as tax evasion or fraud. The Supreme Court of Canada has drawn the line using a "predominant purpose" test: once the predominant purpose of the CRA's inquiry becomes determining criminal liability, the taxpayer is no longer required to comply with the agency's audit requests, and Charter protections against self-incrimination and unreasonable search engage. Warning signs include an auditor abruptly going silent (which can signal a referral to criminal investigations) or correspondence threatening prosecution. If you suspect a criminal purpose, stop providing documents and contact a lawyer immediately — an accountant has no privilege and can be compelled to hand over materials, whereas communications with a tax lawyer are protected. **Q: Can the audit be conducted somewhere other than my home or office?** A: Yes. We routinely host audits at our office. This keeps the auditor away from staff and family, and lets us control the flow of information and documents. **Q: I received a Proposal Letter — what now?** A: A Proposal Letter is the auditor's draft assessment. You usually have 30 days to respond. This is the most important window in the audit — once it becomes a Notice of Reassessment, your only remedy is a Notice of Objection. **Q: What happens if I don't file my taxes in Canada?** A: Not filing sets off a predictable chain. If you owe money, a late-filing penalty of 5% of the balance plus 1% per month (to twelve months) applies under subsection 162(1), and arrears interest compounds daily on top. If you still don't file, the CRA can assess you without a return under subsection 152(7) — an arbitrary assessment that usually overstates what you owe. Once a balance is assessed, the CRA's collections powers (wage garnishment, bank requirements to pay, liens) can be used without a court order. In a narrow band of serious cases, persistent non-filing can lead to prosecution under subsection 238(1). The severity tracks how much is owed and whether you came forward first. Most non-filers resolve their files well short of prosecution. **Q: What is an arbitrary or notional assessment?** A: An arbitrary assessment — also called a notional assessment — is the CRA assessing your tax for a year in which you never filed a return. Subsection 152(7) of the Income Tax Act lets the CRA estimate your income, usually from the T4, T5, T3, and T5008 slips it already holds, and assess tax on that estimate. Because the slips report gross amounts, the assessment leaves out the deductions, credits, and expenses you would have claimed, so the figure is typically higher than the tax you actually owed. Under subsection 152(8) the assessment is presumed valid and is collectible until you displace it. The usual remedy is to file the real return for the year, after which the CRA reassesses on the correct numbers. **Q: How do I fix an arbitrary assessment from the CRA?** A: In almost every case the fix is to file the actual return for the year the CRA assessed without one. A correctly prepared return showing your real income, deductions, and credits gives the CRA the information it was filling in by estimate, and it will ordinarily reassess on that basis — frequently reducing the tax substantially, sometimes to nil or a refund. You can also object formally with a Notice of Objection, generally within 90 days of the assessment date, but for a non-filer the return itself is the more complete remedy because it supplies the correct figures directly. Note that collections do not pause automatically while you prepare the return, so where a large balance is involved it is worth communicating with the CRA so enforcement doesn't run ahead of the reassessment. ## 10. FAQs — Tax Court of Canada **Q: Can Barrett Tax Law help with Tax Court of Canada appeals?** A: Yes. Tax Court of Canada appeals are a core focus of the firm. An appeal is a fresh, independent determination of your assessment by a judge — not another round with the auditor. There are two procedures: the Informal Procedure (faster and less formal, subject to dollar limits) and the General Procedure (full rules of evidence and pleadings). The firm handles the appeal end to end: drafting the Notice of Appeal, pleadings, document discovery and examinations, settlement discussions with Justice counsel, and the hearing itself. In most appeals the taxpayer carries the burden of disproving the Minister's assumptions, so the evidence and how it is presented are decisive. Our Tax Court resource library and the Tax Court representation page explain the process in more detail. **Q: What is the difference between Informal and General Procedure at the Tax Court?** A: The Tax Court of Canada hears appeals under two procedures. The Informal Procedure is available where the federal tax and penalties in dispute for a year (excluding interest) are $25,000 or less, or the loss in dispute is $50,000 or less, among other narrowly defined cases. Pleadings are simpler, discovery is limited, costs awards are modest, and self-representation is common — though decisions carry limited precedential value. The General Procedure applies to all other appeals, and a taxpayer can elect it regardless of the dollar amount. Pleadings, discovery, and procedure resemble Federal Court civil litigation, costs awards apply, and decisions have full precedential value. Choosing between them is strategic. The Informal Procedure is faster and cheaper for smaller files; the General Procedure is required above the dollar limits and is often the right choice for complex legal issues, larger amounts, or where the costs and precedent benefits of full procedure matter. **Q: What is the deadline to file a Tax Court of Canada appeal?** A: After the CRA confirms a reassessment (or 90 days have passed since you filed a Notice of Objection without the CRA acting on it), you have 90 days to file a Notice of Appeal with the Tax Court of Canada. As with the objection, this deadline is statutory and firm. If the 90-day appeal deadline is missed, a late appeal may be brought under section 167 of the Tax Court of Canada Act, but the threshold is demanding and there is an outer time limit. Relying on a late application is far riskier than meeting the original deadline. In almost all cases, you must have filed a Notice of Objection before you can appeal to the Tax Court. If a confirmation has arrived, the clock is running — treat the 90 days seriously. **Q: What is the difference between a Notice of Objection and a Tax Court appeal?** A: A Notice of Objection is an administrative step within the CRA. It is a written submission telling the CRA you disagree with a reassessment, and it sends the file to a CRA Appeals officer — a more senior CRA employee than the auditor — to review independently. Many disputes are resolved, in whole or in part, at this stage. A Tax Court appeal is the next step, taken to an independent court rather than to the CRA. It becomes available after the CRA confirms the reassessment, or after 90 days have passed without the CRA acting on the objection. You generally must have filed an objection first before you can appeal. The two stages also differ in nature. The objection is largely a paper review by the CRA; the Tax Court hears the matter afresh on the evidence, with pleadings and procedure resembling other litigation. Building a strong objection early often improves the position if the matter later proceeds to court. **Q: How long does a Tax Court appeal take and what does it cost?** A: Timelines depend on the procedure and complexity. Informal Procedure appeals typically run twelve to eighteen months. General Procedure appeals typically run eighteen to thirty-six months, and complex matters can take longer because of discovery, motions, and trial scheduling. On cost, smaller Informal Procedure cases can sometimes be handled for fees in the low five figures. General Procedure cases vary widely with complexity and the length of trial. We provide a written estimate after reviewing the file, and we factor potential costs awards into strategy, since the General Procedure allows costs to be awarded. A consultation lets us assess your file and give you a realistic sense of both the likely timeline and the fee structure before you commit. **Q: What is the dollar limit for the Tax Court's Informal Procedure?** A: The Informal Procedure is generally available where the federal tax and penalties in dispute for each year (excluding interest) are $25,000 or less, where a disputed loss for a year is $50,000 or less, or where a GST/HST amount in dispute is $12,000 or less. An appeal that concerns only interest can also proceed informally. The limits are applied year by year, so a multi-year reassessment can still qualify provided the federal tax in dispute for each individual year stays within the threshold. If you are over the limit, you can still elect the Informal Procedure by giving up the amount above the ceiling, or proceed under the General Procedure instead. **Q: Can I appeal a GST/HST assessment to the Tax Court of Canada?** A: Yes. A GST/HST assessment under the Excise Tax Act is appealed to the same Tax Court of Canada that hears income-tax appeals. You first file a Notice of Objection within ninety days of the assessment. If the CRA confirms the assessment, or does not decide the objection within one hundred and eighty days, you can take the matter to the Tax Court. Note that the wait before you can go to Court is 180 days for GST/HST, compared with 90 days for income tax. **Q: What happens if I win or lose at the Tax Court of Canada?** A: If you win, the Court refers the reassessment back to the Minister for reconsideration and reassessment in accordance with the Court's reasons. The Minister then issues a corrected reassessment, and you may receive a refund of any disputed amounts already paid, together with refund interest. If you lose, the reassessment stands and costs may be awarded against you, particularly in the General Procedure. A further appeal to the Federal Court of Appeal is available, generally within 30 days, but it is limited to questions of law and palpable error rather than a fresh hearing of the facts. Because the Tax Court hears the matter afresh on the evidence, the strength of the evidentiary record built during the audit and objection stages often shapes the outcome. We assess the realistic odds candidly before and during litigation. **Q: How long do I have to appeal to the Tax Court of Canada?** A: Once the CRA confirms a reassessment or reassesses following your objection, you have 90 days from the date on that notice to file a notice of appeal with the Tax Court of Canada. The 90 days runs from the date printed on the notice, not the date you received it. You can also appeal without waiting for a CRA decision: if you filed a valid objection and the CRA has not decided it within 90 days (180 days for GST/HST), you may appeal directly. If you miss the 90-day deadline after a confirmation, you can apply to the Court for an extension of time under section 167 of the Tax Court of Canada Act, generally within one further year, but the threshold for relief is high. **Q: Does objecting to a GST/HST assessment stop the CRA from collecting it?** A: No. GST/HST is a trust amount — tax you collected from customers on the government's behalf — and the collections pause that applies to disputed income-tax assessments does not apply to it. The CRA can collect a disputed GST/HST assessment while your objection or appeal is still alive. This is one reason registrants with a clearly wrong GST/HST assessment sometimes go straight to the Tax Court once the 180-day waiting period has passed, to compress the timeline. **Q: Do I need a lawyer to appeal to the Tax Court?** A: It depends on the procedure. In the Informal Procedure you may represent yourself or be represented by an agent who is not a lawyer, including an accountant, and a corporation may have an officer appear for it. In the General Procedure an individual may self-represent, but a corporation generally must be represented by counsel. The Informal Procedure is designed to be navigable without a lawyer, but the burden of proof still rests on the taxpayer and the assumptions of fact still have to be addressed. For larger or legally complex files, the framing of the appeal shapes everything that follows, which is why representation is often valuable even where it is not required. **Q: Who has to prove a gross negligence penalty at the Tax Court — me or the CRA?** A: The CRA does. In almost every tax appeal the taxpayer carries the burden of proving the assessment wrong, but the gross negligence penalty under subsection 163(2) is the exception. Subsection 163(3) places the onus on the Minister to establish the facts justifying the penalty. The CRA must prove that your conduct met the high threshold the provision demands — a high degree of negligence tantamount to intentional acting — not merely that there was an error in your return. **Q: Does filing an objection stop CRA collections action?** A: It depends on the type of debt. Objecting to an income tax assessment — personal or corporate — applies a "stall code" in the CRA's system: collections action that has started will stop, and action that has not yet begun will not start, while the amount is in dispute. Trust amounts are different. Objecting to a GST/HST or source-deduction assessment does not stop collections, so a trust debt remains fully collectible even while it is being disputed. For that reason, a clearly incorrect GST/HST assessment can take a year or two to correct while the disputed amount is being collected — one reason taxpayers sometimes choose to skip the appeals officer and go straight to the Tax Court of Canada on trust-debt files. **Q: Who has the burden of proof in a Tax Court appeal?** A: In most Tax Court appeals the burden is on the taxpayer. CRA assessments are presumed correct, and the Minister's assumptions of fact — set out in the Crown's reply — are taken as true unless the taxpayer rebuts them. The taxpayer's task is to "demolish" those assumptions with credible evidence on a balance of probabilities. There are exceptions. The most important is gross-negligence penalties under subsection 163(2), where the burden shifts to the Crown to justify the penalty. But on the substantive reassessment, the appellant generally carries the onus, which is why identifying and addressing each assumption of fact is the foundation of any appeal. **Q: Can I lose on the tax but still defeat the gross negligence penalty?** A: Yes, and it happens often. The underlying tax and the penalty are decided on different burdens. On the tax, you must prove the assessment wrong; on the penalty, the Minister must prove gross negligence. Even where some additional tax survives, the Crown may be unable to show your omission was anything more than an ordinary mistake — in which case the fifty per cent penalty is removed. Given the size of the penalty, that split outcome is frequently the most valuable result in the appeal. **Q: Can I skip the CRA appeals officer and go straight to Tax Court?** A: Yes, after a waiting period. For income tax matters, once 90 days have passed since you filed your notice of objection, you can appeal directly to the Tax Court of Canada without waiting for an appeals officer to decide. For GST/HST matters, the waiting period is 180 days from the filing of the objection. Skipping ahead can save considerable time, and it is especially useful for a GST/HST assessment that is incorrect but remains collectible while in dispute. The Tax Court also applies the rules of evidence, which the CRA can sidestep at the audit and objection stages — so a well-documented case that stalled inside the agency often fares better before a judge or with Department of Justice counsel. **Q: What are the Minister's assumptions of fact?** A: When the CRA reassesses, it relies on factual conclusions — that a deposit was income, that an expense was personal, that a transaction lacked substance. In a Tax Court appeal, the Crown sets those conclusions out in its reply as the Minister's assumptions of fact, and they are presumed true unless the taxpayer rebuts them. The assumptions effectively define what the taxpayer has to disprove, which is why the reply is the most important document the Crown files. You cannot rebut an assumption you have not identified, so the first step in building an appeal is to read the assumptions one by one and assemble the evidence that demolishes each. **Q: How do I challenge a net-worth assessment at the Tax Court?** A: A net-worth assessment estimates your income from the growth in your wealth plus your living expenses, treating the unexplained increase as unreported income. The appeal attacks the methodology: showing the auditor understated your opening net worth, identifying non-taxable sources (gifts, loans, inheritances, sales of personal property, accumulated savings) that explain apparent increases, correcting misvalued or double-counted assets, and challenging inflated personal-expenditure estimates. Every dollar traced to a non-taxable source comes out of the assessment. **Q: Will my Tax Court appeal go to trial, or can it settle?** A: Most Tax Court appeals settle before trial, frequently after discovery once both sides can see the strengths and weaknesses of the case. The Crown is represented by Department of Justice counsel, who assess each file for its litigation risk and are often open to a reasonable resolution where an assumption is weak. Settlement in tax litigation must rest on a principled basis — a result the law and the facts can actually support — rather than simply splitting the difference. That makes issue-by-issue settlements common: the Crown concedes the issues the evidence supports and maintains the ones it does not. A pure question of law, where there is no factual middle ground, is less likely to settle and may have to be decided at a hearing. **Q: If I win at the Tax Court, will the CRA pay my legal costs?** A: Possibly some of them. Costs at the Tax Court are discretionary and generally follow the event, so a successful taxpayer is presumptively entitled to costs. Historically that meant a modest tariff amount, but the Court now frequently awards a lump sum — a percentage of the legal fees you actually paid, often a quarter to a half. A written settlement offer under Rule 147 that the CRA rejects, where you then do as well or better at trial, can entitle you to substantially enhanced costs from the date of the offer. **Q: What is an examination for discovery in a Tax Court appeal?** A: In the General Procedure, after the pleadings close, each party may orally examine one representative of the other side, under oath and before a court reporter, in advance of trial. This is the examination for discovery. Its purpose is to learn the other side's case, obtain admissions, and test the strength of the assumptions before any hearing. Discovery is where many appeals are effectively won or lost, because it exposes the evidentiary foundation of each side's position. Questions that cannot be answered in the room are often the subject of undertakings — commitments to provide a document or answer afterward. There is no oral examination for discovery in the Informal Procedure. **Q: Can I appeal a Tax Court decision, and how long do I have?** A: Yes. A Tax Court general-procedure judgment can be appealed to the Federal Court of Appeal, generally within thirty days of the judgment (July and August are not counted in the computation). The deadline is strict; missing it requires an application to extend time, which is not assured. Because the window is short, the decision whether to appeal has to be made quickly, while the trial is still fresh. **Q: What happens if I win my Tax Court appeal?** A: If you succeed, the Court rarely fixes a final tax figure itself. Most commonly, when a taxpayer wins in whole or in part, the Court refers the reassessment back to the Minister for reconsideration and reassessment in accordance with the Court's reasons. The CRA then issues a corrected reassessment reflecting the judgment. You may receive a refund of disputed amounts already paid, together with refund interest, and in the General Procedure a successful party can be awarded a portion of their costs. If you lose, the reassessment stands, costs may be awarded against you in the General Procedure, and a further appeal to the Federal Court of Appeal is available on a question of law or a palpable and overriding error of fact. **Q: What does the Federal Court of Appeal actually review — can I re-argue the facts?** A: No — it is not a retrial. The Federal Court of Appeal reviews the Tax Court's decision for error under a standard of review that depends on the type of question. Questions of law (how the Income Tax Act was interpreted, the legal test applied) are reviewed for correctness. Questions of fact are reviewed only for "palpable and overriding error," a demanding standard that gives deference to the trial judge who heard the witnesses. An appeal that is really a complaint about how the evidence was weighed usually fails; an appeal that identifies a genuine legal error has a real prospect. **Q: Can I represent myself at the Tax Court of Canada?** A: Yes. The Tax Court of Canada was designed so that taxpayers can appeal without a lawyer, and many do — particularly under the Informal Procedure, which is the simpler, lower-cost track. The judge controls the process and will generally help a self-represented taxpayer understand what is being asked. Preparation matters more than legal training: organized documents, a clear chronology, and a focus on the specific issues go a long way. For larger or legally complex disputes, or where significant penalties are at stake, many taxpayers choose to consult or retain a tax lawyer. But self-representation is a realistic option, especially under the Informal Procedure. **Q: What is the difference between the Informal and General Procedure at the Tax Court?** A: The Informal Procedure is the simpler, faster track built for self-represented taxpayers: no filing fee, relaxed evidence rules, and a hearing that is usually a few hours to a day. You can elect it when the federal tax and penalties in dispute are $25,000 or less per year (or $50,000 or less of GST/HST). If your dispute is larger, you can still choose the Informal Procedure by waiving the excess. The General Procedure is more formal — it has prescribed pleadings, examinations for discovery, stricter rules of evidence, a filing fee, and the possibility of costs awards. It is used for larger disputes. You elect the Informal Procedure right in your Notice of Appeal. **Q: Do I have to file a Notice of Objection before appealing to the Tax Court?** A: For most income tax and GST/HST disputes, yes. The Notice of Objection filed with the CRA is the mandatory first step, and it preserves your right to appeal. You can appeal to the Tax Court only after the CRA confirms or reassesses in response to your objection, or after 90 days have passed since you filed the objection with no decision. Skipping the objection stage is a common reason appeals get blocked, so if you have not objected yet, start there. **Q: How long does a Tax Court appeal take?** A: Informal Procedure files often resolve in 6–18 months. General Procedure can run 18–36 months from Notice of Appeal to judgment, depending on complexity, discovery, and whether the case settles or proceeds to trial. **Q: What goes in a Notice of Appeal to the Tax Court?** A: Under the Informal Procedure there is no mandatory form — a clear letter is enough, and the court publishes a model. A good Notice of Appeal identifies the tax year(s) and the CRA notice you are appealing by date, states the relevant facts, lists the issues, explains why you say the assessment is wrong, states the exact relief you want, and elects the Informal Procedure if you qualify. Include an address for service in Canada. Keep it factual and organized; you do not need legal language. The General Procedure uses a more formal prescribed form. **Q: Do I have to attend the trial?** A: If you are the appellant and there are factual issues in dispute, yes — you will usually be a key witness. Your counsel will prepare you. For purely legal arguments, attendance is optional in most cases. **Q: What is the deadline to appeal to the Tax Court, and what if I miss it?** A: You generally have 90 days to file your Notice of Appeal, measured from the date on the CRA's notice of confirmation or reassessment. The clock runs from the CRA's date, not the day you received the letter, so file early. If you miss the 90 days, you can apply for an extension of time — but only within one year after the deadline expired (15 months total), and only if you intended to appeal within the original period, have reasonable grounds, and applied as soon as you could. Treat the extension as a safety net, and act quickly if you need it. **Q: How do I get my receipts and documents accepted as evidence?** A: A document only becomes evidence once it is introduced at the hearing. Bring copies for the judge, the Crown, and yourself; introduce each key document through a witness who can speak to it (usually you), and ask the judge to mark it as an exhibit. Then tie each document to the specific fact it proves. Under the Informal Procedure the judge is not bound by the strict rules of evidence, so this is more relaxed than in a regular courtroom. Organize everything in a tabbed, numbered binder, and consider agreeing a joint book of documents with the Crown so exhibits go in by consent. If originals are missing, you can prove the same facts with bank statements, vendor copies, or a consistent reconstruction. **Q: Can I settle my Tax Court appeal with the government lawyer?** A: Yes — most appeals settle rather than going to a decision. After you file, a Department of Justice (Crown) lawyer is assigned to your file and may discuss resolution. The key rule is that a settlement must be "principled": it has to reflect a result the facts and the law actually support. The Crown cannot simply split the difference to close a file. The way to move a settlement is to show, with documents, why a particular number is the legally correct one — issue by issue. When you agree, the terms are written into Minutes of Settlement, which are binding once signed. **Q: What are Minutes of Settlement and should I review them before signing?** A: Minutes of Settlement are the written, binding record of a deal you reach with the Crown to resolve some or all of your Tax Court appeal. Before signing, read every line: confirm the dollar amounts, tax years, and issues match what you agreed, check that each issue is addressed (settled, conceded, or left for hearing), and understand the costs treatment (usually each side bears its own). Based on the Minutes, the court issues a judgment and the CRA reassesses accordingly. Because they are binding once signed, it is reasonable to ask the Crown lawyer to explain any clause, or to take time to review. If the amount is significant or the issues are complex, a short consultation with a tax lawyer before signing can be worthwhile. ## 11. FAQs — Corporate matters **Q: What corporate tax planning services does Barrett Tax Law offer for business owners?** A: For business owners and their corporations, the firm advises on owner-manager remuneration (salary versus dividends), the small-business deduction and associated-corporation rules, holding-company structures, and surplus extraction within the rules (including the capital dividend account and the section 84.1 limits on surplus stripping). It also handles corporate reorganizations and section 85 rollovers, estate freezes and family-trust planning for succession, qualifying shares for the Lifetime Capital Gains Exemption (including QSBC purification), and tax-efficient business sales. Because the firm is tax-first, the planning is designed around the tax outcome rather than added on afterward. Many engagements are coordinated with the client's accountant. **Q: What is a section 85 rollover and when is it used?** A: A section 85 rollover is an election under the Income Tax Act that lets a taxpayer transfer eligible property to a Canadian corporation on a tax-deferred basis, rather than triggering an immediate capital gain. The transferor and corporation jointly elect an "elected amount" that sets the proceeds for the transferor and the cost for the corporation, typically deferring the accrued gain. It is commonly used to incorporate a sole proprietorship, to transfer appreciated assets or shares into a holding company, and as a building block in estate freezes and other reorganizations. In exchange for the property, the transferor usually takes back shares (and sometimes a limited amount of non-share consideration). The election is technical and timing-sensitive — it is made on Form T2057 by a deadline, and errors in the elected amount or the consideration can defeat the deferral or attract adverse consequences. Careful structuring and documentation are essential. **Q: What is the Lifetime Capital Gains Exemption and who can use it?** A: The Lifetime Capital Gains Exemption (LCGE) lets eligible individuals shelter a substantial amount of capital gain — into the millions of dollars and indexed over time — realized on the sale of qualified small business corporation (QSBC) shares, or qualified farm or fishing property. For many business owners it is the single most valuable relief available on a sale. To use it on a share sale, the shares must meet the QSBC tests at the time of sale: broadly, the company must be a small business corporation using substantially all of its assets in an active business in Canada, the shares must have been held by the seller (or a related person) for the prior 24 months, and an asset-use test must be met throughout that period. Many companies do not satisfy these tests by default, often because of excess investments or cash. Advance planning — sometimes called "purification" — can position a company so the shares qualify when a sale eventually happens, and the exemption can sometimes be multiplied across family members. **Q: Can I deduct meals and entertainment as a business expense in Canada?** A: Generally only half of a qualifying meal or entertainment expense is deductible. If you take a client to dinner, you can claim the meal, but the deductible portion is 50%, and the expense has to be reasonable and connected to earning business income. Meals and entertainment are a frequent audit target because they are so often over-claimed. To support the claim, keep the original receipt and a note of who the client was and the business purpose of the meal. If you cannot provide that context during an audit, the auditor can disallow the expense. Different rules can apply to meals while travelling for business. **Q: What is an estate freeze?** A: An estate freeze is a tax-planning strategy that locks in the current value of an owner's interest in a business (or other appreciating asset) for tax purposes, so that any future appreciation accrues to the heirs or successors rather than the owner. The owner typically exchanges their common shares for fixed-value preferred shares equal to the current fair market value of the business, and new common shares — which capture future growth — are issued to the next generation or a family trust. The owner's eventual deemed-disposition tax on death is then capped at the frozen value, and the owner can keep control by holding voting preferred shares. **Q: Should I incorporate my new business or operate as a sole proprietor?** A: It depends on your numbers and your tolerance for risk. A sole proprietorship is the quickest and least expensive structure to start and run: there is no separate tax return, and you simply report the business profit on your personal T1. The trade-offs are that all of the profit is taxed in your hands in the year it is earned, and there is no liability shield — if the business is sued, you are sued. A corporation is a separate legal person. It can shield your personal assets from most business liabilities, and a qualifying Canadian-controlled private corporation pays a much lower rate on active business income up to $500,000 (roughly 12.2% in Ontario), which lets you leave surplus profit in the company on a tax-deferred basis. A useful rule of thumb: if your business reliably earns more than you need to live on, a corporation is often the sensible choice; if there is no surplus at month-end, the simplicity of a proprietorship may win. A free consultation can help you weigh the structures against your actual situation before you commit. **Q: How can Barrett Tax Law help business owners and incorporated professionals with tax planning?** A: Incorporated professionals — doctors, dentists, lawyers, consultants — and other owner-managers face a recurring set of questions: how to draw income from the corporation efficiently, how to retain and invest surplus without losing the small-business deduction, how to split income within the TOSI limits, and how to eventually sell or transition the business and use the Lifetime Capital Gains Exemption. The firm builds and documents structures that answer these questions — remuneration plans, holding companies, family trusts, estate freezes, and pre-sale purification — designed to withstand CRA review. Advice is coordinated with the client's accountant so the planning and the filings line up. **Q: What is an estate freeze and why would a business owner use one?** A: An estate freeze is a reorganization that "freezes" the current value of a business owner's shares at today's value, so that future growth accrues to the next generation or to a family trust. The owner typically exchanges their common shares for fixed-value preferred shares (often using section 85 or section 86), and new common shares are issued to children or to a trust. The purpose is usually succession and tax planning: it caps the owner's tax exposure on death at the frozen value, shifts future growth to the successors, and can multiply access to the Lifetime Capital Gains Exemption across family members where the structure qualifies. It can also support income-splitting where the tax-on-split-income rules permit. An estate freeze is a significant, fact-specific reorganization that must be coordinated with corporate law, family circumstances, and the relevant anti-avoidance rules. It should be designed and documented carefully. **Q: How do I claim home office expenses without running into trouble with the CRA?** A: You can claim a share of your home's carrying costs equal to the share of your home used for business. If your home is 1,000 square feet and your office is a 110-square-foot room, you can claim 11%. A renter can claim that percentage of rent, heat, and power; an owner can claim that percentage of mortgage interest, property tax, heat, and power. Home office claims are heavily audited because they are often estimated or inflated. Measure the actual space rather than eyeballing it, and do not include questionable items like gardening or pool maintenance. Because people move and later cannot show a former office, it is wise to document the office now — take photos, draw a floor plan, calculate the square footage, and keep the records in case the CRA ever asks. **Q: What is the small business deduction, and how much can it save my corporation?** A: The small business deduction reduces the corporate tax rate on active business income earned by a qualifying Canadian-controlled private corporation. It applies to active business income up to $500,000 a year and brings the effective rate down to roughly 12.2% in Ontario — well below the personal marginal rates that would apply if you earned the same income personally. The saving is largely a deferral. If your corporation earns $100,000 after expenses and you only need to draw $66,000 to live on, you can leave the remaining $34,000 in the company taxed at the low corporate rate. The portion that would otherwise have gone immediately to the Canada Revenue Agency at your high personal rate instead stays in the corporation to reinvest. When the money is eventually paid out to you, it is taxed in your hands then — so the tax is deferred, not eliminated, but the deferred amount works for the business in the meantime. **Q: What is surplus stripping and how does section 84.1 affect it?** A: "Surplus stripping" refers to arrangements that try to extract a corporation's retained earnings as lower-taxed capital gains rather than as higher-taxed dividends. Section 84.1 of the Income Tax Act is an anti-avoidance rule aimed at certain non-arm's-length share transfers that would otherwise convert dividends into capital gains, and it can recharacterize the result as a deemed dividend. The rule frequently arises in family succession — for example, when a parent sells shares of the family company to a corporation owned by their children. Recent legislation created defined exceptions for genuine intergenerational business transfers that meet specific conditions, but those conditions are detailed and must be satisfied to obtain the relief. Because the line between legitimate planning and offside surplus stripping is technical and shifting, transactions in this area should be structured with current rules and the general anti-avoidance rule firmly in mind. **Q: How can I plan ahead so my company's shares qualify for the LCGE?** A: Qualifying for the Lifetime Capital Gains Exemption on a share sale requires meeting the qualified small business corporation tests, and a common obstacle is having too many non-active assets — surplus cash, investments, or redundant real estate — on the company's books. "Purification" is planning that removes or repositions those assets so the active-business tests are satisfied. Typical steps include paying out excess cash, moving passive investments to a separate holding company, and ensuring the company keeps substantially all of its assets in an active business in Canada. Because the tests look back over a 24-month period, this planning generally needs to be done well before a sale, not on its eve. Where the structure permits, the exemption can sometimes be multiplied among family members through a family trust or direct shareholdings, subject to the tax-on-split-income rules. The earlier this is planned, the more options remain available. **Q: How can a family trust help with tax and estate planning?** A: A family trust holds property for the benefit of family members under the control of trustees. In tax and estate planning it serves several purposes: it can hold the growth shares in an estate freeze so future growth accrues outside the founder's estate, it can multiply access to the Lifetime Capital Gains Exemption among beneficiaries, and it can provide flexibility in how and when value reaches the next generation. Trusts also have important limits and rules. The tax-on-split-income rules restrict income-splitting with certain family members, the 21-year deemed-disposition rule requires planning to avoid a tax hit at that anniversary, and attribution rules can apply where property is transferred to a spouse or minor children. A trust is a powerful tool when it fits the family's goals, but it adds administration and must be set up and maintained correctly. Whether one is appropriate depends on the specific facts and objectives. **Q: Do I need a vehicle log to claim car expenses for my business?** A: In practice, yes. It is fine to use one vehicle for both business and personal driving, but on audit you need to be able to separate the two, and a vehicle log is what auditors look for. Many businesses simply pick a percentage, and auditors know it is a guess — which makes the deduction easy to deny. A log is simple: record each business trip with the date, destination, reason, and the starting and ending odometer readings, and take odometer readings at the start and end of the year. Divide business kilometres by total kilometres to get your business-use percentage, then claim that share of fuel, insurance, licensing, interest, leasing costs, and maintenance. With a log that adds up, an auditor will generally allow the expense. **Q: What are the three tests for the Lifetime Capital Gains Exemption on small business shares?** A: To qualify for the exemption on the sale of Qualified Small Business Corporation shares, three tests must be met. First, the corporation must be a Canadian-controlled private corporation at the time of sale. Second, the asset-use tests must be satisfied: throughout the 24 months before the sale, more than half of the corporation's assets must have been used in an active business carried on primarily in Canada (the 50% test), and at the time of sale a substantial majority of its assets must be so used (the 90% test). Third, the shareholder must have held the shares for at least 24 months continuously before the sale. **Q: Do I need a shareholders' agreement if I incorporate with a business partner?** A: If your corporation will have more than one shareholder, a unanimous shareholders' agreement is close to essential. It governs what the shareholders can and cannot do, provides dispute-resolution mechanisms, sets the votes needed for major decisions, and controls how shares can be transferred or pledged. It can also include provisions that force minority shareholders to sell alongside the majority in a takeover, or that let shareholders participate in a deal another shareholder is making. The single most important thing about a shareholders' agreement is timing: negotiate and sign it while the business is new and the shareholders are still on good terms. It is far harder to agree on these rules after a dispute has already started. We can help prepare an agreement that fits your corporation. **Q: Does Barrett Tax Law work with accountants and CPA firms as a co-counsel partner?** A: Yes. The firm works alongside accountants and CPA firms as co-counsel rather than as a competitor for the relationship. When a client's matter moves from compliance into a dispute, a privileged question, or complex planning, the accountant can bring in the firm to handle that piece while the accountant keeps the client relationship and the ongoing work. Tax lawyers add two things an accountant generally cannot: solicitor-client privilege over sensitive communications, and rights of audience at the Tax Court of Canada. The firm is careful not to poach the referring professional's clients. The For Accountants page explains how the co-counsel relationship works. **Q: What is post-mortem tax planning and why does it matter?** A: When a shareholder of a private corporation dies, the same underlying value can be taxed more than once: first as a deemed disposition of the shares on death, and again when the corporation's value is later distributed to the estate or heirs. Post-mortem planning is designed to reduce or eliminate that potential double — or even triple — taxation. Common techniques include the "pipeline" strategy and the subsection 164(6) loss carryback, each suited to different situations and each with its own conditions and timing. The subsection 164(6) approach, for instance, generally must be implemented within the estate's first taxation year. Because the relief depends on acting within strict deadlines after death, executors and beneficiaries of private-company estates should obtain advice early — well before the first anniversary of death — to preserve the available options. **Q: Can I pay my spouse or children from my business to save tax?** A: Yes, if it is done properly. Paying a reasonable salary to a spouse or children who genuinely work in the business shifts income from a higher tax bracket to a lower one and lowers the family's overall tax. If a child with no other income earns a modest wage, they may pay little or no tax on it. Two conditions are essential. The wage must be reasonable under section 67 of the Income Tax Act — pay what you would pay a stranger for the same work — and the work must be real, with timesheets and a record of what was done. Anything beyond a reasonable salary for genuine work, such as sprinkling dividends to family, can trigger the tax-on-split-income (TOSI) rules, so get advice before going further. **Q: What is the difference between a section 85 rollover and a section 86 reorganization?** A: A section 85 rollover lets a taxpayer transfer assets — such as real estate, equipment, or shares — to a corporation in exchange for shares without an immediate tax bill. It requires a joint election by the transferor and the corporation on Form T2057, and the elected amount must fall between the asset's cost base and its fair market value. A section 86 reorganization, by contrast, is an exchange of all the shares of one class for shares of another class within the same corporation. It is the provision most often used to carry out an estate freeze, and it applies automatically when the conditions are met rather than requiring a joint election. **Q: How does an estate freeze reduce tax for a business owner?** A: An estate freeze locks in the current value of a business owner's shares for tax purposes and shifts future growth to the next generation, usually through a family trust. The owner exchanges their growth-bearing common shares for fixed-value preferred shares equal to today's value, and new common shares are issued to children or a family trust to capture future appreciation. The benefit is that the owner's capital gain on death is capped at today's value rather than the much larger future value, while the post-freeze growth accrues to the next generation outside the owner's estate. A freeze also sets up the family trust to multiply the lifetime capital gains exemption across several beneficiaries on a future sale. A freeze caps the tax rather than eliminating it, and it has to be structured and documented carefully, so it is planning to undertake with professional advice well before a sale or transition. **Q: Can I be held personally liable for my corporation's unpaid GST/HST or payroll remittances?** A: Yes. GST/HST you collect and the income tax, CPP, and EI you withhold from employees are "trust" amounts — money the business holds on the government's behalf. Unlike ordinary corporate taxes, unremitted trust amounts can pierce the corporate liability shield and be assessed against the directors personally, for up to two years after a person last served as a director. There is a "due diligence" defence — a director who exercised the care a reasonable director would have exercised is not liable — but in practice the Canada Revenue Agency tends to apply a very demanding standard and treats directors almost as guarantors of the debt. Before a director is assessed, the corporation's own ability to pay must first be exhausted, and a director's assessment can be objected to and appealed to the Tax Court of Canada. If you have received a director's liability assessment, get advice promptly. **Q: Why does earning income through a corporation defer tax?** A: A corporation is a separate legal person, and active business income earned in a Canadian-controlled private corporation — up to the small business limit, currently $500,000 a year — is taxed at a much lower rate than the same income earned personally. If you do not need to draw all the profit out, the difference stays in the corporation. The tax is not eliminated; it is deferred until the money is paid out to the shareholder and taxed in their hands. But deferral has real value. The money that would otherwise have gone to tax can be invested or used to grow the business in the meantime, and a dollar of tax paid years from now costs less, in real terms, than a dollar paid today. **Q: Should I pay myself a salary or dividends from my corporation?** A: Both are valid, and each has trade-offs. Salary puts you on the corporation's payroll: it triggers CPP, sometimes EI, and payroll administration, and it requires the corporation to withhold and remit your source deductions — but it generates RRSP room and is a deductible expense for the corporation. Dividends are paid out of after-tax corporate income and avoid payroll mechanics and CPP, but you must leave enough money in the company to pay its corporate tax at year-end. A caution applies to both. If a corporation pays dividends while it has unpaid corporate taxes, the Canada Revenue Agency can assess the dividend recipients for that unpaid tax. And if you go on payroll but fail to remit source deductions, you can be assessed as a director. As a sole shareholder and director you can be assessed personally either way, so the corporation's own tax obligations should always be funded first. We can help you plan a mix that fits your situation. **Q: What is an estate freeze and how does it save tax?** A: An estate freeze caps the value of a business owner's shares at today's value so that future growth accrues to the next generation. The owner exchanges their common shares for fixed-value preferred shares, and the corporation issues new common shares — usually worth a nominal amount — to children or a family trust. Because the new shares start at nominal value, there is no taxable event when they are issued. After the freeze, future growth accrues to the next generation's shares, and the tax on that growth is paid much later, when they eventually sell. Because of the time value of money, paying that tax decades from now is far cheaper in real terms than paying it on the owner's death. A freeze can attract CRA scrutiny, so a proper valuation — ideally by a certified business valuator — and a price-adjustment clause are commonly used. **Q: Why would a corporation own life insurance on a key person?** A: Corporate-owned life insurance is a policy a corporation takes out on the life of a key individual, with the corporation paying the premiums and receiving the death benefit. It serves several purposes: providing a financial safety net for business continuity if a key person dies; funding buy-sell agreements so a deceased shareholder's interest can be purchased without straining the company; and, with a whole-life policy, accumulating cash value on a tax-deferred basis. A further advantage is that, on the death of the insured, the death benefit received by the corporation (less the policy's adjusted cost basis) can be credited to the corporation's Capital Dividend Account and then distributed tax-free to shareholders. **Q: Should I sell my business as a share sale or an asset sale to save tax?** A: Where possible, sellers usually prefer to sell shares rather than assets, because the Lifetime Capital Gains Exemption can shelter a gain on qualifying shares but not on a sale of assets. The complication is that buyers often prefer asset sales, which are cleaner and avoid inheriting the company's historical liabilities. To use the exemption on a share sale, the shares generally have to meet the qualified small business corporation tests at the time of sale, which can require advance planning — sometimes called purification — to remove non-active assets such as excess cash. Because the structure drives the after-tax result, it is worth modelling both options well before a sale rather than after a deal is signed. **Q: What is crystallization of the Lifetime Capital Gains Exemption?** A: Crystallization means triggering a capital gain on paper — without an actual sale to a third party — so you can use your Lifetime Capital Gains Exemption now, before a possible increase in the asset's value or a change in the law reduces the amount available. It is usually done by valuing the qualifying shares and electing (commonly under a subsection 85(1) rollover) to a deemed disposition at fair market value, then sheltering the resulting gain with the exemption. This resets the cost base of the shares to their current value, so less gain is taxable on an eventual sale, and it locks in today's exemption limit. **Q: I incorporated, but I work for one client like an employee. Is that a problem?** A: It can be. If your corporation provides services that an officer or employee of the client would normally perform, and you function much like one of the client's employees — same work, under their direction, without genuine independence — the Canada Revenue Agency can treat your corporation as a "personal services business." Where that designation applies, the corporation loses the small business deduction and most of its deductions are denied, which can dramatically increase the tax. The agency looks at the substance of the relationship, not just the fact that you have a corporation: your financial risk, who controls how the work is done, who supplies the tools, and whether you could send a replacement. Workers in industries that encourage incorporation, such as trucking, are especially exposed. If you are concerned that you may be operating a personal services business, it is worth getting advice before an audit raises the issue. **Q: As a business owner, should I pay myself a salary or dividends?** A: There is no single right answer — it depends on your goals and your corporation. Because the Canadian system is built on integration, the headline tax on salary and dividends is roughly similar; the decision usually turns on the side-effects. Salary is deductible to the corporation, builds RRSP contribution room, and requires CPP contributions (and gives CPP entitlement). Dividends are paid from after-tax corporate profits, attract a lower personal rate through the dividend tax credit, avoid CPP, and create no RRSP room. Salary tends to suit owners who want RRSP room, value CPP coverage, or need to reduce corporate income to manage the small-business-deduction limit. Dividends tend to suit owners who want to avoid the CPP cost, prefer flexible distributions, or value simpler administration. Most owner-managers use a deliberate blend rather than one route exclusively. The right mix depends on your income, your retirement-savings plans, your CPP views, the corporation's dividend pools, and your family situation, so it is worth modelling each year as part of year-end planning. **Q: Can I still split income with my family through my corporation after the TOSI rules?** A: Income splitting through a private corporation is still possible, but the tax-on-split-income (TOSI) rules introduced in 2018 sharply restricted it. TOSI applies the top marginal rate to "split income" — such as dividends — received by a related family member from a private corporation, unless a specific exclusion applies. The exclusions are what make splitting work. The most important include the excluded-business exclusion for family members who work an average of at least 20 hours a week in the business (or did so in any five prior years), the excluded-shares exclusion for a shareholder aged 25 or older who owns at least 10% of the votes and value of a qualifying corporation, and the exclusions tied to a business owner reaching age 65 and their spouse. Where an exclusion applies, the family member is taxed at their own graduated rates; where none does, TOSI claws the benefit back. Because the exclusions are technical and fact-specific, splitting has to be built deliberately around them rather than assumed. Getting the analysis right before paying dividends to family members is what keeps the planning onside. **Q: What is a holding company and why would a business owner use one?** A: A holding company (holdco) is a corporation that owns the shares of an operating company rather than carrying on the active business itself. Surplus cash earned in the operating company is moved up to the holdco as inter-corporate dividends, which are generally tax-free between connected Canadian corporations. Owners use a holdco for several reasons at once. It moves retained earnings away from the operational risk and creditors of the active business, which is a form of creditor protection. It provides a separate place to hold passive investments. And it positions the group for a future sale, because a buyer typically wants a clean operating company without years of accumulated investments inside it — which can also help the operating-company shares qualify for the lifetime capital gains exemption. The trade-offs are the extra compliance cost of a second corporation and the passive-investment-income rules, which can reduce access to the small-business deduction where passive income across the associated group climbs above defined thresholds. Whether a holdco fits depends on the size of the surplus, the risk profile of the business, and the plan for eventual sale or succession. **Q: Why use a tax lawyer for a corporate matter instead of a corporate lawyer?** A: Most incorporations, sales, and reorganizations have tax consequences worth more than the legal fees. A tax-aware lawyer drafts the share structure, the rollover, and the agreement with the after-tax outcome in mind — not just the corporate-law mechanics. **Q: Do you work with my existing accountant?** A: Yes — most corporate engagements involve close coordination with the client's accountant for valuation, rollovers, T2057 filings, and post-closing compliance. We treat your accountant as part of the team. **Q: How are corporate engagements priced?** A: Most matters — incorporations, shareholder agreements, share sales, simple reorganizations — are quoted on a fixed-fee basis after we understand scope. Complex transactions and litigation are typically billed hourly with a budget cap. We will beat any competing Canadian tax-lawyer quote by 20%. **Q: How does the co-counsel model work with my accounting firm?** A: Under a co-counsel arrangement, both professionals stay on the file. You continue to manage the financial statements, the returns, and the routine CRA correspondence; we handle the legal submissions, the strategy, and any Tax Court of Canada proceeding. The client experiences a coordinated team rather than a hand-off. You can engage us two ways: refer the legal portion of a file to us (we engage your client under our retainer and coordinate with you), or retain us as counsel on behalf of your firm or client. In either structure, the engagement is scoped to the legal work and bounded — you are adding a capability to the file, not transferring it. **Q: Can a non-pharmacist inherit my pharmacy corporation?** A: It depends on the province and on the class of shares. Provincial Colleges of Pharmacists regulate who may own and control a pharmacy. In most provinces, only licensed pharmacists may hold the voting shares of a pharmacy corporation, while non-pharmacist family members (a spouse, children, or a family trust) may hold non-voting shares. A will that leaves voting shares to a non-pharmacist can lead the College to refuse registration or suspend the Certificate of Accreditation until control is restored to a licensed pharmacist. Quebec is stricter — only licensed pharmacists may own a pharmacy, and ownership must be direct rather than through a holding company, trust, or family members. Where no pharmacist heir exists, the usual approach is to authorize the executor to sell the shares to a qualified pharmacist purchaser. Confirm your province's rules before structuring your will. **Q: What is the difference between an asset sale and a share sale when selling a pharmacy?** A: In an asset sale , the buyer acquires individual assets — inventory, fixtures, and goodwill — rather than the corporation. The proceeds are generally treated as business income and recapture at the corporate level, the vendor cannot use the Lifetime Capital Gains Exemption (LCGE) on goodwill held in the corporation, and each licence, contract, and permit must be transferred individually. In a share sale , the buyer acquires the shares of the Pharmacy Professional Corporation. If the corporation qualifies as a Qualified Small Business Corporation (QSBC), the vendor can claim the LCGE on the capital gain, and there is no need to re-register licences or contracts. A share sale generally produces a better after-tax result for the seller, which is why many pharmacists structure the corporation so a share sale is feasible. The right choice depends on the corporation's liabilities, its QSBC status, and the buyer's preferences. **Q: What privilege does my client gain when I bring in a tax lawyer?** A: There is no accountant-client privilege in Canadian tax law. Your file, your notes, and your candid communications about a client's position are generally producible to the CRA — and an accountant's working note can become the CRA's evidence. Once a tax lawyer is engaged, confidential communications made for the purpose of obtaining legal advice are protected by solicitor-client privilege. That protection can extend to analysis prepared at the lawyer's direction for the legal advice. Privilege protects communications made after the lawyer is engaged, so the earlier a lawyer is involved on a sensitive file, the more of the analysis can stay inside the privileged channel. **Q: How do fees and billing work in a co-counsel engagement?** A: The legal engagement is scoped to the legal work and quoted up front, so you and your client know what the legal portion will cost before it begins. Many disputes and disclosures are handled on a fixed fee; we tell you the basis of the fee at the outset. Your own billing for the accounting and return work is unaffected — we do not bill your client for accounting services or insert ourselves into your relationship. The initial consultation is free, and it is available to you as the accountant, not only to the client. **Q: Why should corporate-owned life insurance be held in a Holdco rather than the pharmacy corporation?** A: To claim the Lifetime Capital Gains Exemption, a pharmacy corporation generally needs at least 90% of its assets used in an active business at the time of sale or death. If a life-insurance policy's cash surrender value is recorded as a passive investment inside the operating Pharmacy Professional Corporation, it can count as a non-active asset and jeopardize that QSBC status. Holding the policy in a Holding Company instead keeps the operating corporation's assets "pure," lets the Holdco accumulate the cash value and invest surplus dividends, and segregates the insurance proceeds for family use or buy-sell obligations. On death, the death benefit (less the policy's adjusted cost basis) creates a Capital Dividend Account credit in the Holdco, allowing tax-free capital dividends to the estate or shareholders. **Q: What is purification, and when should a pharmacy corporation be purified?** A: Purification is the process of removing or restructuring passive and investment assets — excess cash, marketable securities, non-business real estate — so that a corporation meets the Qualified Small Business Corporation (QSBC) tests and the shares qualify for the Lifetime Capital Gains Exemption. Common techniques include transferring excess cash and investments to a Holding Company, paying dividends or bonuses to reduce retained earnings, selling non-operating assets, and moving corporate-owned insurance to a Holdco. Because two of the three QSBC tests look back over the 24 months before a sale or death, purification should begin at least 24 months ahead. Purification crammed into the final weeks before closing invites the CRA to treat it as part of the disposition and to challenge the holding-period test, so the earlier the corporation is cleaned up, the safer the exemption claim. **Q: How does post-mortem pipeline planning avoid double tax on a pharmacist's estate?** A: When a pharmacist dies owning corporation shares, the same value can be taxed twice: once as a capital gain on the deemed disposition of the shares at death, and again as a dividend when the corporation's retained earnings are later distributed to the estate or heirs. A pipeline plan addresses the second layer. The estate incorporates a new corporation, transfers the deceased's shares to it under a section 85 rollover in exchange for a promissory note equal to fair-market value, then amalgamates or winds up the original corporation into the new one. Over time the new corporation repays the note from the retained earnings as a capital repayment rather than a taxable dividend. The CRA generally expects a reasonable delay (often around 12 months) before repayment to confirm the reorganization is bona fide. The result is that only the capital gain at death is taxed. An alternative, the subsection 164(6) loss carry-back, suits estates where the corporation will be wound up shortly after death. **Q: What is the going-concern GST/HST election when a pharmacy is sold?** A: Under section 167 of the Excise Tax Act, the sale of an entire business as a going concern can be relieved of GST/HST where both the buyer and the seller are registrants and the buyer continues to operate the business immediately. The election is made jointly on the prescribed CRA form and should be referenced in the purchase-and-sale agreement. For a pharmacy sale, the election can remove a significant amount of tax from the transaction. It is worth confirming registrant status on both sides and including the election in the definitive agreement so it is not overlooked at closing. **Q: What happens to a pharmacy when its pharmacist-owner dies without a succession plan?** A: The consequences can be severe. Every pharmacy must have a licensed pharmacist acting as Designated Manager, and at death the executor must promptly appoint a replacement and notify the provincial College within the deadline (often 30 days). If no licensed pharmacist is in place, the College can require the pharmacy to close, prescriptions transfer elsewhere, and goodwill erodes quickly. On the tax side, the deemed disposition of the corporation's shares at death can trigger a large capital-gains liability, and if the corporation is not a Qualified Small Business Corporation on the date of death, the Lifetime Capital Gains Exemption may be lost. A will that grants the executor authority to operate the pharmacy, appoint a Designated Manager, and carry out post-mortem reorganizations — combined with advance purification and, where appropriate, an estate freeze and a family trust — preserves both the business value and continuity of patient care. ## 12. FAQs — Estate planning **Q: Does Canada have an estate tax or an inheritance tax?** A: Canada does not levy an estate tax or an inheritance tax in the way some other countries do. Instead, the Income Tax Act generally treats a person as having disposed of their capital property at fair market value immediately before death — the "deemed disposition" under subsection 70(5). The resulting capital gain is taxed on the deceased's final return, and the estate pays that income tax. Certain rollovers can defer the tax — most importantly the spousal rollover, which lets qualifying property pass to a surviving spouse or a qualifying spousal trust at cost rather than at fair market value, deferring the gain until the spouse disposes of the property or dies. Private-company shares, real estate, and investment portfolios are the assets most affected, and the tax on death can be substantial. Planning — including the use of trusts, freezes, and life insurance — can reduce or fund the liability. **Q: What is an estate freeze?** A: An estate freeze is a tax-planning strategy that locks in the current value of an owner's interest in a business (or other appreciating asset) for tax purposes, so that any future appreciation accrues to the heirs or successors rather than the owner. The owner typically exchanges their common shares for fixed-value preferred shares equal to the current fair market value of the business, and new common shares — which capture future growth — are issued to the next generation or a family trust. The owner's eventual deemed-disposition tax on death is then capped at the frozen value, and the owner can keep control by holding voting preferred shares. **Q: Does Canada have an inheritance tax or estate tax?** A: No. Canada does not levy an inheritance tax or an estate tax. What it has instead is the deemed disposition on death: a deceased person is treated as having sold most of their capital property at fair market value immediately before death, which triggers capital-gains tax on any accrued gains. The estate, not the beneficiaries, generally bears that tax. Beneficiaries usually receive their inheritance without a separate tax on the receipt itself, but the estate may have already paid significant capital-gains tax before distributing. Planning — the spousal rollover, the principal residence exemption, the lifetime capital gains exemption, and post-mortem techniques — is aimed at managing that capital-gains bill. The rules interact and vary with the assets involved, so a review of the specific estate is worthwhile. **Q: What is an estate freeze and why would a business owner use one?** A: An estate freeze is a reorganization that "freezes" the current value of a business owner's shares at today's value, so that future growth accrues to the next generation or to a family trust. The owner typically exchanges their common shares for fixed-value preferred shares (often using section 85 or section 86), and new common shares are issued to children or to a trust. The purpose is usually succession and tax planning: it caps the owner's tax exposure on death at the frozen value, shifts future growth to the successors, and can multiply access to the Lifetime Capital Gains Exemption across family members where the structure qualifies. It can also support income-splitting where the tax-on-split-income rules permit. An estate freeze is a significant, fact-specific reorganization that must be coordinated with corporate law, family circumstances, and the relevant anti-avoidance rules. It should be designed and documented carefully. **Q: How is property taxed on death in Canada?** A: On death, subsection 70(5) of the Income Tax Act generally deems the deceased to have disposed of each capital property at its fair market value immediately before death. Accrued capital gains are realized and taxed on the final (terminal) return, and registered plans such as RRSPs and RRIFs are generally brought fully into income unless they pass to a qualifying recipient. The spousal rollover is the main deferral: property left to a surviving spouse or a qualifying spousal trust can transfer at the deceased's cost, so the gain is deferred rather than taxed immediately. Without a rollover, the tax falls in the year of death. Where the estate holds private-company shares, additional planning may be needed to avoid double taxation when the company's value is later distributed. Coordinating the will, beneficiary designations, and any corporate structure is what keeps the tax outcome efficient. **Q: How does a family trust help multiply the Lifetime Capital Gains Exemption?** A: The Lifetime Capital Gains Exemption is available per individual. A discretionary family trust holding shares of a Qualified Small Business Corporation can allocate a capital gain on a future sale among several beneficiaries, each of whom claims their own exemption against their portion of the gain. Spreading the gain across several family members can shelter a large multiple of what one person could shelter alone. The structure has to be in place well before any sale: the shares must qualify and be held for at least 24 months, and the beneficiaries must be residents of Canada to use the exemption. **Q: What happens if I die without a will in Canada?** A: If you die without a valid will, you are said to die intestate, and provincial or territorial intestacy legislation decides who inherits your property and in what shares. Those default rules are fixed formulas based on family relationships; they do not account for your particular wishes, for blended-family dynamics, for a disabled dependant, or for anyone you wanted to provide for who is not a close relative. Intestacy also means the court appoints an administrator rather than an executor of your choosing, and it can complicate guardianship for minor children. Because the intestacy rules differ from province to province, the outcome of dying without a will depends on where you lived. A valid will lets you direct all of this yourself rather than leaving it to a default formula. **Q: How can a family trust help with tax and estate planning?** A: A family trust holds property for the benefit of family members under the control of trustees. In tax and estate planning it serves several purposes: it can hold the growth shares in an estate freeze so future growth accrues outside the founder's estate, it can multiply access to the Lifetime Capital Gains Exemption among beneficiaries, and it can provide flexibility in how and when value reaches the next generation. Trusts also have important limits and rules. The tax-on-split-income rules restrict income-splitting with certain family members, the 21-year deemed-disposition rule requires planning to avoid a tax hit at that anniversary, and attribution rules can apply where property is transferred to a spouse or minor children. A trust is a powerful tool when it fits the family's goals, but it adds administration and must be set up and maintained correctly. Whether one is appropriate depends on the specific facts and objectives. **Q: What is the difference between a will and a power of attorney?** A: They cover different moments. A will takes effect when you die and directs how your property is distributed, who administers your estate, and who cares for your minor children. A power of attorney takes effect while you are still alive but unable to act for yourself — through illness, injury, incapacity, or absence — and authorizes someone you choose to make decisions on your behalf. Powers of attorney come in two functions: a financial (property) power of attorney for money and property, and a personal-care power of attorney for health-care and personal decisions. An enduring or continuing power of attorney is the form that survives your incapacity, which is when it matters most. A complete estate plan generally includes both a valid will and powers of attorney; British Columbia uses a representation agreement for personal-care decisions. **Q: What is post-mortem tax planning and why does it matter?** A: When a shareholder of a private corporation dies, the same underlying value can be taxed more than once: first as a deemed disposition of the shares on death, and again when the corporation's value is later distributed to the estate or heirs. Post-mortem planning is designed to reduce or eliminate that potential double — or even triple — taxation. Common techniques include the "pipeline" strategy and the subsection 164(6) loss carryback, each suited to different situations and each with its own conditions and timing. The subsection 164(6) approach, for instance, generally must be implemented within the estate's first taxation year. Because the relief depends on acting within strict deadlines after death, executors and beneficiaries of private-company estates should obtain advice early — well before the first anniversary of death — to preserve the available options. **Q: What is the difference between a section 85 rollover and a section 86 reorganization?** A: A section 85 rollover lets a taxpayer transfer assets — such as real estate, equipment, or shares — to a corporation in exchange for shares without an immediate tax bill. It requires a joint election by the transferor and the corporation on Form T2057, and the elected amount must fall between the asset's cost base and its fair market value. A section 86 reorganization, by contrast, is an exchange of all the shares of one class for shares of another class within the same corporation. It is the provision most often used to carry out an estate freeze, and it applies automatically when the conditions are met rather than requiring a joint election. **Q: How does an estate freeze reduce tax for a business owner?** A: An estate freeze locks in the current value of a business owner's shares for tax purposes and shifts future growth to the next generation, usually through a family trust. The owner exchanges their growth-bearing common shares for fixed-value preferred shares equal to today's value, and new common shares are issued to children or a family trust to capture future appreciation. The benefit is that the owner's capital gain on death is capped at today's value rather than the much larger future value, while the post-freeze growth accrues to the next generation outside the owner's estate. A freeze also sets up the family trust to multiply the lifetime capital gains exemption across several beneficiaries on a future sale. A freeze caps the tax rather than eliminating it, and it has to be structured and documented carefully, so it is planning to undertake with professional advice well before a sale or transition. **Q: How do multiple wills reduce probate fees in Canada?** A: Probate fees are calculated on the total value of the assets passing through the will that is probated. Using two wills lets you separate assets that require probate from those that do not. A primary will covers assets that need probate, such as real estate and certain financial accounts. A secondary will covers assets that can bypass probate, such as shares in privately held companies, artwork, and jewelry. Because only the assets in the probated (primary) will attract probate fees, segregating private-company shares and similar assets into a secondary will can produce substantial savings for the estate. **Q: Can an executor be held personally liable in Canada?** A: Yes. An executor owes a fiduciary duty to administer the estate properly, and can be held personally liable for losses caused by mistakes or negligence — for example, mismanaging estate assets, failing to pay the estate's taxes or debts, or distributing assets to beneficiaries before all liabilities are settled. Distributing too early is a common source of personal exposure, because the executor can be left on the hook for a tax bill the estate no longer has the funds to cover. Executors reduce this risk by obtaining professional legal and tax advice, keeping clear records, communicating with beneficiaries, applying to the court for directions where the will is unclear, and obtaining confirmation from the tax authority that the estate's taxes are paid before making the final distribution. Executor's insurance is also available for honest mistakes. Acting as an executor is a serious responsibility, and getting advice early is part of doing it safely. **Q: Can Canadians be subject to US estate tax?** A: Yes. The US imposes estate tax on the US-situs assets of non-resident, non-citizen individuals — most commonly US real estate and shares of US corporations — even where the owner has no other US connection. Under domestic US law the exemption for non-residents is very small, which can expose Canadians who own US property or US-listed shares. The Canada-US tax treaty softens this with a prorated unified credit, calculated by reference to the ratio of US-situs assets to worldwide assets. For many estates that credit eliminates the exposure; for larger worldwide estates, US estate tax can still apply. Planning levers include holding US real estate through a Canadian corporation or a properly structured entity, life insurance to fund the projected liability, and trust planning. Because the exposure depends on the size and composition of the whole estate, it is worth modelling in advance rather than discovering at death. **Q: What is the attribution rule, and how can it be managed when gifting assets?** A: The attribution rules can tax income or gains from gifted property in the hands of the person who made the gift rather than the recipient. They apply most directly to gifts to a spouse or to a minor child — so, for example, income earned on an investment gifted to a spouse is generally taxed as the donor's income. Two common ways to manage the rules are to lend rather than gift the asset, charging interest at the prescribed rate, which avoids attribution; or to transfer assets that do not produce income but are expected to appreciate, such as growth stocks or real estate, because capital gains are not subject to the same attribution. **Q: Do probate fees differ across Canadian provinces?** A: Yes, significantly. Probate fees — sometimes called estate administration tax — are charged on the value of the estate, and the structures range from modest flat fees to percentage charges that scale with estate size. Alberta, for instance, uses a flat-fee schedule capped at a few hundred dollars regardless of estate value, while Ontario and several other provinces charge per-thousand rates that can add up to thousands of dollars on a large estate. Quebec generally does not require probate where the will is notarized. Because fees are usually based on the value passing through probate, strategies that keep certain assets outside the probated estate — assets held in joint tenancy, assets with valid beneficiary designations, and a secondary will for private-company shares — can reduce the fee base. These strategies need to be set up correctly and coordinated with the rest of the plan. Rates change, so confirm the current figures for the relevant province. **Q: What is an estate freeze and how does it save tax?** A: An estate freeze caps the value of a business owner's shares at today's value so that future growth accrues to the next generation. The owner exchanges their common shares for fixed-value preferred shares, and the corporation issues new common shares — usually worth a nominal amount — to children or a family trust. Because the new shares start at nominal value, there is no taxable event when they are issued. After the freeze, future growth accrues to the next generation's shares, and the tax on that growth is paid much later, when they eventually sell. Because of the time value of money, paying that tax decades from now is far cheaper in real terms than paying it on the owner's death. A freeze can attract CRA scrutiny, so a proper valuation — ideally by a certified business valuator — and a price-adjustment clause are commonly used. **Q: Why would a corporation own life insurance on a key person?** A: Corporate-owned life insurance is a policy a corporation takes out on the life of a key individual, with the corporation paying the premiums and receiving the death benefit. It serves several purposes: providing a financial safety net for business continuity if a key person dies; funding buy-sell agreements so a deceased shareholder's interest can be purchased without straining the company; and, with a whole-life policy, accumulating cash value on a tax-deferred basis. A further advantage is that, on the death of the insured, the death benefit received by the corporation (less the policy's adjusted cost basis) can be credited to the corporation's Capital Dividend Account and then distributed tax-free to shareholders. **Q: What is a Henson trust and when is it used?** A: A Henson trust is a discretionary trust used where a beneficiary has a disability and receives, or may receive, means-tested government assistance. If a disabled person inherits money outright, the inheritance can disqualify them from those benefits. A Henson trust is structured so the trustee has absolute discretion over distributions, which means the beneficiary has no fixed entitlement the benefits authority can count as their own asset. The trustee can then use the trust to fund the beneficiary's supplemental needs — things the government program does not cover — without jeopardizing eligibility. Because the rules governing disability benefits and the recognition of Henson trusts vary by province, the trust has to be drafted against the specific provincial program. For families with a disabled member, omitting a Henson trust where one is needed is a costly and avoidable mistake. **Q: Why might a business owner have a secondary will?** A: A secondary will is a separate will that deals specifically with certain assets — most commonly shares of a private corporation — alongside a primary will that covers everything else. Business owners use one for two reasons. First, it can keep private-company shares out of the probated estate, which both speeds the transfer of ownership and reduces probate fees, since those fees are typically calculated on the value passing through probate. Second, it allows the shares to transfer to a chosen successor quickly, so the new shareholder can step in and keep the business running without the delay that probate of the main estate can cause. The primary and secondary wills must be drafted to dovetail — each clearly governing its own assets — to avoid conflict or overlap. A secondary will is a standard piece of business succession planning, and it works best when coordinated with the rest of the owner's estate and tax plan. **Q: Can I be assessed for a relative's tax debt after a family asset transfer?** A: Yes. Under subsection 160(1) of the Income Tax Act (and subsection 325(1) of the Excise Tax Act), if a tax debtor transfers property to a non-arm's-length person — a spouse, child, sibling, or related corporation — for less than fair market value, the recipient can be assessed for the transferor's tax, up to the benefit received. Transfer a $20,000 car for $1 and the recipient received a $19,999 benefit and can be assessed for up to that amount. There is a hidden danger: even if the transferor owed no tax on the date of the transfer, the CRA can later reassess them for an earlier year, and that liability is treated as having existed retroactively — so the recipient can still be pursued. Because there is no due-diligence escape from a debt that did not yet exist, it is important to get advice before any transfer of property between related parties. **Q: How can wealthy families give to charity in a tax-efficient way?** A: Canadian tax rules are generous to charitable gifts, and the structure of a gift materially affects the result. One of the most efficient techniques is donating appreciated publicly listed securities directly to a charity rather than selling them first: the capital gains tax on the donated shares is eliminated, and you still receive a donation receipt for the full fair market value. Families who give substantial amounts over time often establish a private foundation or use a donor-advised fund at a community foundation. Both allow a deductible gift now with grants directed to charities over many years. Gifts made through a will can offset tax on the estate's terminal return, and gifts of life insurance can turn a modest premium into a larger eventual gift with favourable treatment. The common thread is that the form, timing, and vehicle of a gift drive its efficiency. Coordinating giving with the rest of a family's tax and estate plan is what turns generosity into an integrated part of the picture rather than an afterthought. **Q: Is asset protection legal, and how do high-net-worth families do it properly?** A: Legitimate asset protection is entirely legal — but it has to be done prospectively and transparently, well before any claim arises. The law draws a sharp line between organizing your affairs sensibly in advance and transferring assets to defeat a creditor who is already on the doorstep. The latter can be reversed and can carry serious consequences; the former is sound planning. Compliant asset protection uses familiar structures for their protective side-effects: holding surplus investments in a holding company separate from an operating business, so operational creditors cannot reach the family's accumulated savings; using trusts to hold assets outside any single individual's name; keeping personal and business assets properly separated; maintaining adequate insurance; and using domestic marriage or cohabitation agreements for the family-law dimension. The unifying principle is timing and transparency. Structuring done in advance of any claim, and disclosed where disclosure is required, is effective and above-board. Asset protection is never about hiding assets or evading existing creditors — done properly and early, ordinary well-documented structuring is all that is required. **Q: Do I need a tax lawyer for estate planning if I already have a will?** A: Wills handle distribution. Tax planning handles what's left after the deemed disposition on death, the capital-gains rollover to a spouse, the post-mortem pipeline, and US estate tax for snowbirds. The two work together. **Q: What is a post-mortem pipeline?** A: A pipeline transaction lets the estate of a deceased shareholder extract corporate value as a return of capital instead of a deemed dividend, avoiding double taxation. It typically requires a holdco freeze and is most effective when planned within the first year after death. **Q: Can a non-pharmacist inherit my pharmacy corporation?** A: It depends on the province and on the class of shares. Provincial Colleges of Pharmacists regulate who may own and control a pharmacy. In most provinces, only licensed pharmacists may hold the voting shares of a pharmacy corporation, while non-pharmacist family members (a spouse, children, or a family trust) may hold non-voting shares. A will that leaves voting shares to a non-pharmacist can lead the College to refuse registration or suspend the Certificate of Accreditation until control is restored to a licensed pharmacist. Quebec is stricter — only licensed pharmacists may own a pharmacy, and ownership must be direct rather than through a holding company, trust, or family members. Where no pharmacist heir exists, the usual approach is to authorize the executor to sell the shares to a qualified pharmacist purchaser. Confirm your province's rules before structuring your will. **Q: How can a family trust multiply the Lifetime Capital Gains Exemption on a pharmacy sale?** A: The LCGE is available per individual. A discretionary family trust that owns Qualified Small Business Corporation (QSBC) shares can allocate the capital gain on a future sale among several beneficiaries — for example, a spouse and adult children — so that each claims their own exemption against their share of the gain. With several beneficiaries each able to shelter roughly $1.25 million (2025), the family can shelter several million dollars of gain that a single owner could not. The structure has requirements: the trust deed must permit capital-gains allocation, the beneficiaries must be eligible, the shares must independently qualify as QSBC shares, and the trust must have held the shares long enough to satisfy the 24-month holding-period test — so the planning has to be done well before any sale. In a pharmacy, the trust must hold non-voting shares, and voting control must remain with licensed pharmacists. **Q: Why should corporate-owned life insurance be held in a Holdco rather than the pharmacy corporation?** A: To claim the Lifetime Capital Gains Exemption, a pharmacy corporation generally needs at least 90% of its assets used in an active business at the time of sale or death. If a life-insurance policy's cash surrender value is recorded as a passive investment inside the operating Pharmacy Professional Corporation, it can count as a non-active asset and jeopardize that QSBC status. Holding the policy in a Holding Company instead keeps the operating corporation's assets "pure," lets the Holdco accumulate the cash value and invest surplus dividends, and segregates the insurance proceeds for family use or buy-sell obligations. On death, the death benefit (less the policy's adjusted cost basis) creates a Capital Dividend Account credit in the Holdco, allowing tax-free capital dividends to the estate or shareholders. **Q: How does post-mortem pipeline planning avoid double tax on a pharmacist's estate?** A: When a pharmacist dies owning corporation shares, the same value can be taxed twice: once as a capital gain on the deemed disposition of the shares at death, and again as a dividend when the corporation's retained earnings are later distributed to the estate or heirs. A pipeline plan addresses the second layer. The estate incorporates a new corporation, transfers the deceased's shares to it under a section 85 rollover in exchange for a promissory note equal to fair-market value, then amalgamates or winds up the original corporation into the new one. Over time the new corporation repays the note from the retained earnings as a capital repayment rather than a taxable dividend. The CRA generally expects a reasonable delay (often around 12 months) before repayment to confirm the reorganization is bona fide. The result is that only the capital gain at death is taxed. An alternative, the subsection 164(6) loss carry-back, suits estates where the corporation will be wound up shortly after death. **Q: What happens to a pharmacy when its pharmacist-owner dies without a succession plan?** A: The consequences can be severe. Every pharmacy must have a licensed pharmacist acting as Designated Manager, and at death the executor must promptly appoint a replacement and notify the provincial College within the deadline (often 30 days). If no licensed pharmacist is in place, the College can require the pharmacy to close, prescriptions transfer elsewhere, and goodwill erodes quickly. On the tax side, the deemed disposition of the corporation's shares at death can trigger a large capital-gains liability, and if the corporation is not a Qualified Small Business Corporation on the date of death, the Lifetime Capital Gains Exemption may be lost. A will that grants the executor authority to operate the pharmacy, appoint a Designated Manager, and carry out post-mortem reorganizations — combined with advance purification and, where appropriate, an estate freeze and a family trust — preserves both the business value and continuity of patient care. ## 13. FAQs — Business sales & acquisitions **Q: What is the Lifetime Capital Gains Exemption and who can use it?** A: The Lifetime Capital Gains Exemption (LCGE) lets eligible individuals shelter a substantial amount of capital gain — into the millions of dollars and indexed over time — realized on the sale of qualified small business corporation (QSBC) shares, or qualified farm or fishing property. For many business owners it is the single most valuable relief available on a sale. To use it on a share sale, the shares must meet the QSBC tests at the time of sale: broadly, the company must be a small business corporation using substantially all of its assets in an active business in Canada, the shares must have been held by the seller (or a related person) for the prior 24 months, and an asset-use test must be met throughout that period. Many companies do not satisfy these tests by default, often because of excess investments or cash. Advance planning — sometimes called "purification" — can position a company so the shares qualify when a sale eventually happens, and the exemption can sometimes be multiplied across family members. **Q: Should I sell my business as a share sale or an asset sale?** A: The choice has significant tax consequences and the buyer and seller usually have opposing preferences. Sellers often prefer a share sale, because it can access the Lifetime Capital Gains Exemption on qualifying shares and generally produces a single layer of capital-gains tax. Buyers often prefer an asset sale, because it lets them step up the cost of depreciable assets and avoid inheriting the company's historical liabilities. An asset sale inside a corporation can create two layers of tax — at the corporate level on the sale and again when proceeds are distributed to shareholders — though planning can mitigate this. The right structure depends on the company's assets, its share status, the parties' relative bargaining power, and the timeline. Because the structure drives the after-tax outcome, it is worth modelling both options early in negotiations rather than after a deal is signed. Planning before the sale preserves the most options. **Q: How does a family trust help multiply the Lifetime Capital Gains Exemption?** A: The Lifetime Capital Gains Exemption is available per individual. A discretionary family trust holding shares of a Qualified Small Business Corporation can allocate a capital gain on a future sale among several beneficiaries, each of whom claims their own exemption against their portion of the gain. Spreading the gain across several family members can shelter a large multiple of what one person could shelter alone. The structure has to be in place well before any sale: the shares must qualify and be held for at least 24 months, and the beneficiaries must be residents of Canada to use the exemption. **Q: What is surplus stripping and how does section 84.1 affect it?** A: "Surplus stripping" refers to arrangements that try to extract a corporation's retained earnings as lower-taxed capital gains rather than as higher-taxed dividends. Section 84.1 of the Income Tax Act is an anti-avoidance rule aimed at certain non-arm's-length share transfers that would otherwise convert dividends into capital gains, and it can recharacterize the result as a deemed dividend. The rule frequently arises in family succession — for example, when a parent sells shares of the family company to a corporation owned by their children. Recent legislation created defined exceptions for genuine intergenerational business transfers that meet specific conditions, but those conditions are detailed and must be satisfied to obtain the relief. Because the line between legitimate planning and offside surplus stripping is technical and shifting, transactions in this area should be structured with current rules and the general anti-avoidance rule firmly in mind. **Q: How can I plan ahead so my company's shares qualify for the LCGE?** A: Qualifying for the Lifetime Capital Gains Exemption on a share sale requires meeting the qualified small business corporation tests, and a common obstacle is having too many non-active assets — surplus cash, investments, or redundant real estate — on the company's books. "Purification" is planning that removes or repositions those assets so the active-business tests are satisfied. Typical steps include paying out excess cash, moving passive investments to a separate holding company, and ensuring the company keeps substantially all of its assets in an active business in Canada. Because the tests look back over a 24-month period, this planning generally needs to be done well before a sale, not on its eve. Where the structure permits, the exemption can sometimes be multiplied among family members through a family trust or direct shareholdings, subject to the tax-on-split-income rules. The earlier this is planned, the more options remain available. **Q: What are the three tests for the Lifetime Capital Gains Exemption on small business shares?** A: To qualify for the exemption on the sale of Qualified Small Business Corporation shares, three tests must be met. First, the corporation must be a Canadian-controlled private corporation at the time of sale. Second, the asset-use tests must be satisfied: throughout the 24 months before the sale, more than half of the corporation's assets must have been used in an active business carried on primarily in Canada (the 50% test), and at the time of sale a substantial majority of its assets must be so used (the 90% test). Third, the shareholder must have held the shares for at least 24 months continuously before the sale. **Q: When do I have to register for and charge GST/HST?** A: The general rule of thumb is that once your business generates $30,000 or more in a year, you are required to charge and collect GST/HST. Many owners cross that threshold without realizing it and later learn — often during an audit — that they owe the tax even though they never collected it from their customers, which can be a costly surprise. The correct rate depends on where your customer is and where the goods or services are supplied, not where you are: for example, a Toronto business charges 13% HST to an Ontario customer, 5% GST to an Alberta customer, and 0% to a customer outside Canada. Once you register, you can also claim input tax credits for the HST you pay on your own business expenses, which reduces the net amount you remit. The safest practice is to register for an HST number and apply the correct tax to every transaction. **Q: Should I sell my business as a share sale or an asset sale to save tax?** A: Where possible, sellers usually prefer to sell shares rather than assets, because the Lifetime Capital Gains Exemption can shelter a gain on qualifying shares but not on a sale of assets. The complication is that buyers often prefer asset sales, which are cleaner and avoid inheriting the company's historical liabilities. To use the exemption on a share sale, the shares generally have to meet the qualified small business corporation tests at the time of sale, which can require advance planning — sometimes called purification — to remove non-active assets such as excess cash. Because the structure drives the after-tax result, it is worth modelling both options well before a sale rather than after a deal is signed. **Q: What is crystallization of the Lifetime Capital Gains Exemption?** A: Crystallization means triggering a capital gain on paper — without an actual sale to a third party — so you can use your Lifetime Capital Gains Exemption now, before a possible increase in the asset's value or a change in the law reduces the amount available. It is usually done by valuing the qualifying shares and electing (commonly under a subsection 85(1) rollover) to a deemed disposition at fair market value, then sheltering the resulting gain with the exemption. This resets the cost base of the shares to their current value, so less gain is taxable on an eventual sale, and it locks in today's exemption limit. **Q: Why might a business owner have a secondary will?** A: A secondary will is a separate will that deals specifically with certain assets — most commonly shares of a private corporation — alongside a primary will that covers everything else. Business owners use one for two reasons. First, it can keep private-company shares out of the probated estate, which both speeds the transfer of ownership and reduces probate fees, since those fees are typically calculated on the value passing through probate. Second, it allows the shares to transfer to a chosen successor quickly, so the new shareholder can step in and keep the business running without the delay that probate of the main estate can cause. The primary and secondary wills must be drafted to dovetail — each clearly governing its own assets — to avoid conflict or overlap. A secondary will is a standard piece of business succession planning, and it works best when coordinated with the rest of the owner's estate and tax plan. **Q: I incorporated, but I work for one client like an employee. Is that a problem?** A: It can be. If your corporation provides services that an officer or employee of the client would normally perform, and you function much like one of the client's employees — same work, under their direction, without genuine independence — the Canada Revenue Agency can treat your corporation as a "personal services business." Where that designation applies, the corporation loses the small business deduction and most of its deductions are denied, which can dramatically increase the tax. The agency looks at the substance of the relationship, not just the fact that you have a corporation: your financial risk, who controls how the work is done, who supplies the tools, and whether you could send a replacement. Workers in industries that encourage incorporation, such as trucking, are especially exposed. If you are concerned that you may be operating a personal services business, it is worth getting advice before an audit raises the issue. **Q: Should I sell my business as an asset sale or a share sale?** A: Sellers usually prefer a share sale (Lifetime Capital Gains Exemption can shelter up to ~$1M+ of gain on Qualified Small Business Corporation shares). Buyers usually prefer asset sales (step-up in basis, lower successor-liability risk). The price negotiation is partly about who absorbs the tax differential. **Q: What is the Lifetime Capital Gains Exemption?** A: An indexed exemption for capital gains on Qualified Small Business Corporation shares (and qualified farm/fishing property). Multiplying it across family members through estate freezes and family trusts is one of the highest-leverage tax-planning moves available to Canadian business owners. **Q: What is the difference between an asset sale and a share sale when selling a pharmacy?** A: In an asset sale , the buyer acquires individual assets — inventory, fixtures, and goodwill — rather than the corporation. The proceeds are generally treated as business income and recapture at the corporate level, the vendor cannot use the Lifetime Capital Gains Exemption (LCGE) on goodwill held in the corporation, and each licence, contract, and permit must be transferred individually. In a share sale , the buyer acquires the shares of the Pharmacy Professional Corporation. If the corporation qualifies as a Qualified Small Business Corporation (QSBC), the vendor can claim the LCGE on the capital gain, and there is no need to re-register licences or contracts. A share sale generally produces a better after-tax result for the seller, which is why many pharmacists structure the corporation so a share sale is feasible. The right choice depends on the corporation's liabilities, its QSBC status, and the buyer's preferences. **Q: How can a family trust multiply the Lifetime Capital Gains Exemption on a pharmacy sale?** A: The LCGE is available per individual. A discretionary family trust that owns Qualified Small Business Corporation (QSBC) shares can allocate the capital gain on a future sale among several beneficiaries — for example, a spouse and adult children — so that each claims their own exemption against their share of the gain. With several beneficiaries each able to shelter roughly $1.25 million (2025), the family can shelter several million dollars of gain that a single owner could not. The structure has requirements: the trust deed must permit capital-gains allocation, the beneficiaries must be eligible, the shares must independently qualify as QSBC shares, and the trust must have held the shares long enough to satisfy the 24-month holding-period test — so the planning has to be done well before any sale. In a pharmacy, the trust must hold non-voting shares, and voting control must remain with licensed pharmacists. **Q: What is purification, and when should a pharmacy corporation be purified?** A: Purification is the process of removing or restructuring passive and investment assets — excess cash, marketable securities, non-business real estate — so that a corporation meets the Qualified Small Business Corporation (QSBC) tests and the shares qualify for the Lifetime Capital Gains Exemption. Common techniques include transferring excess cash and investments to a Holding Company, paying dividends or bonuses to reduce retained earnings, selling non-operating assets, and moving corporate-owned insurance to a Holdco. Because two of the three QSBC tests look back over the 24 months before a sale or death, purification should begin at least 24 months ahead. Purification crammed into the final weeks before closing invites the CRA to treat it as part of the disposition and to challenge the holding-period test, so the earlier the corporation is cleaned up, the safer the exemption claim. **Q: What is the going-concern GST/HST election when a pharmacy is sold?** A: Under section 167 of the Excise Tax Act, the sale of an entire business as a going concern can be relieved of GST/HST where both the buyer and the seller are registrants and the buyer continues to operate the business immediately. The election is made jointly on the prescribed CRA form and should be referenced in the purchase-and-sale agreement. For a pharmacy sale, the election can remove a significant amount of tax from the transaction. It is worth confirming registrant status on both sides and including the election in the definitive agreement so it is not overlooked at closing. ## 14. Canadian Tax Law Glossary Index: https://www.barretttaxlaw.com/glossary ### Adjusted Cost Base URL: https://www.barretttaxlaw.com/glossary/adjusted-cost-base The adjusted cost base (ACB) of a property is its cost to the taxpayer for the purpose of computing a capital gain or loss on disposition. It generally starts with the acquisiti… ### Allowable Business Investment Loss URL: https://www.barretttaxlaw.com/glossary/allowable-business-investment-loss-abil An allowable business investment loss (ABIL) is a portion of a business investment loss — a capital loss on shares or debt of a small business corporation — that the Income Tax … ### Alternative Source Argument URL: https://www.barretttaxlaw.com/glossary/alternative-source-argument The alternative source argument is the principal way a taxpayer rebuts a net-worth or other indirect-income assessment. The net-worth method presumes that any unexplained increa… ### Amalgamation URL: https://www.barretttaxlaw.com/glossary/amalgamation An amalgamation is the combination of two or more corporations into a single continuing corporation under corporate law. Section 87 of the Income Tax Act provides tax rules for … ### Arbitrary Assessment URL: https://www.barretttaxlaw.com/glossary/arbitrary-assessment An arbitrary assessment — also called a notional assessment — is an assessment the Canada Revenue Agency issues for a tax year in which the taxpayer has not filed a return. Subs… ### Asset Sale vs Share Sale URL: https://www.barretttaxlaw.com/glossary/asset-sale-vs-share-sale Asset Sale vs. Share Sale There are major considerations when considering an Asset Sale vs. Share Sale Whenever possible, you want to sell the shares of your corporation rather … ### Asset Seizure URL: https://www.barretttaxlaw.com/glossary/asset-seizure Asset Seizure When push comes to shove and the CRA needs to squeeze some funds out of a taxpayer they can apply for a certificate in Federal Court which will allow them to go ah… ### Associated Corporations URL: https://www.barretttaxlaw.com/glossary/associated-corporations Associated corporations are corporations connected by common control or common ownership under the rules in section 256 of the Income Tax Act. The concept is broad and captures … ### Attribution Rules URL: https://www.barretttaxlaw.com/glossary/attribution-rules The attribution rules in the Income Tax Act attribute income, and in some cases capital gains, earned on transferred or loaned property back to the person who transferred or loa… ### Audit Risk Factors URL: https://www.barretttaxlaw.com/glossary/audit-risk-factors Audit Risk Factors Sometimes a taxpayer is randomly selected for an audit. It’s like winning the worst lottery in the world. It’s just random. Nothing you can do to change that.… ### Authorized Representative URL: https://www.barretttaxlaw.com/glossary/authorized-representative Authorized Representative When the going gets tough there are always those who can act as an “authorized representative” with the CRA. This can be an accountant, a tax lawyer, o… ### Butterfly Reorganization URL: https://www.barretttaxlaw.com/glossary/butterfly-reorganization A butterfly reorganization is a corporate restructuring that divides a corporation's property among two or more corporations on a tax-deferred basis, typically to split asse… ### CRA Business Audit URL: https://www.barretttaxlaw.com/glossary/cra-business-audit CRA Business Audit Business audits are not different from personal or sole proprietorship audits. The auditor examines one or more returns and tries to identify areas where addi… ### CRA Collections URL: https://www.barretttaxlaw.com/glossary/cra-collections CRA Collections Tasked with the collection of billions of dollars of taxes each year, the CRA employs a large number of full-time collections officers. Not everybody who owes ta… ### CRA Payment Plan URL: https://www.barretttaxlaw.com/glossary/cra-payment-plan CRA Payment Plan If a taxpayer cannot pay off their entire tax debt in a reasonable period of time, they will require a payment plan. And in order to get a payment plan the taxp… ### CRA Penalties URL: https://www.barretttaxlaw.com/glossary/cra-penalties CRA Penalties Interest & Penalties In all cases, where tax returns are filed after the due date, interest will be applied from the date the amount was initially due. And it … ### CRA Tax Audit URL: https://www.barretttaxlaw.com/glossary/cra-tax-audit CRA Tax Audit In Information Circular 71-14R3, the CRA describes the purpose of the tax audit as follows: “While there is, in Canada, a high standard of public compliance with t… ### CRA Trust Audit URL: https://www.barretttaxlaw.com/glossary/cra-trust-audit CRA Trust Audit Trust Audits Payroll and HST audits are performed both randomly and when there are risk factors. The CRA identifies returns with a higher risk of errors or omiss… ### Canadian-Controlled Private Corporation URL: https://www.barretttaxlaw.com/glossary/ccpc A Canadian-controlled private corporation (CCPC) is a private corporation resident in Canada that is not controlled, directly or indirectly, by non-residents, public corporation… ### Capital Cost Allowance URL: https://www.barretttaxlaw.com/glossary/capital-cost-allowance Capital cost allowance (CCA) is the income-tax equivalent of depreciation. Instead of writing off depreciable property over its accounting useful life, the Income Tax Act sorts … ### Capital Dividend Account URL: https://www.barretttaxlaw.com/glossary/capital-dividend-account The capital dividend account (CDA) is a notional account that tracks certain tax-free amounts accumulated by a private corporation, including the non-taxable portion of net capi… ### Capital Gain Inclusion Rate URL: https://www.barretttaxlaw.com/glossary/capital-gain-inclusion-rate The capital gain inclusion rate is the portion of a capital gain that is included in income and subject to tax, set by section 38 of the Income Tax Act. The corresponding portio… ### Capital Gains URL: https://www.barretttaxlaw.com/glossary/capital-gains Capital Gains Capital gains earnings result when capital property, other than personal property or inventory, is sold for an amount greater than that at which it was acquired. T… ### Capital Gains Reserve URL: https://www.barretttaxlaw.com/glossary/capital-gains-reserve A capital gains reserve lets a taxpayer who sells capital property at a gain but is paid over time spread the resulting capital gain across the years in which the proceeds are r… ### Certificate in Federal Court URL: https://www.barretttaxlaw.com/glossary/certificate-in-federal-court A certificate in the Federal Court is the document by which the Canada Revenue Agency converts an unpaid, assessed tax debt into an enforceable judgment. Under section 223 of th… ### Certificate of Accreditation (Pharmacy) URL: https://www.barretttaxlaw.com/glossary/certificate-of-accreditation-pharmacy The authorization issued by a provincial College of Pharmacists that permits a particular pharmacy to operate. Depending on the province, it may be called a Certificate of Accre… ### Change-of-Use Rules URL: https://www.barretttaxlaw.com/glossary/change-of-use-rules The change-of-use rules in section 45 of the Income Tax Act treat a taxpayer as having disposed of property at fair market value, and immediately reacquired it, when the use of … ### Collection Restrictions URL: https://www.barretttaxlaw.com/glossary/collection-restrictions Collection restrictions are the statutory limits on when the Canada Revenue Agency may take certain collection actions against an income-tax debt. For most individual income-tax… ### Controlled Foreign Affiliate URL: https://www.barretttaxlaw.com/glossary/controlled-foreign-corporation A controlled foreign affiliate (CFA) is a foreign affiliate of a Canadian taxpayer that is controlled, in fact or by ownership, by Canadian residents alone or together with rela… ### Corporate Wind-Up URL: https://www.barretttaxlaw.com/glossary/wind-up A wind-up is the process of dissolving a corporation and distributing its remaining property to shareholders. Where a subsidiary is wound up into its parent, section 88(1) of th… ### Corporate-Owned Life Insurance (COLI) URL: https://www.barretttaxlaw.com/glossary/corporate-owned-life-insurance A life insurance policy purchased by a corporation on the life of a key individual, where the corporation pays the premiums and is the beneficiary. It is used to provide a finan… ### Corporations URL: https://www.barretttaxlaw.com/glossary/corporations Corporations The way corporations work is as follows: A corporation is owned by shareholders. Each of these shareholders own shares, and most shares allow their owners to vote a… ### Crystallization of the LCGE URL: https://www.barretttaxlaw.com/glossary/crystallization-of-the-lcge The deliberate triggering of a capital gain on paper — without an actual sale to a third party — in order to use the Lifetime Capital Gains Exemption before a potential increase… ### Deemed Disposition URL: https://www.barretttaxlaw.com/glossary/deemed-disposition A deemed disposition is a rule that treats a taxpayer as having sold property at fair market value even though no actual sale has occurred, triggering recognition of any accrued… ### Deemed Disposition on Death URL: https://www.barretttaxlaw.com/glossary/deemed-disposition-on-death A Canadian tax rule that treats a deceased person as having sold most of their capital property at fair market value immediately before death. Because the property is deemed sol… ### Deemed Dividend under Section 84 URL: https://www.barretttaxlaw.com/glossary/deemed-dividend-section-84 A deemed dividend under section 84 of the Income Tax Act is an amount that the Act treats as a dividend, and therefore as taxable in the shareholder's hands, even though it … ### Demand to File URL: https://www.barretttaxlaw.com/glossary/demand-to-file A demand to file is a formal notice from the Canada Revenue Agency, issued under subsection 150(2) of the Income Tax Act, requiring a taxpayer to file an outstanding return by a… ### Demolishing the Minister's Assumptions URL: https://www.barretttaxlaw.com/glossary/demolishing-the-ministers-assumptions In a Tax Court of Canada appeal, the Minister's assumptions of fact are presumed correct, and the taxpayer's task is to "demolish" them — to put forward credib… ### Departure Tax URL: https://www.barretttaxlaw.com/glossary/departure-tax Departure tax refers to the deemed-disposition rules in section 128.1 of the Income Tax Act that apply when a person ceases to be a Canadian tax resident. On emigration, the ind… ### Departure Tax Deferral (Form T1244) URL: https://www.barretttaxlaw.com/glossary/departure-tax-deferral-t1244 Form T1244 is the election that lets an individual defer paying the departure tax that arises when they cease to be a Canadian tax resident. On emigration, the deemed-dispositio… ### Derivative Liability URL: https://www.barretttaxlaw.com/glossary/derivative-liability Derivative liability describes situations where a person becomes responsible for another person's tax debt because of their relationship or dealings with the original tax de… ### Designated Manager (Pharmacy) URL: https://www.barretttaxlaw.com/glossary/designated-manager-pharmacy The licensed pharmacist who is responsible to the provincial College of Pharmacists for the day-to-day compliance of a pharmacy. Pharmacy legislation generally requires every lo… ### Director's Liability Assessment URL: https://www.barretttaxlaw.com/glossary/directors-liability-assessment A director's liability assessment is the CRA's mechanism for collecting a corporation's unpaid trust amounts — GST/HST, CPP, and EI — directly from its directors. Al… ### Director’s Liability URL: https://www.barretttaxlaw.com/glossary/directors-liability Director’s Liability Although a central purpose of incorporation is to create a shield between the company’s creditor’s and the personal assets of its principals, certain tax de… ### Dual Wills (Primary and Secondary) URL: https://www.barretttaxlaw.com/glossary/dual-wills-primary-secondary A planning method, available in provinces such as Ontario, that uses two coordinated wills to separate assets that require probate from those that do not. The primary will gover… ### Due-Diligence Defence URL: https://www.barretttaxlaw.com/glossary/due-diligence-defence A due-diligence defence is the argument that a person took all reasonable care to comply with an obligation and should therefore not bear a penalty or liability that otherwise a… ### Economic Substance Regulations (ESR) URL: https://www.barretttaxlaw.com/glossary/economic-substance-regulations-esr The UAE's Economic Substance Regulations require entities carrying on certain "relevant activities" — such as banking, insurance, fund management, headquarters, sh… ### Eligible Dividend URL: https://www.barretttaxlaw.com/glossary/eligible-dividend An eligible dividend is a dividend paid by a Canadian corporation that has been designated as eligible and that qualifies, in the hands of an individual shareholder, for the enh… ### Employee vs Independent Contractor URL: https://www.barretttaxlaw.com/glossary/employee-vs-independent-contractor Employee vs. Independent Contractor It is important when you are doing business to ensure that you are not incorrectly characterized as being an employee vs. independent contrac… ### Estate Freeze URL: https://www.barretttaxlaw.com/glossary/estate-freeze Estate Freeze The Estate Freeze is a great tax planning tool. It is a common business succession tool used to defer taxes. The Estate Freeze transfers the future increase in val… ### Examination for Discovery URL: https://www.barretttaxlaw.com/glossary/examination-for-discovery An examination for discovery is the oral, pre-trial questioning of one party's representative by the other side, under oath and before a court reporter, in a Tax Court of Ca… ### Examination-in-Chief URL: https://www.barretttaxlaw.com/glossary/examination-in-chief The stage of a hearing where a party questions a witness they have called in order to bring out that witness's evidence. Questions are meant to be open and non-leading — for… ### Extension of Time to Appeal URL: https://www.barretttaxlaw.com/glossary/extension-of-time-to-appeal A request to the Tax Court of Canada for permission to file a Notice of Appeal after the 90-day deadline has passed. The application must be made within one year after that dead… ### FATCA (Foreign Account Tax Compliance Act) URL: https://www.barretttaxlaw.com/glossary/fatca The Foreign Account Tax Compliance Act (FATCA) is a United States regime aimed at identifying US persons holding assets outside the United States. It has two main components: an… ### FBAR (Report of Foreign Bank and Financial Accounts) URL: https://www.barretttaxlaw.com/glossary/fbar The FBAR, formally the Report of Foreign Bank and Financial Accounts, is a United States filing required of US persons whose foreign financial accounts exceed an aggregate value… ### FIRPTA (Foreign Investment in Real Property Tax Act) URL: https://www.barretttaxlaw.com/glossary/firpta FIRPTA, the Foreign Investment in Real Property Tax Act, is a United States regime that taxes a foreign person's gain on the disposition of a United States real property int… ### Failure-to-File Penalty URL: https://www.barretttaxlaw.com/glossary/failure-to-file-penalty The failure-to-file penalty, more commonly called the late-filing penalty, is charged under subsection 162(1) of the Income Tax Act when a return is filed after its deadline and… ### Fairness Application URL: https://www.barretttaxlaw.com/glossary/fairness-application A fairness application — now usually called a taxpayer relief request — asks the Minister of National Revenue to use the discretion in subsection 220(3.1) of the Income Tax Act … ### Family Trust URL: https://www.barretttaxlaw.com/glossary/family-trust A family trust is a trust whose beneficiaries are members of a family, most often structured as a discretionary trust in which the trustees decide the timing and amount of distr… ### Federal Court Judicial Review URL: https://www.barretttaxlaw.com/glossary/federal-court-judicial-review Judicial review in the Federal Court of Canada is the procedural route for challenging certain Canada Revenue Agency decisions that are not directly disputable through the objec… ### Federal Court of Appeal URL: https://www.barretttaxlaw.com/glossary/federal-court-of-appeal The Federal Court of Appeal is the court that hears appeals from decisions of the Tax Court of Canada. It is not a retrial: it reviews the Tax Court's judgment for legal err… ### Financial Disclosure Statement URL: https://www.barretttaxlaw.com/glossary/financial-disclosure-statement A financial disclosure statement is the summary of a taxpayer's finances the Canada Revenue Agency requests when assessing a request for a payment arrangement or a hardship-… ### Form T2062 (Non-Resident Disposition Notice) URL: https://www.barretttaxlaw.com/glossary/t2062 Form T2062 is the request a non-resident files with the Canada Revenue Agency to obtain a section 116 clearance certificate on the disposition of taxable Canadian property. It r… ### Frozen Bank Account URL: https://www.barretttaxlaw.com/glossary/frozen-bank-account Frozen Bank Account Many taxpayers with collections issues will tell you about the fear they experience when they go to the checkout at the grocery store and pull out their Inte… ### Future Value of Money URL: https://www.barretttaxlaw.com/glossary/future-value-of-money Future Value of Money The analysis of money and time is paramount in financial decision making. Time value of money concepts such as present value of money vs. future value of m… ### GST URL: https://www.barretttaxlaw.com/glossary/gst GST Operating a Canadian business means in most cases, being an agent of the CRA for the collection and withholding of certain amounts. Most businesses will end up remitting to … ### GST/HST Input Tax Credit URL: https://www.barretttaxlaw.com/glossary/gst-hst-input-tax-credit A GST/HST input tax credit (ITC) lets a registered business recover the GST/HST it paid or owes on property and services acquired for use in its commercial activities. The credi… ### Garnishment URL: https://www.barretttaxlaw.com/glossary/garnishment Garnishment is a collection action in which the Canada Revenue Agency directs a third party who owes money to a tax debtor — such as an employer, a bank, or a customer — to pay … ### General Anti-Avoidance Rule URL: https://www.barretttaxlaw.com/glossary/gaar The general anti-avoidance rule (GAAR) in section 245 of the Income Tax Act is a catch-all provision that can deny a tax benefit obtained through abusive tax avoidance, even whe… ### General Procedure URL: https://www.barretttaxlaw.com/glossary/general-procedure The General Procedure is the full-procedure track at the Tax Court of Canada. It applies to any appeal that exceeds the Informal Procedure limits, and a taxpayer may elect it re… ### Gross Negligence Penalty URL: https://www.barretttaxlaw.com/glossary/gross-negligence-penalty Gross Negligence Penalty The most severe penalties assessed by the CRA are the gross negligence penalty under subsection 163(2) of the Act. This penalty may be assessed when the… ### Gross Negligence Penalty URL: https://www.barretttaxlaw.com/glossary/gross-negligence-penalty-163-2 The gross-negligence penalty under section 163(2) of the Income Tax Act equals the greater of $100 and 50% of the tax related to a false statement or omission, where the taxpaye… ### HST URL: https://www.barretttaxlaw.com/glossary/hst HST Operating a Canadian business means in most cases, being an agent of the CRA for the collection and withholding of certain amounts. Most businesses will end up remitting to … ### Henson Trust URL: https://www.barretttaxlaw.com/glossary/henson-trust A fully discretionary trust used to provide for a beneficiary who has a disability and who receives, or may receive, means-tested government assistance. Because the trustee has … ### Holding Company URL: https://www.barretttaxlaw.com/glossary/holding-company A holding company (often "holdco") is a corporation whose main function is to hold assets — typically the shares of an operating company, and sometimes passive investm… ### How to deal with tax search warrants – tax guidance from a Canadian tax lawyer URL: https://www.barretttaxlaw.com/glossary/how-to-deal-with-tax-search-warrants-tax-guidance-from-a-canadian-tax-lawyer How To Deal With Tax Search Warrants – Tax Guidance From A Canadian Tax Lawyer The CRA cannot use its civil audit powers in a criminal investigation When the Canada Revenue Agen… ### Income Splitting URL: https://www.barretttaxlaw.com/glossary/income-splitting Income splitting is the practice of shifting income from a higher-income family member to lower-income family members so that, taken together, the family pays less tax by using … ### Income Tax URL: https://www.barretttaxlaw.com/glossary/income-tax Income Tax Canadians are taxed on their income from sources inside and outside Canada. There are various ways in which income is taxed, depending on the person or entity earning… ### Independent Contractor URL: https://www.barretttaxlaw.com/glossary/independent-contractor Independent Contractor It is important when you are doing business to ensure that you are not incorrectly characterized as being an employee vs. independent contractor. And just… ### Indirect Verification of Income URL: https://www.barretttaxlaw.com/glossary/indirect-verification-of-income Indirect verification of income (IVI) is a family of audit techniques the Canada Revenue Agency uses to estimate income without relying solely on the taxpayer's books and re… ### Informal Procedure URL: https://www.barretttaxlaw.com/glossary/informal-procedure The Informal Procedure is a streamlined track at the Tax Court of Canada for smaller or simpler appeals. It is generally available where the federal tax and penalties at issue f… ### Input Tax Credit (ITC) URL: https://www.barretttaxlaw.com/glossary/input-tax-credit An input tax credit (ITC) is a credit a GST/HST registrant can claim for the GST/HST it pays on purchases and expenses used in its commercial activities. ITCs reduce the net tax… ### Integration URL: https://www.barretttaxlaw.com/glossary/tax-integration Integration is the principle underlying the Canadian corporate-personal tax system: income earned through a corporation and then distributed to an individual shareholder should … ### Intergenerational Business Transfer (Bill C-208) URL: https://www.barretttaxlaw.com/glossary/intergenerational-business-transfer-bill-c208 Rules that permit a tax-deferred or capital-gains-eligible sale of the shares of a family business — including a professional corporation — to a corporation controlled by the ow… ### LCGE Multiplication URL: https://www.barretttaxlaw.com/glossary/lcge-multiplication A planning result in which the Lifetime Capital Gains Exemption (LCGE), which is available per individual, is used by several family members on the same business sale. A discret… ### Lifetime Capital Gains Exemption URL: https://www.barretttaxlaw.com/glossary/lifetime-capital-gains-exemption Lifetime Capital Gains Exemption A major consideration when planning for one’s exit is the lifetime capital gains exemption (the “LCGE”). Here’s how it works: When one disposes … ### Minister's Assumptions URL: https://www.barretttaxlaw.com/glossary/ministers-assumptions The factual assumptions the Minister of National Revenue states, in the Reply, were relied on when issuing an assessment. On appeal these assumptions are presumed correct, and t… ### Minutes of Settlement URL: https://www.barretttaxlaw.com/glossary/minutes-of-settlement Minutes of settlement are the written, signed agreement that records the terms on which a Tax Court of Canada appeal is resolved without trial. They typically set out how each i… ### Multiplication of the LCGE URL: https://www.barretttaxlaw.com/glossary/multiplication-of-the-lcge A planning strategy that spreads the gain on a sale of qualifying property across several family members — often through a discretionary family trust — so that multiple individu… ### Mutual Wills Agreement URL: https://www.barretttaxlaw.com/glossary/mutual-wills-agreement A binding contract under which two or more people — often spouses in a blended family — agree to make their wills in agreed terms and agree not to change them without the others… ### Net Worth Assessment URL: https://www.barretttaxlaw.com/glossary/net-worth-assessment A net worth assessment is a technique the Canada Revenue Agency uses to reconstruct a taxpayer's income indirectly. Rather than auditing reported income line by line, the CR… ### Net Worth Audit URL: https://www.barretttaxlaw.com/glossary/net-worth-audit Net Worth Audit If a taxpayer’s books and records are seriously lacking or if an auditor cannot obtain all the required documents to perform the audit, the auditor can elect to … ### Non Arm’s Length Tax Assessments URL: https://www.barretttaxlaw.com/glossary/non-arms-length-tax-assessments Non Arm’s Length Tax Assessments When the collections agent has determined that there is nothing left to be collected from a tax debtor, besides going after directors (which is … ### Non Arm’s Length Transaction URL: https://www.barretttaxlaw.com/glossary/non-arms-length-transaction Non Arm’s Length Transaction Non Arm’s Length Transaction: A transaction which occurs between people or parties which the CRA deems to be related. Included in the definition of … ### Non Filers URL: https://www.barretttaxlaw.com/glossary/non-filers Non Filers There are many different consequences that can result from not filing tax returns. These consequences range from a small penalty to jail time. And when the CRA decide… ### Non-Arm's-Length Transfer URL: https://www.barretttaxlaw.com/glossary/non-arms-length-transfer A non-arm's-length transfer is a transfer of property between persons the Income Tax Act treats as related — such as family members, or a corporation and a person who contro… ### Notice of Appeal URL: https://www.barretttaxlaw.com/glossary/notice-of-appeal A notice of appeal is the document that starts a Tax Court of Canada appeal. It sets out the material facts, the issues, the statutory provisions relied on, the reasons the reas… ### Notice of Assessment URL: https://www.barretttaxlaw.com/glossary/notice-of-assessment Notice of Assessment After businesses and individuals file their returns with the CRA, the agency processes the returns, which involves making a decision as to whether to audit … ### Notice of Confirmation URL: https://www.barretttaxlaw.com/glossary/notice-of-confirmation A notice of confirmation is the Canada Revenue Agency Appeals decision that confirms a reassessment, in whole or in part, after reviewing a notice of objection. It marks the end… ### Notice of Objection URL: https://www.barretttaxlaw.com/glossary/notice-of-objection Notice of Objection If a taxpayer disagrees with the assessment, they have an option to appeal the decision, the first step of which begins by the filing of a “Notice of Objecti… ### Notice of Reassessment URL: https://www.barretttaxlaw.com/glossary/notice-of-reassessment A notice of reassessment is the formal Canada Revenue Agency document that changes a prior notice of assessment for a tax year. It restates the tax, interest, and penalties owin… ### Notional Assessment URL: https://www.barretttaxlaw.com/glossary/notional-assessment A notional assessment is an assessment the Canada Revenue Agency raises when a taxpayer has not filed a required return. Acting under its authority to assess tax payable, the CR… ### Notional Assessment URL: https://www.barretttaxlaw.com/glossary/arbitrary-notional-assessment A notional or arbitrary assessment is an assessment the Canada Revenue Agency raises when a taxpayer has not filed a required return. Using the information available to it — oft… ### Owner-Manager Remuneration URL: https://www.barretttaxlaw.com/glossary/owner-manager-remuneration Owner-manager remuneration refers to how the owner of an incorporated business pays themselves from the corporation — principally through salary, dividends, or a blend of the tw… ### Paid-Up Capital URL: https://www.barretttaxlaw.com/glossary/paid-up-capital Paid-up capital (PUC) is a tax measure of the amount a corporation can return to its shareholders as a tax-free repayment of capital, without producing a deemed dividend under s… ### Partnerships URL: https://www.barretttaxlaw.com/glossary/partnerships Partnerships Partnerships are one type of business structure, and are different from corporations and sole proprietorships. If two or more people form a business and start opera… ### Passive Foreign Investment Company URL: https://www.barretttaxlaw.com/glossary/pfic A passive foreign investment company (PFIC) is a United States tax concept, not a Canadian one. It refers to a foreign corporation that meets either an income test or an asset t… ### Payment Arrangement URL: https://www.barretttaxlaw.com/glossary/payment-arrangement A payment arrangement is an agreement under which the Canada Revenue Agency accepts payment of a tax debt by scheduled instalments rather than in full immediately. It does not r… ### Payroll vs Dividends URL: https://www.barretttaxlaw.com/glossary/payroll-vs-dividends Payroll vs. Dividends If you are operating a corporation there are a variety of ways that you could pay yourself. Sole proprietors have no options. They directly earn their inco… ### Penalty Recommendation Report URL: https://www.barretttaxlaw.com/glossary/penalty-recommendation-report A penalty recommendation report is the internal CRA document in which an auditor sets out the facts and reasoning supporting a proposed gross negligence penalty under subsection… ### Permanent Establishment (UAE Corporate Tax) URL: https://www.barretttaxlaw.com/glossary/permanent-establishment-uae A permanent establishment is a taxable presence that a foreign person can create in the UAE, bringing the income attributable to that presence within UAE Corporate Tax even wher… ### Personal Services Business URL: https://www.barretttaxlaw.com/glossary/personal-services-business Personal Services Business The Personal Services Business (“PSB”) is defined by the CRA as “a business that a corporation carried on to provide services to another entity (such … ### Personal Services Business (PSB) URL: https://www.barretttaxlaw.com/glossary/personal-services-business-psb A personal services business (PSB) is, in the CRA's words, a business a corporation carries on to provide the services of an "incorporated employee" — an individua… ### Pharmacy Professional Corporation (PPC) URL: https://www.barretttaxlaw.com/glossary/pharmacy-professional-corporation A corporation formed under provincial law that allows a licensed pharmacist to carry on the practice of pharmacy while maintaining limited liability and access to corporate tax … ### Pipeline Planning URL: https://www.barretttaxlaw.com/glossary/pipeline-planning Pipeline planning is a structure that allows corporate surplus to be extracted as a repayment of capital rather than as a taxable dividend. In the post-mortem context, the estat… ### Post-Mortem Pipeline URL: https://www.barretttaxlaw.com/glossary/post-mortem-pipeline A post-mortem tax strategy used to avoid double taxation on private-corporation shares held at death. On death, the shares face capital-gains tax under the deemed disposition; w… ### Post-Mortem Planning URL: https://www.barretttaxlaw.com/glossary/post-mortem-planning Post-mortem planning addresses the potential double taxation that can arise when a shareholder of a private corporation dies. At death, the deemed disposition rules tax the accr… ### Predominant Purpose Test URL: https://www.barretttaxlaw.com/glossary/predominant-purpose-test The predominant purpose test, established by the Supreme Court of Canada in R. v. Jarvis and R. v. Ling , determines when a CRA inquiry has shifted from a civil audit to a crimi… ### Principal Purpose Test (PPT) URL: https://www.barretttaxlaw.com/glossary/principal-purpose-test-ppt The Principal Purpose Test is an anti-abuse rule found in many modern double taxation agreements, including a number of the UAE's treaties. Under the PPT, treaty relief can … ### Principal Residence Exemption URL: https://www.barretttaxlaw.com/glossary/principal-residence-exemption The principal residence exemption shelters all or part of the capital gain realized on the disposition of a property that qualified as the taxpayer's principal residence. A … ### QSBC Purification URL: https://www.barretttaxlaw.com/glossary/qsbc-purification The process of removing or restructuring passive and non-active assets from an operating corporation so that it satisfies the Qualified Small Business Corporation (QSBC) tests, … ### Qualified Domestic Trust (QDOT) URL: https://www.barretttaxlaw.com/glossary/qualified-domestic-trust-qdot A qualified domestic trust (QDOT) is a United States estate-planning structure that allows the United States estate-tax marital deduction to apply where the surviving spouse is … ### Qualified Small Business Corporation URL: https://www.barretttaxlaw.com/glossary/qualified-small-business-corporation Qualified Small Business Corporation A major consideration when planning for one’s exit is the lifetime capital gains exemption (the “LCGE”). Here’s how it works: When one dispo… ### Qualified Small Business Corporation Shares URL: https://www.barretttaxlaw.com/glossary/qualified-small-business-corporation-shares Qualified small business corporation (QSBC) shares are shares of a Canadian-controlled private corporation that meet a set of tests in the Income Tax Act, the reward for which i… ### Qualifying Free Zone Person (QFZP) URL: https://www.barretttaxlaw.com/glossary/qualifying-free-zone-person-qfzp A Qualifying Free Zone Person is a UAE free zone entity that qualifies for a 0% Corporate Tax rate on its qualifying income, with a 9% rate applying to any non-qualifying income… ### Qualifying Income (UAE Free Zones) URL: https://www.barretttaxlaw.com/glossary/qualifying-income-uae-free-zones Qualifying income is the category of a UAE free zone entity's income that can benefit from the 0% Corporate Tax rate available to a Qualifying Free Zone Person. It generally… ### Quick Method of Accounting URL: https://www.barretttaxlaw.com/glossary/quick-method-of-accounting The Quick Method of Accounting is a simplified way for eligible small businesses to calculate the GST/HST they remit. Instead of tracking and claiming input tax credits on most … ### Quick Method of Accounting for GST/HST URL: https://www.barretttaxlaw.com/glossary/quick-method-gst-hst The Quick Method is a simplified way for eligible smaller businesses to account for GST/HST. Instead of tracking and claiming input tax credits on most purchases, the registrant… ### Reasonableness (Section 67) URL: https://www.barretttaxlaw.com/glossary/reasonableness-section-67 Section 67 of the Income Tax Act limits the deduction of an expense to an amount that is reasonable in the circumstances. Even where an outlay is otherwise deductible because it… ### Recapture of Capital Cost Allowance URL: https://www.barretttaxlaw.com/glossary/recapture Recapture arises when depreciable property is disposed of for more than the undepreciated capital cost of its class. The excess, up to the property's original capital cost, … ### Record Keeping URL: https://www.barretttaxlaw.com/glossary/record-keeping Record Keeping Whether you plan on selling the business and need to show immaculate records to a buyer or whether you just want to ensure that an audit goes smoothly and that yo… ### Rectification URL: https://www.barretttaxlaw.com/glossary/rectification Rectification is an equitable remedy that asks a court to correct a written instrument so that it reflects the parties' true, agreed intention where the document, as drafted… ### Refundable Dividend Tax on Hand URL: https://www.barretttaxlaw.com/glossary/refundable-dividend-tax-on-hand Refundable dividend tax on hand (RDTOH) is an account that tracks refundable corporate tax paid on a private corporation's investment income — both Part I tax on aggregate i… ### Replacement Property Rules URL: https://www.barretttaxlaw.com/glossary/replacement-property-rules The replacement property rules in section 44 of the Income Tax Act, with a parallel rule in subsection 13(4) for depreciable property, allow a taxpayer to defer the capital gain… ### Reply (Tax Court) URL: https://www.barretttaxlaw.com/glossary/reply-tax-court The reply is the Crown's responding pleading in a Tax Court of Canada appeal, filed by Department of Justice counsel for the Minister of National Revenue. It admits or denie… ### Reply (Tax Court) URL: https://www.barretttaxlaw.com/glossary/reply-to-notice-of-appeal The document the Crown (the Department of Justice, acting for the Minister of National Revenue) files in response to a Notice of Appeal, usually within 60 days. It sets out the … ### Representation Agreement (British Columbia) URL: https://www.barretttaxlaw.com/glossary/representation-agreement-bc A British Columbia legal instrument, similar in function to a power of attorney for personal care, that lets an adult appoint a representative to make health-care, personal-care… ### Requirement To Pay URL: https://www.barretttaxlaw.com/glossary/requirement-to-pay Requirement To Pay A “Requirement To Pay” or an “RTP” is a tool which is used to collect money which business clients owe the CRA. The way an RTP works is that the collector iss… ### Requirement to Pay (RTP) URL: https://www.barretttaxlaw.com/glossary/requirement-to-pay-rtp A Requirement to Pay (RTP) is a CRA collections tool that directs a third party who owes money to a tax debtor to remit those funds to the CRA instead. Issued to a customer of a… ### Reverse Onus (Subsection 163(3)) URL: https://www.barretttaxlaw.com/glossary/reverse-onus-163-3 The reverse onus is the rule that shifts the burden of proof from the taxpayer to the Minister of National Revenue. In almost every tax appeal the taxpayer must prove the assess… ### Rollover URL: https://www.barretttaxlaw.com/glossary/rollover A rollover is a tax provision that allows property to be transferred without triggering an immediate disposition, deferring any accrued gain until a later event. Rollovers prese… ### Rule 147 Settlement Offer URL: https://www.barretttaxlaw.com/glossary/rule-147-settlement-offer Rule 147 of the Tax Court of Canada Rules (General Procedure) governs costs, including the enhanced cost consequences that flow from a written settlement offer. Where a party ma… ### Safe Income URL: https://www.barretttaxlaw.com/glossary/safe-income Safe income is the retained earnings of a corporation, computed for tax purposes, that can reasonably be considered to contribute to the accrued gain on a share. The concept is … ### Secondary Will URL: https://www.barretttaxlaw.com/glossary/secondary-will A separate will that governs specific assets — most often shares of a private corporation — alongside a primary will that covers the rest of the estate. Business owners use a se… ### Section 116 Clearance Certificate URL: https://www.barretttaxlaw.com/glossary/section-116-clearance-certificate A section 116 clearance certificate is the Canada Revenue Agency document confirming that a non-resident's disposition of taxable Canadian property has been reported and tha… ### Section 160 Derivative Liability URL: https://www.barretttaxlaw.com/glossary/section-160-liability Section 160 of the Income Tax Act (and section 325 of the Excise Tax Act for GST/HST) imposes joint and several liability on a person who receives property from a tax debtor for… ### Section 216 Election URL: https://www.barretttaxlaw.com/glossary/section-216-election Section 216 Election When non-residents receive rental income from rental or immovable property in Canada, the tenant or agent must withhold non-resident tax which is 25% on the… ### Section 84.1 URL: https://www.barretttaxlaw.com/glossary/section-84-1 Section 84.1 of the Income Tax Act is an anti-avoidance rule aimed at surplus stripping — extracting a corporation's retained earnings as a lower-taxed capital gain rather t… ### Section 85 Rollover URL: https://www.barretttaxlaw.com/glossary/section-85-rollover A section 85 rollover lets a taxpayer transfer eligible property to a taxable Canadian corporation in exchange for shares (and possibly other consideration) at a jointly elected… ### Section 86 Reorganization URL: https://www.barretttaxlaw.com/glossary/section-86-reorganization Section 86 of the Income Tax Act allows a tax-deferred share-for-share exchange carried out as part of a reorganization of a corporation's capital. It is most often used to … ### Sham Doctrine URL: https://www.barretttaxlaw.com/glossary/sham-doctrine The sham doctrine is a common-law principle that allows a court to disregard the legal form of a transaction where the parties created documents intended to mislead others about… ### Shareholder Benefit URL: https://www.barretttaxlaw.com/glossary/shareholder-benefit A shareholder benefit arises under subsection 15(1) of the Income Tax Act when a corporation confers a benefit on a shareholder. The value of the benefit is included in the shar… ### Shareholder Loan under Subsection 15(2) URL: https://www.barretttaxlaw.com/glossary/shareholder-loan-section-15-2 Subsection 15(2) of the Income Tax Act generally requires a shareholder who receives a loan from the corporation to include the loan amount in income, on the basis that an open-… ### Small Business Deduction URL: https://www.barretttaxlaw.com/glossary/small-business-deduction The small business deduction reduces the federal corporate tax rate on a Canadian-controlled private corporation's active business income, up to an annual limit that is curr… ### Sole Proprietorship URL: https://www.barretttaxlaw.com/glossary/sole-proprietorship Sole Proprietorship A Sole Proprietorship (an “SP”) is a business owned and run by a person. There are no partners and there are no shareholders. And it does not have to be regi… ### Source Concept Of Tax URL: https://www.barretttaxlaw.com/glossary/source-concept-of-tax Source Concept Of Tax In order to be taxable, the Canadian income tax system requires income to be allocated to a “source” either contained in the Income Tax Act or recognized b… ### Source Deductions URL: https://www.barretttaxlaw.com/glossary/source-deductions Source Deductions Operating a Canadian business means in most cases, being an agent of the CRA for the collection and withholding of certain amounts. Most businesses will end up… ### Specified Foreign Property URL: https://www.barretttaxlaw.com/glossary/specified-foreign-property Specified Foreign Property Foreign property reporting requirements in Canada – A Canadian tax lawyer’s guidance on T1135 obligations When a Canadian resident holds specified for… ### Spousal Rollover URL: https://www.barretttaxlaw.com/glossary/spousal-rollover A tax provision that allows capital property to transfer to a surviving spouse or common-law partner — directly or through a qualifying spousal trust — at the deceased's adj… ### Standard of Review URL: https://www.barretttaxlaw.com/glossary/standard-of-review The standard of review is the degree of deference an appeal court gives to the decision under appeal. At the Federal Court of Appeal in a tax matter, the standard determines whe… ### Statute-Barred Year URL: https://www.barretttaxlaw.com/glossary/statute-barred-year A statute-barred year is a tax year that has passed the normal reassessment period and cannot be reassessed by the Canada Revenue Agency unless a specific statutory exception ap… ### Stop-Loss Rules URL: https://www.barretttaxlaw.com/glossary/stop-loss-rules The stop-loss rules in the Income Tax Act restrict or grind a capital loss on shares in defined circumstances, generally where a loss has been generated in a way the Act treats … ### Streamlined Foreign Offshore Procedures URL: https://www.barretttaxlaw.com/glossary/streamlined-foreign-offshore-procedures The Streamlined Foreign Offshore Procedures are a United States Internal Revenue Service compliance program for US persons living outside the United States who failed to report … ### Subparagraph 152(4)(a)(i) URL: https://www.barretttaxlaw.com/glossary/subparagraph-152-4-a-i Subparagraph 152(4)(a)(i) of the Income Tax Act lets the Canada Revenue Agency reassess a taxpayer after the normal reassessment period where the taxpayer made a misrepresentati… ### Substantial Presence Test URL: https://www.barretttaxlaw.com/glossary/substantial-presence-test The substantial presence test is the United States rule that determines whether a non-citizen is treated as a US tax resident based on days of physical presence. A person genera… ### Superficial Loss URL: https://www.barretttaxlaw.com/glossary/superficial-loss A superficial loss is a capital loss that the Income Tax Act denies because the taxpayer, or an affiliated person, acquired the same or identical property within 30 days before … ### Surplus Stripping URL: https://www.barretttaxlaw.com/glossary/surplus-stripping Surplus stripping describes arrangements that seek to extract a corporation's retained earnings as a lower-taxed capital gain or a return of capital rather than as a dividen… ### T1134 Foreign Affiliate Information Return URL: https://www.barretttaxlaw.com/glossary/t1134 Form T1134 is the information return that Canadian residents and corporations must file annually for each foreign affiliate. A foreign affiliate is generally a non-resident corp… ### T1135 Foreign Income Verification Statement URL: https://www.barretttaxlaw.com/glossary/t1135 Form T1135, the Foreign Income Verification Statement, must be filed annually by Canadian residents whose specified foreign property cost more than $100,000 at any time in the y… ### Tariff Costs URL: https://www.barretttaxlaw.com/glossary/tariff-costs Tariff costs are the fixed schedule of amounts a court may award to a successful party for each step in litigation — filing, discovery, preparation, and hearing days. At the Tax… ### Tax Court General Procedure URL: https://www.barretttaxlaw.com/glossary/tax-court-general-procedure Tax Court General Procedure For a corporation, unless it has received permission of the court to allow an officer to represent it, there is no choice but to engage a lawyer as i… ### Tax Court Informal Procedure URL: https://www.barretttaxlaw.com/glossary/tax-court-informal-procedure Tax Court Informal Procedure There is no fee to file an appeal under the informal procedure and there is also no need for a corporation to have a lawyer as a representative. Man… ### Tax Court of Canada URL: https://www.barretttaxlaw.com/glossary/tax-court-of-canada Tax Court of Canada If a taxpayer finds that they have not resolved their issue after having gone through the appeals process, the only way forward is to appeal to the Tax Court… ### Tax Credits URL: https://www.barretttaxlaw.com/glossary/tax-credits Tax Credits Tax credits are amounts that directly offset tax payable, while tax deductions are amounts which are used to offset and reduce a taxpayer’s income. To understand how… ### Tax Deductions URL: https://www.barretttaxlaw.com/glossary/tax-deductions Tax Deductions Considering deductions in more detail, their basis is s. 9(1) of the Income Tax Act, with exclusions provided elsewhere in the Act. Section 9(1) defines profit wh… ### Tax Deferral URL: https://www.barretttaxlaw.com/glossary/tax-deferral Things Most Often Audited Low-Hanging Fruit for the Auditor There are a variety of areas most often targeted by auditors because they are low-hanging fruit. The auditor doesn’t … ### Tax Evasion URL: https://www.barretttaxlaw.com/glossary/tax-evasion Tax evasion is the offence of wilfully evading or attempting to evade the payment of tax, or wilfully making false or deceptive statements on a return, contrary to subsection 23… ### Tax Lien URL: https://www.barretttaxlaw.com/glossary/tax-lien Tax Lien Placing Liens on Property Many taxpayers will tell you that while they were in collections the CRA placed a lien on their properties. This is commonplace. Where the col… ### Tax Remission Order URL: https://www.barretttaxlaw.com/glossary/tax-remission-order A remission order is a discretionary cancellation of a tax debt granted by the federal government, generally as a last resort where it would be seriously unfair to require payme… ### Tax Residence Determination in Canada URL: https://www.barretttaxlaw.com/glossary/tax-residence-determination-in-canada Tax Residence Determination in Canada The basis for Canadian taxation The Canadian income tax system is based on residence status. Under subsection 2(1) of the Income Tax Act , … ### Tax Returns URL: https://www.barretttaxlaw.com/glossary/tax-returns Tax Returns The Canadian tax filing system is dependent on individual self-assessment. In regard to income, taxpayers are expected to provide truthful and accurate information s… ### Tax on Split Income URL: https://www.barretttaxlaw.com/glossary/tax-on-split-income-tosi The tax on split income (TOSI) applies the highest marginal personal tax rate to certain income — primarily dividends, capital gains, and similar passive returns — received by a… ### Tax on Split Income (TOSI) URL: https://www.barretttaxlaw.com/glossary/tax-on-split-income The tax on split income (TOSI) is a set of rules in the Income Tax Act, expanded in 2018, that applies the top marginal personal tax rate to certain income — most commonly priva… ### Taxable Benefit URL: https://www.barretttaxlaw.com/glossary/taxable-benefit A taxable benefit is the value of a benefit an employee receives because of their employment, which paragraph 6(1)(a) of the Income Tax Act requires the employee to include in i… ### Taxable Benefits URL: https://www.barretttaxlaw.com/glossary/taxable-benefits Taxable Benefits A taxable benefit is essentially something that you receive from your corporation, which is not cash, but which has a cash value to you. For example, if your co… ### Taxable Canadian Property URL: https://www.barretttaxlaw.com/glossary/taxable-canadian-property Taxable Canadian property (TCP) is the category of property whose disposition by a non-resident of Canada can be subject to Canadian tax. The main types include real or immovabl… ### Taxpayer Bill of Rights URL: https://www.barretttaxlaw.com/glossary/taxpayer-bill-of-rights Taxpayer Bill of Rights A good place to start learning about one’s rights is the Taxpayer Bill of Rights. While this “Taxpayer Bill of Rights” is not a true legal “Bill”, many o… ### Taxpayer Relief URL: https://www.barretttaxlaw.com/glossary/taxpayer-relief Taxpayer relief refers to the discretion the Canada Revenue Agency has, under subsection 220(3.1) of the Income Tax Act and parallel provisions, to cancel or waive interest and … ### Taxpayer Relief Provisions URL: https://www.barretttaxlaw.com/glossary/taxpayer-relief-provisions The taxpayer-relief provisions, found in subsection 220(3.1) of the Income Tax Act, give the Canada Revenue Agency discretion to cancel or waive penalties and interest — though … ### Taxpayer Relief Request (RC4288) URL: https://www.barretttaxlaw.com/glossary/taxpayer-relief-rc4288 A taxpayer relief request, made on Form RC4288, asks the Minister of National Revenue to use the discretion in subsection 220(3.1) of the Income Tax Act to cancel or waive penal… ### Taxpayer’s Ombudsman URL: https://www.barretttaxlaw.com/glossary/taxpayers-ombudsman Taxpayer’s Ombudsman The Taxpayer’s Ombudsman is an independent official, who advocates for taxpayers and assists with complaints. The Ombudsman’s office will not be able to hel… ### Terminal Loss URL: https://www.barretttaxlaw.com/glossary/terminal-loss A terminal loss occurs when the last property in a capital cost allowance class is disposed of for less than the undepreciated capital cost remaining in that class. The shortfal… ### Things Most Often Audited URL: https://www.barretttaxlaw.com/glossary/things-most-often-audited Things Most Often Audited Low-Hanging Fruit for the Auditor There are a variety of areas most often targeted by auditors because they are low-hanging fruit. The auditor doesn’t … ### Third-Party Penalty URL: https://www.barretttaxlaw.com/glossary/third-party-penalty The third-party civil penalties in section 163.2 of the Income Tax Act apply to advisers and others who participate in or culpably ignore false statements that a taxpayer uses f… ### Treaty Tie-Breaker Rules URL: https://www.barretttaxlaw.com/glossary/treaty-tie-breaker Treaty tie-breaker rules are the provisions in a tax treaty that assign a single country of residence to a person who would otherwise be a resident of both countries under their… ### Trust Amounts URL: https://www.barretttaxlaw.com/glossary/trust-amounts Trust amounts are taxes a business collects or withholds on the government's behalf and holds in trust for the Canada Revenue Agency — principally GST/HST collected from cus… ### Trust Tax Debt URL: https://www.barretttaxlaw.com/glossary/trust-tax-debt Trust Tax Debt Trust Debts Compared to Income Tax Debts When dealing with the collections agent, remember the distinction between trust debts and regular debts – taxpayers are t… ### Twenty-One-Year Rule URL: https://www.barretttaxlaw.com/glossary/twenty-one-year-rule The twenty-one-year rule, under subsection 104(4) of the Income Tax Act, deems most trusts to dispose of their capital property at fair market value every twenty-one years. The … ### UAE Tax Residency Certificate (TRC) URL: https://www.barretttaxlaw.com/glossary/uae-tax-residency-certificate-trc A UAE Tax Residency Certificate is a document issued by the UAE Ministry of Finance that confirms an individual's or entity's tax residence in the UAE for a specified 12… ### Unanimous Shareholders' Agreement (USA) URL: https://www.barretttaxlaw.com/glossary/unanimous-shareholders-agreement A unanimous shareholders' agreement (USA) is a contract among all of a corporation's shareholders that governs how they will deal with one another and with the corporati… ### Undepreciated Capital Cost URL: https://www.barretttaxlaw.com/glossary/undepreciated-capital-cost Undepreciated capital cost (UCC) is the remaining, unclaimed depreciable balance of a capital cost allowance class. It equals the original capital cost of the property in the cl… ### Unreported Income URL: https://www.barretttaxlaw.com/glossary/unreported-income Unreported income is income a taxpayer earned but did not include on a filed return — cash sales, side-business revenue, rental or investment income, foreign income, or capital … ### Viva Voce Evidence URL: https://www.barretttaxlaw.com/glossary/viva-voce-evidence Viva voce evidence is oral testimony — live evidence given by a witness under oath, in the witness box, subject to cross-examination. In a Tax Court of Canada appeal it compleme… ### Voluntary Disclosures Program URL: https://www.barretttaxlaw.com/glossary/voluntary-disclosures-program Voluntary Disclosures Program The Voluntary Disclosures Program falls under taxpayer relief provisions. A Voluntary Disclosures Program (“VDP”) application is an application whe… ### Voting and Non-Voting Shares (Pharmacy Ownership) URL: https://www.barretttaxlaw.com/glossary/voting-non-voting-shares-pharmacy A distinction central to pharmacy ownership and estate planning. Voting shares carry control of corporate decisions and, in most provinces, may be held only by licensed pharmaci… ### Wage Garnishee URL: https://www.barretttaxlaw.com/glossary/wage-garnishee Voluntary Disclosures Program Garnisheeing Wages One of the more feared powers of CRA collectors is their ability to garnishee wages. If an individual taxpayer who is a sole pro… ### Wilful Blindness URL: https://www.barretttaxlaw.com/glossary/wilful-blindness Wilful blindness is a state of mind in which a person suspects a fact, has the means to confirm it, and deliberately chooses not to inquire so as to avoid confirming what they s… ### Zero-Rated vs Exempt Supplies URL: https://www.barretttaxlaw.com/glossary/zero-rated-vs-exempt-supplies Under the GST/HST framework, the difference between a zero-rated supply and an exempt supply lies in both the rate charged and the supplier's ability to recover tax on input… ### “Unnamed Persons” Search: An Enhanced Ability For The CRA To Identify Taxpayers To Audit. URL: https://www.barretttaxlaw.com/glossary/unnamed-persons-search-an-enhanced-ability-for-the-cra-to-identify-taxpayers-to-audit “Unnamed Persons” Search: An Enhanced Ability For The CRA To Identify Taxpayers To Audit. by Alex Kerslake Taxpayers are often aware of the common triggers for a Canada Revenue … ## 15. Articles ### Bare Trusts and the New Trust Reporting Rules: What Canadians Need to Know Date: 2026-06-12T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/bare-trust-reporting-rules-canada Bare trusts caused widespread confusion when Canada's expanded T3 trust reporting rules arrived. Here is the current 2026 status after Bill C-15, the repeated CRA deferrals, what Schedule 15 requires, and how to plan ahead. ### Tax Planning for Incorporated Professionals: Doctors, Dentists, and Lawyers Date: 2026-06-12T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/tax-planning-doctors-dentists-incorporated-professionals How professional corporations fit salary vs. dividends, the small-business deduction and the passive-income grind, TOSI limits on income splitting, the LCGE, individual pension plans, and exit planning for doctors, dentists, and lawyers in 2026. ### Tax Planning for Real Estate Investors in Canada Date: 2026-06-12T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/tax-planning-for-real-estate-investors-canada A framework for Canadian real estate investors: capital vs. income, the 2023 property-flipping rule, ownership structures, GST/HST and the new rental rebates, the principal residence exemption, CCA recapture, section 216, and interest deductibility. ### Co-Counsel in Action: When an Accountant Brings in a Tax Lawyer Mid-Audit Date: 2026-06-12T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/case-study-accountant-referral-cra-audit An illustrative look at the co-counsel model: how a CPA can bring a tax lawyer into an escalating CRA audit to handle the dispute and privilege while keeping the client and the books. The accountant stays the trusted advisor; the lawyer does not poach. ### Co-Counsel in Action: A Financial Planner, an Estate Freeze, and a Family Trust Date: 2026-06-12T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/case-study-financial-planner-referral-estate An illustrative look at how a financial planner referred a business-owner client to tax counsel for succession planning — and how an estate freeze and family trust were designed and implemented with the planner and accountant. Anonymized example only; outcomes depend on facts. ### When Personal and Business Blur: Peach v. Canada and the Limits of Deductible Business Expenses Under Sections 18(1)(a) and 67 Date: 2026-06-11T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/tcc-case-peach-business-expense-deductibility-reasonableness-18-1-a-67 In Peach v. Canada (2022 FCA 163), the Federal Court of Appeal upheld the disallowance of a taxpayer's business and rental losses. A look at how courts apply the purpose test in s.18(1)(a) and the reasonableness limit in s.67 when personal and family elements blur an activity. ### Capital Gain or Business Income? The Badges of Trade at the Tax Court — Wall v. The Queen, 2019 TCC 168 Date: 2026-06-11T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/tcc-case-capital-vs-income-badges-of-trade-wall In Wall v. The Queen, 2019 TCC 168 (affirmed 2021 FCA 132), the Tax Court used the badges of trade to recharacterize a real estate agent's home sales as fully taxable business income, not capital gains — and upheld gross negligence penalties. ### When a Director Escapes Personal Liability: Hamad v. The Queen and the Due-Diligence Defence Under Section 227.1 Date: 2026-06-11T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/tcc-case-hamad-directors-liability-due-diligence-227-1 In Hamad v. The Queen (2019 TCC 137), the Tax Court allowed a director's due-diligence defence to a section 227.1 assessment for unremitted source deductions. A look at why he succeeded under the demanding Buckingham standard. ### When a Leveraged Donation Is Not a Gift: Kossow v. The Queen, 2012 TCC 325 Date: 2026-06-11T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/tcc-case-donation-shelter-kossow-2012-tcc-325 In Kossow v. The Queen, 2012 TCC 325 (affirmed 2013 FCA 283), the Tax Court denied donation tax credits for a leveraged charity shelter. The reason is the heart of every gifting case: an interest-free loan was a benefit that vitiated the gift. ### Wilful Blindness vs. Negligence: What Wynter v. Canada (2017 FCA 195) Means for 163(2) Penalties Date: 2026-06-11T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/tcc-case-gross-negligence-wilful-blindness-wynter-fca-195 In Wynter v. Canada, the Federal Court of Appeal set the standard for subsection 163(2) gross-negligence penalties: wilful blindness is deliberate ignorance, while gross negligence is judged objectively. A close look at the decision and what it means for taxpayers. ### When a Valid GST Number Isn't Enough: Comtronic Computer and the ITC Documentary Rules Date: 2026-06-11T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/tcc-case-comtronic-itc-documentary-requirements-gst-hst In Comtronic Computer Inc. v. The Queen, 2010 TCC 55, the Tax Court denied roughly $500,000 in input tax credits because the GST numbers on the supplier invoices, though genuine, belonged to other registrants. A case comment on the documentary rules under section 169(4) ETA. ### When Many Conditions Don't Add Up to a 'Marked Restriction': Laing v. The Queen (2019 TCC 267) and the Disability Tax Credit Date: 2026-06-11T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/tcc-case-laing-disability-tax-credit-cumulative-effect-2019-tcc-267 In Laing v. The Queen, 2019 TCC 267, the Tax Court explained how the disability tax credit's cumulative-effect rule actually works — and why several real, documented conditions can still fall short of the 'markedly restricted' threshold. ### Rebutting a CRA Net Worth Assessment: Lessons from Halls v. The Queen, 2022 TCC 14 Date: 2026-06-11T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/tcc-case-net-worth-halls-2022-tcc-14 In Halls v. The Queen, 2022 TCC 14, the Tax Court upheld a CRA net worth assessment of a restaurant owner. The decision is a clear roadmap of what taxpayers must actually prove to displace the Minister's assumptions. ### The 10-Year Clock on Interest Relief: What Bozzer v. Canada (2011 FCA 186) Means for Taxpayers Date: 2026-06-11T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/tcc-case-bozzer-taxpayer-relief-ten-year-interest-limitation In Bozzer v. Canada, the Federal Court of Appeal held that the 10-year limit on CRA interest relief runs from when interest accrues, not when the tax debt arose — letting taxpayers cancel recent interest on old debts. A case comment on penalty/interest relief. ### When a "Home" Is Really Inventory: Hansen v. The Queen and the Principal Residence Exemption for House Flippers Date: 2026-06-11T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/tcc-case-principal-residence-exemption-house-flipping-hansen In Hansen v. The Queen, 2020 TCC 102, the Tax Court denied the principal residence exemption on two house sales it found were really a business — but cancelled the gross negligence penalties because the taxpayer relied on his accountant. ### Section 160 and the Family Home: Lessons from Vasilkioti v The King, 2024 TCC 101 Date: 2026-06-11T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/tcc-case-net-worth-section-160-spousal-transfer-vasilkioti In Vasilkioti v The King, 2024 TCC 101, the Tax Court vacated a roughly $72,000 section 160 derivative-liability assessment because the CRA could not prove the transferor spouse actually owed the underlying tax. A reminder that even this harsh collection rule has real limits. ### Valuing a Shareholder Benefit for Personal Use of a Corporate Home: Youngman v. The Queen Date: 2026-06-11T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/tcc-case-shareholder-benefit-youngman-personal-use-corporate-home In Youngman v. The Queen, the Federal Court of Appeal set the test for valuing a subsection 15(1) shareholder benefit when a corporation lets a shareholder use corporate property. A look at why fair market rent is not always the answer. ### When Better Pie Recipes Are R&D: Canafric Inc. v. The King and the Five-Question SR&ED Test Date: 2026-06-11T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/tcc-case-canafric-sred-technological-uncertainty-five-questions In Canafric Inc. v. The King, 2023 TCC 108, the Tax Court applied the Northwest Hydraulic five-question test, found genuine technological uncertainty in frozen-pie development, and confirmed that contemporaneous documentation is persuasive but not mandatory for SR&ED. ### Judicial Review of a Denied Taxpayer Relief Request: Lessons from Telfer v. Canada (Revenue Agency), 2009 FCA 23 Date: 2026-06-11T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/tcc-case-taxpayer-relief-judicial-review-telfer-2009-fca-23 In Telfer v. CRA, 2009 FCA 23, the Federal Court of Appeal confirmed that a denied taxpayer relief request is reviewed for reasonableness, not re-decided on "fairness." The case is a roadmap for what a relief application and judicial review must actually establish. ### Unreported Income and Credibility: What Lacroix v. Canada Teaches About Demolishing the Minister's Assumptions Date: 2026-06-11T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/tcc-case-net-worth-unreported-income-lacroix-onus-of-proof In Lacroix v. Canada, 2008 FCA 241, the Federal Court of Appeal confirmed how net-worth assessments shift the onus to the taxpayer — and why a non-credible explanation for unexplained wealth can sink both the appeal and a gross-negligence penalty defence. ### Employee or Independent Contractor? What Insurance Institute of Ontario v. M.N.R. (2020 TCC 69) Teaches About Common Intention Date: 2026-06-11T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/tcc-case-employee-vs-independent-contractor-insurance-institute-ontario-2020-tcc-69 In Insurance Institute of Ontario v. M.N.R., 2020 TCC 69, the Tax Court applied the Connor Homes / Wiebe Door / Sagaz framework and held a part-time instructor was an independent contractor — a case comment on how intention and conduct shape CPP and EI status. ### When the CRA Calls Your Business Expenses "Personal": Substantiating Purpose and Reasonableness on Audit Date: 2026-06-11T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/case-study-business-expense-denial An illustrative look at how an independent consultant whose deductions were denied as personal can answer the CRA — by evidencing a genuine business purpose and the reasonableness of each expense. Anonymized example only; outcomes depend on the facts. ### Frozen Bank Account and Garnished Wages: Negotiating a Release and an Affordable CRA Payment Arrangement Date: 2026-06-11T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/case-study-cra-collections-garnishment-released An illustrative look at how a taxpayer facing a frozen bank account and a wage garnishment can work toward lifting CRA collection action and settling into a manageable payment arrangement. Anonymized example only; outcomes depend on the facts. ### Case Study: A U.S. Citizen in Canada Uses the Streamlined Procedure to Clean Up Years of Unfiled U.S. Returns and FBARs Date: 2026-06-11T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/case-study-cross-border-us-filing-cleanup Illustrative example: a U.S. citizen who has lived in Canada for years learns they were supposed to keep filing U.S. returns and FBARs the whole time. How the IRS Streamlined Foreign Offshore Procedures can bring a non-wilful filer back into compliance. ### Gross Negligence Penalties After a Bad Tax Preparer: Arguing the Absence of Wilful Blindness Date: 2026-06-11T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/case-study-gross-negligence-wilful-blindness An illustrative look at how a taxpayer hit with gross negligence penalties for a dishonest preparer's inflated claims can fight the penalty by showing there was no wilful blindness. Anonymized example only; outcomes depend on the facts. ### Denied GST/HST Input Tax Credits: Reconstructing a Contractor's Records on Objection Date: 2026-06-11T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/case-study-gst-hst-audit-itc-denial An illustrative look at how a contractor whose GST/HST input tax credits were denied for thin documentation rebuilt the paper trail and recovered most of the disputed ITCs at the objection stage. ### Case Study: A Director Personally Assessed for a Corporation's Unremitted GST/HST — Due Diligence and Resignation Timing Date: 2026-06-11T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/case-study-gst-hst-director-liability An illustrative section 323 scenario: a director was personally assessed for a company's unremitted GST/HST after the business failed. This composite walks through how a due-diligence defence and the timing of a resignation can shape director's-liability exposure. ### Case Study: A Corporation Resolves Most of a Multi-Year Reassessment at the Objection Stage Date: 2026-06-11T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/case-study-large-corporate-objection Illustrative example: a mid-sized corporation hit with a multi-year reassessment files a Notice of Objection and resolves most of the disputed issues with CRA Appeals — without going to Tax Court. What the process looked like and why the file's organization mattered. ### "Where Did the Money Come From?": Rebutting a Net Worth Assessment Against a Cash-Intensive Small Business Date: 2026-06-11T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/case-study-net-worth-audit-cash-business An illustrative look at how a cash-heavy small business hit with a net worth assessment for alleged unreported income pushed back — using a documented funds analysis to dismantle the CRA's assumptions. Anonymized example only; outcomes depend on the facts. ### Case Study: A New Canadian Uses Voluntary Disclosure to Correct an Undisclosed Offshore Account and Unfiled T1135s Date: 2026-06-11T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/case-study-offshore-vdp-streamlined An illustrative scenario: a recent immigrant to Canada discovers that an account back home and several years of missed T1135 forms left them offside, and comes forward through the Voluntary Disclosures Program before the CRA makes contact. ### Principal Residence Exemption Denied on a Second Property: Proving "Ordinarily Inhabited" Use Date: 2026-06-11T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/case-study-principal-residence-exemption An illustrative look at how a family whose principal residence exemption was denied on a second property rebuilt a record of who lived there and when, and recovered much of the disputed capital gain on objection. ### Reassessed for "Flipping": When the CRA Treats a Property Sale as Business Income Instead of a Capital Gain Date: 2026-06-11T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/case-study-property-flipping-business-income An illustrative look at how a homeowner reassessed because a property sale was taxed as business income — not a capital gain or principal residence — can challenge the CRA by evidencing genuine intention. Anonymized example only; outcomes depend on the facts. ### Section 160 Assessed Against a Spouse After a Home Transfer: Arguing Fair-Market-Value Consideration Date: 2026-06-11T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/case-study-section-160-spousal-transfer An illustrative look at how a spouse assessed under section 160 for a home transfer can challenge a derivative tax assessment by showing fair-market-value consideration was given. Anonymized example only; outcomes depend on the facts. ### Reassessed for a Shareholder Benefit on Personal Use of a Corporate Asset: Cutting the Benefit Down on Objection Date: 2026-06-11T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/case-study-shareholder-benefit-reassessment An illustrative look at how an owner-manager reassessed under subsection 15(1) for personal use of a corporate asset can reduce the shareholder benefit on objection by correcting the valuation. Anonymized example only; outcomes depend on the facts. ### SR&ED Claim Denied for "No Technological Uncertainty": Reframing the Evidence on Objection Date: 2026-06-11T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/case-study-sred-claim-denied An illustrative look at how a software company whose SR&ED claim was denied for a supposed lack of technological uncertainty rebuilt its technical narrative and recovered a large share of the disputed credits at the objection stage. ### Case Study: A Small Business Settles a Large Reassessment Before Tax Court Trial Date: 2026-06-11T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/case-study-tax-court-general-procedure Illustrative example: a small business hit with a six-figure reassessment files a General Procedure appeal in the Tax Court of Canada and reaches a favourable negotiated settlement before trial. What the process looked like and why preparation mattered. ### When the CRA Denied an Employee's Work Expenses: An Informal Procedure Appeal Date: 2026-06-11T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/case-study-tax-court-informal-appeal Illustrative example: a salaried employee saw their employment expenses denied on reassessment, objected without success, and took the matter to the Tax Court of Canada under the Informal Procedure. Here is how a denied-expense appeal can unfold. ### When Illness Caused a Tax Backlog: Taxpayer Relief for Penalties and Interest Date: 2026-06-11T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/case-study-taxpayer-relief-penalty-cancellation An illustrative look at how a taxpayer who fell behind during a serious illness can seek cancellation of CRA penalties and partial interest through a taxpayer-relief application built on documented circumstances beyond their control. ### Several Years of Unfiled Returns and a Notional Assessment: Getting a Self-Employed Taxpayer Caught Up Date: 2026-06-11T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/case-study-unfiled-returns-catch-up Illustrative example: a self-employed person with years of unfiled returns received an arbitrary (notional) CRA assessment for far more than they actually owed. How back-filing and a corrected balance can replace a guessed number with the real one. ### Coming Forward on Years of Unreported Crypto Gains Through the VDP Date: 2026-06-11T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/case-study-unreported-crypto-vdp An illustrative case study: a trader with years of unreported cryptocurrency gains came forward through the Voluntary Disclosures Program before the CRA made contact. How a pre-emptive disclosure can be approached, and what it can change. ### Case Study: A Business Assessed for Unremitted Source Deductions After CRA Reclassified Its Contractors as Employees — A Wiebe Door Control-Test Argument Date: 2026-06-11T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/case-study-worker-vs-contractor An illustrative scenario: a company that engaged workers as independent contractors was assessed for unremitted source deductions after a CRA payroll audit reclassified them as employees. This composite shows how a Wiebe Door / control-test argument is built and run. ### The CRA Data Breach Settlement: Who Can Claim, How Much, and the Tax Questions That Follow Date: 2026-06-10T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/cra-data-breach-settlement-claim-and-tax-questions The Federal Court approved an $8.7M settlement for Canadians whose CRA and government accounts were breached in 2020. Who is eligible, what you can claim before the deadline, whether the money is taxable, and what to do if a benefit claim was filed in your name. ### Estate Freeze vs. Holding Company: Which Structure, and When Date: 2026-06-10T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/estate-freeze-vs-holding-company An estate freeze caps the future growth of your shares for tax; a holding company holds assets above the operating business. They solve different problems, often work together, and the right choice depends on what you are actually trying to do. ### Lifetime Capital Gains Exemption: A Planning Checklist for Business Owners Date: 2026-06-10T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/lifetime-capital-gains-exemption-planning-checklist For 2026 the LCGE shelters up to $1,275,000 of gain on qualifying small-business shares. The exemption is easy to lose on a technicality. This checklist walks through the three QSBC tests, the 24-month trap, crystallization, multiplication, and AMT. ### QSBC Purification: Cleaning Up a Corporation to Protect the LCGE Date: 2026-06-10T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/qsbc-purification-small-business-owners Excess cash, a passive investment portfolio or redundant real estate can quietly disqualify your shares from the Lifetime Capital Gains Exemption. Here is how QSBC purification works, the 90% and 50% asset tests, the 24-month rule, and a worked example. ### Cross-Border U.S. Real Estate: How Canadians Should Own U.S. Property Date: 2026-06-10T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/cross-border-us-real-estate-ownership A planning guide for Canadians buying U.S. real estate: ownership structures, the LLC double-tax trap, U.S. estate-tax exposure and treaty credit proration, FIRPTA withholding on sale, and 1040-NR rental reporting. ### Director's Liability Assessments: Defending a Section 227.1 / ETA 323 Assessment Date: 2026-06-10T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/directors-liability-assessment-defence How the CRA assesses directors personally for a corporation's unremitted payroll source deductions (ITA s.227.1) and net GST/HST (ETA s.323) — the preconditions, the two-year limitation, the due-diligence defence, and the path to the Tax Court of Canada. ### Capital Gains vs. Business Income: How the CRA Decides, and Why It Matters Date: 2026-06-10T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/capital-gains-vs-business-income Whether a profit is a capital gain (50% taxable) or business income (100% taxable) turns on the "badges of trade." We explain how the CRA characterizes securities, real-estate flips, and crypto, the s.39(4) election, and the 2023 flipping rule. ### Shareholder Loans and Subsection 15(2): The Traps Owner-Managers Miss Date: 2026-06-10T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/shareholder-loans-subsection-15-2 When a private corporation lends money to its owner, subsection 15(2) can fold the entire balance into income unless a narrow exception applies. Here are the rules, the s.80.4 interest benefit, and how to fix a loan before the CRA finds it. ### Salary vs. Dividends: Owner-Manager Remuneration After TOSI Date: 2026-06-10T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/salary-vs-dividends-owner-manager-remuneration How a CCPC owner-manager should think about salary, bonus and dividends in 2026 — RRSP and CPP from salary, integration theory, the small-business deduction grind, and what TOSI does and does not allow. ### The 21-Year Deemed Disposition Rule: Planning Before a Family Trust Turns 21 Date: 2026-06-10T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/family-trust-21-year-rule-planning Every personal trust faces a deemed disposition of its capital property at fair market value on its 21st anniversary under s.104(4). Here is why it matters, the rollout and refreeze options before year 21, and a planning timeline. ### Post-Mortem Pipeline Planning: Avoiding Double Tax on Death Date: 2026-06-10T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/post-mortem-pipeline-planning When a shareholder dies owning private-company shares, the same value can be taxed twice. This guide explains the pipeline and the s.164(6) loss carryback, when each fits, and the CRA timing and GAAR pitfalls to manage. ### The Estate Freeze, Explained Date: 2026-05-26T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/estate-freeze-explained An estate freeze caps the tax on a business owner's death at today's value and lets future growth accrue to the next generation or a family trust. Here is what a freeze is, when it makes sense, and how it is built. ### Owner-Manager Remuneration: Salary vs. Dividends Date: 2026-05-26T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/owner-manager-salary-vs-dividends Salary or dividends? The classic owner-manager question turns on integration, CPP, RRSP room, and your own cash needs. Here is how each option works, what it costs, and when each one wins. ### When the CRA Audits Your Small Business: The Process, Step by Step Date: 2026-05-22T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/cra-audit-process-step-by-step A CRA audit of a small business follows a predictable sequence — selection, the first letter, document requests, the proposal letter, reassessment, and your objection rights. Here is what each stage means for an owner-managed business, and where to push back. ### Amalgamations, Wind-Ups, and Corporate Simplification Date: 2026-05-21T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/amalgamations-wind-ups-corporate-simplification Corporate groups accumulate dormant companies, redundant holdcos, and tangled cross-holdings over time. Section 87 amalgamations and section 88 wind-ups are the two main tools for simplifying them — without losing the tax attributes that matter. ### Talking to a Justice Canada Lawyer About Settlement (Self-Represented) Date: 2026-05-20T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/talking-to-justice-canada-lawyer-about-settlement How settlement works when you represent yourself at the Tax Court: who the Crown lawyer is, what can and cannot be settled, how to negotiate on a principled basis, and what minutes of settlement mean. ### Reducing Probate Fees: Multiple Wills, Trusts & Assets That Pass Outside the Will Date: 2026-05-19T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/holistic-reducing-probate-fees-multiple-wills-and-beyond Probate fees are charged on the value of assets passing through a probated will. Multiple wills, jointly held assets, named beneficiaries, and trusts can each move value outside that calculation — if the planning is done carefully. ### What Makes a Tax Court Appeal Succeed Date: 2026-05-19T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/what-makes-a-tax-court-appeal-succeed Tax Court appeals are not won on clever arguments alone. Evidence, credibility, a clearly framed legal issue, and an honest assessment of the case before it is filed are what separate the appeals that succeed from the ones that should have settled. ### Case Study: An Estate Freeze and Section 85 Reorganization for a Family Business Date: 2026-05-18T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/case-study-corporate-reorganization An illustrative planning scenario: a family-business owner used an estate freeze and a section 85 rollover to cap future tax at death and bring the next generation in. This composite shows how the reorganization is structured. ### An Accountant's Guide to CRA Audit Escalation Date: 2026-05-14T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/accountants-guide-cra-audit-escalation A practical playbook for the moment a routine CRA audit turns adversarial — recognizing the shift, controlling the paper trail, protecting deadlines, and bringing in co-counsel without losing your client relationship. ### Tax Litigation vs Tax Planning: Which Do You Need? Date: 2026-05-14T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/tax-litigation-vs-tax-planning Tax litigation and tax planning solve opposite problems at opposite ends of the timeline — one fights a position the CRA has taken, the other builds a position before the CRA looks. This guide defines each, shows when you need which, and explains how the two connect. ### Deferring Tax the Smart Way: Rollovers, the Capital Gains Reserve, and the Estate Freeze Date: 2026-05-14T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/pay-way-less-tax-defer-tax-rollovers-estate-freeze A dollar of tax paid years from now costs less than a dollar paid today. Tax-free rollovers, the capital gains reserve, and the estate freeze are three tools Canadians use to defer tax and shift growth to the next generation. ### Tax Planning at Death in Canada: Deemed Disposition, the PRE & the Spousal Rollover Date: 2026-05-13T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/wills-estates-tax-planning-at-death Canada has no inheritance tax, but the deemed disposition on death taxes accrued capital gains as if you sold everything the moment before you died. The spousal rollover, the principal residence exemption, and post-mortem planning are how estates manage that bill. ### Post-Mortem Tax Planning and Pipeline Strategies for Pharmacist Estates Date: 2026-05-13T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/pharmacist-post-mortem-tax-planning-and-pipeline-strategies When a pharmacist dies owning corporation shares, the same value can be taxed twice. Pipeline planning and the subsection 164(6) loss carry-back are the two principal answers — and the will has to grant the executor authority to use them. ### CRA Voluntary Disclosure Program: Eligibility, Step by Step Date: 2026-05-12T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/voluntary-disclosure-program-eligibility-step-by-step The CRA Voluntary Disclosures Program lets you correct unreported income, unfiled returns, and missed forms before CRA finds you. Here are the five eligibility tests, the General vs Limited tracks, and what relief is available. ### How to File a Notice of Objection (Step by Step) Date: 2026-05-12T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/how-to-file-a-notice-of-objection A notice of objection is the formal way to dispute a CRA reassessment. This step-by-step guide covers the 90-day deadline, the one-year extension, Form T400A, what to include, and what happens once Appeals takes over. ### Audit Defence vs Voluntary Disclosure vs Objection & Appeal: Choosing Your CRA Route Date: 2026-05-12T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/audit-defence-vs-voluntary-disclosure-vs-appeal Audit defence, the Voluntary Disclosures Program, and the objection-and-appeal route solve different CRA problems at different stages. This decision guide explains which route fits which situation, the timing, and what each can and cannot achieve. ### Family Trusts in Canadian Tax & Estate Planning Date: 2026-05-12T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/family-trusts-tax-estate-planning A discretionary family trust can split income, multiply the capital gains exemption, and hold growth shares outside an owner's estate — within the limits set by TOSI, the attribution rules, and the 21-year rule. Here is how they work. ### Gross Negligence Penalties (s.163(2)): How They're Applied and How They're Challenged Date: 2026-05-12T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/gross-negligence-penalties-163-2-defence A gross-negligence penalty under s.163(2) adds 50% of the understated tax. The CRA carries the burden of proof, the Venne standard is demanding, and these penalties are challenged more successfully than most taxpayers assume. ### CRA Audit Readiness Checklist Date: 2026-05-12T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/cra-audit-readiness-checklist A practical checklist for Canadians and businesses facing a CRA audit: documents to gather, what to do and avoid, the deadlines that matter, and when to involve a tax lawyer. ### NFTs, Staking, Mining & DeFi: Canadian Tax Treatment Date: 2026-05-12T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/nft-staking-mining-defi-tax-canada Mining, staking rewards, DeFi yield, and NFTs each raise distinct Canadian tax questions — business versus hobby, income on receipt, and the difference between creating and trading. This guide explains how the CRA approaches each. ### GST/HST Audits: Common Triggers and How to Defend Them Date: 2026-05-12T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/gst-hst-audit-defence-guide GST/HST audits look like accounting reviews, but most reassessments turn on legal-characterization questions. This guide covers the common triggers, the audit process, documentation, typical adjustments, and the objection route. ### Common Tax Mistakes New Businesses Make — and How to Avoid Them Date: 2026-05-12T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/startup-common-tax-mistakes-new-businesses-make Most new-business tax trouble comes from a short list of avoidable mistakes: misjudging employee-versus-contractor status, ignoring the HST threshold, spending trust money, and estimating the deductions auditors love to deny. Here is the list. ### UAE Holding Companies and Treaty Planning: Substance, the Principal Purpose Test, and the Canada–UAE Treaty Date: 2026-05-12T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/uae-cross-border-holding-companies-treaty-planning The UAE's 140-plus treaty network and free zone infrastructure make it a natural cross-border holding location — but only for companies with real substance. Paper structures no longer survive the Principal Purpose Test or foreign scrutiny. Here is how to build one that holds up. ### Dealing With a CRA Collections Officer: What to Say, What Not to Say, and Your Rights Date: 2026-05-11T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/dealing-with-a-cra-collections-officer A call from a CRA collections officer can be unnerving. Knowing what the officer can and cannot do, what you are obliged to disclose, and when to bring in representation keeps a difficult conversation from making things worse. ### What Triggers a CRA Audit Date: 2026-05-08T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/what-triggers-a-cra-audit Most CRA audits are not random. This guide explains the common red flags, the industries that draw extra scrutiny, the difference between random and targeted selection, and practical steps that reduce audit risk without changing how you live or run your business. ### Pipeline Planning (s.84.1) to Avoid Double Tax After Death Date: 2026-05-07T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/pipeline-planning-section-84-1-double-tax When a shareholder dies owning private-company shares, the same value can be taxed twice — once on death, again when the corporation is wound up. A post-mortem pipeline extracts the surplus as capital instead. Here is how it works and where section 84.1 bites. ### U.S. Citizens Living in Canada: Your Annual U.S. Filing Obligations Date: 2026-05-07T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/us-citizens-living-in-canada-filing-guide The United States taxes its citizens wherever they live. If you are an American or dual citizen in Canada, here are the U.S. returns and disclosures you owe each year, the Canadian accounts that cause the most trouble, and the way back if you are behind. ### The Gross Negligence Penalty: Reverse Onus and the Report You Should Always Demand Date: 2026-05-07T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/victory-over-the-cra-gross-negligence-penalty-defence The gross negligence penalty under subsection 163(2) is the harshest the CRA can assess — 50% of the understated tax. Because the burden is reversed, it is also one of the most defensible. Here is how it works and the one document you should always request. ### Back Taxes and Taxes Owing: Your Options When You Can't Pay Date: 2026-05-07T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/back-taxes-and-taxes-owing-options Owing the CRA more than you can pay is a common and resolvable situation. This guide explains your options — payment arrangements, taxpayer relief, and the Voluntary Disclosure Program — and when penalties and interest can actually be reduced or cancelled. ### The Tax Court of Canada Appeal Process Date: 2026-05-06T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/tax-court-of-canada-appeal-process The Tax Court of Canada hears appeals from CRA reassessments. This guide explains the Informal and General Procedures, the dollar thresholds, the stages from notice of appeal to judgment, evidence, settlement, and costs. ### When Do You Need a Tax Lawyer vs. an Accountant? A Decision Guide Date: 2026-05-06T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/when-do-you-need-a-tax-lawyer-vs-accountant Tax lawyers and accountants do different jobs, and the strongest results usually come from using both. This decision guide maps common situations to the right professional — and explains privilege, the one thing only a lawyer brings. ### Offshore Assets & T1135: Coming Clean Through the VDP Date: 2026-05-05T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/offshore-assets-t1135-voluntary-disclosure Foreign accounts, foreign property, and foreign entities carry Canadian reporting duties — T1135, T1134, and more — backed by steep penalties. The VDP is the path to fix years of missed foreign reporting before CRA finds it. ### Director's Liability for Unremitted Source Deductions & GST/HST (s.227.1) Date: 2026-05-05T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/directors-liability-source-deductions-gst-hst When a corporation fails to remit source deductions or GST/HST, the CRA can assess directors personally under s.227.1 (and s.323 ETA). Two defences matter most: the two-year limitation period and the due-diligence defence. ### Case Study: Defending a Director Against a Section 227.1 Liability Assessment Date: 2026-05-05T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/case-study-directors-liability-defence An illustrative director's-liability scenario: the CRA assessed a director personally for a corporation's unremitted source deductions and GST/HST. This composite shows the due-diligence and procedural defences available under section 227.1. ### Settling a Tax Court Appeal Before Trial Date: 2026-05-05T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/settling-a-tax-court-appeal-before-trial Most Tax Court appeals settle before trial — but only on a principled basis. This guide explains the role of Department of Justice counsel, the Galway and CIBC principle, minutes of settlement, and when settlement is and is not possible. ### How to Present Evidence and Witnesses at the Tax Court (Self-Rep Guide) Date: 2026-05-05T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/how-to-present-evidence-and-witnesses-tax-court A practical guide for self-represented taxpayers on getting documents into evidence, preparing and calling witnesses, the basics of examination and cross-examination, and testifying credibly yourself. ### Questions to Ask Before Hiring a Canadian Tax Lawyer Date: 2026-05-04T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/questions-to-ask-before-hiring-a-canadian-tax-lawyer A practical buyer's checklist for choosing a Canadian tax lawyer: solicitor-client privilege, fixed fees, the free consultation, experience with your specific issue, and who actually does the work. Use it with any firm you consider. ### CRA Collections: Frozen Accounts, Requirements to Pay, and Garnishments Date: 2026-04-29T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/cra-collections-frozen-accounts-rtps-garnishments The CRA can freeze accounts, issue requirements to pay, and garnish wages — often without a court order. This guide explains those powers, whether the CRA can collect while you object, taxpayer relief, and payment arrangements. ### Voluntary Disclosure vs Waiting for a CRA Audit Date: 2026-04-28T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/voluntary-disclosure-vs-cra-audit Coming forward through the VDP before CRA contacts you can take prosecution and the heaviest penalties off the table. Wait for an audit and the door closes. Here is the risk comparison, side by side. ### Section 160: Derivative Tax Liability for Non-Arm's-Length Transfers Date: 2026-04-28T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/section-160-derivative-tax-liability Section 160 makes someone who receives property from a tax debtor for less than fair market value jointly liable for the debtor's tax — capped at the value transferred. There are four conditions, and real defences. ### Questions to Ask Before Hiring CRA Audit Representation Date: 2026-04-28T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/questions-to-ask-before-hiring-cra-audit-representation Choosing who represents you in a CRA audit is a consequential decision. This checklist of questions covers lawyer versus accountant, solicitor-client privilege, fixed fees, who actually handles your file, and how quickly you can expect a response. ### Sections 85, 86 & 51: The Rollover Provisions Compared Date: 2026-04-28T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/holistic-section-85-86-51-rollovers-compared Sections 85, 86, and 51 of the Income Tax Act all let assets or shares move on a tax-deferred basis, but each does a different job. Here is what each provision does, when to use it, and how they compare side by side. ### After the Tax Court: Appealing to the Federal Court of Appeal Date: 2026-04-28T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/appealing-a-tax-court-decision-federal-court-of-appeal A Tax Court loss is not the end of the road. An appeal lies to the Federal Court of Appeal — but it is governed by a deadline of thirty days, a different standard of review, and a far narrower scope than the trial itself. ### Notice of Objection vs Tax Court Appeal: Which Path and When Date: 2026-04-22T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/notice-of-objection-vs-tax-court-appeal Objection and Tax Court appeal are two different stages in disputing a CRA reassessment, and the order matters. Here is the sequence, the timelines, and the 90-day no-decision rule that lets you skip ahead to court. ### Boutique Tax Law Firm vs General-Practice Firm: What the Difference Means for Your CRA File Date: 2026-04-22T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/boutique-tax-firm-vs-general-practice-firm When the CRA is involved, the type of firm you choose changes how your file is handled. This neutral comparison looks at tax focus, who actually does the work, fee models, and response time — so you can match the firm to the matter. ### The Executor's Role, Probate & Probate Fees Across Canada Date: 2026-04-22T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/wills-estates-executor-and-probate The executor turns a will into reality — collecting assets, paying debts and taxes, and distributing what is left. Probate validates the will and the executor's authority, and probate fees vary widely by province. Here is the role, the process, and the personal liability. ### LCGE & QSBC Purification: Multiplying the Capital Gains Exemption Date: 2026-04-21T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/lcge-qsbc-purification-multiplying-capital-gains-exemption The Lifetime Capital Gains Exemption shelters over a million dollars of gain on qualifying small-business shares — and can be multiplied across a family. But the three QSBC tests reach back 24 months, so the planning window is earlier than most owners think. ### Tax Evasion vs Tax Avoidance: Where the Line Is Date: 2026-04-21T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/tax-evasion-vs-tax-avoidance Tax avoidance is legal; tax evasion is a crime. Between them sits the GAAR, which can reverse a transaction's tax result without making it criminal. Knowing which side of the line you are on shapes everything that follows. ### Voluntary Disclosure Readiness Checklist Date: 2026-04-21T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/voluntary-disclosure-readiness-checklist Thinking about coming forward to the CRA? Work through this checklist: the five eligibility tests, the documents to assemble, and the timing that matters — ideally before any CRA contact. ### Family Trusts for Pharmacists: Multiplying the Lifetime Capital Gains Exemption Date: 2026-04-21T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/pharmacist-family-trusts-multiplying-the-lcge A family trust can let a pharmacist's spouse and children each claim their own Lifetime Capital Gains Exemption on a sale — sheltering several million dollars — while voting control stays in licensed hands. Here is how the structure works, and its limits. ### Evidence and Burden of Proof in Tax Court Date: 2026-04-21T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/evidence-and-burden-of-proof-tax-court In a Tax Court appeal the burden is largely on the taxpayer: the Minister's assumptions of fact are presumed correct, and your job is to demolish them. This guide explains the onus, documentary versus viva voce evidence, and why credibility decides cases. ### Estate Freeze: Locking In Today's Value, Transferring Tomorrow's Growth Date: 2026-04-20T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/estate-freeze-when-it-makes-sense An estate freeze caps your business's value at today's price in your hands and shifts future appreciation to the next generation. Here's how the mechanics work and when they pay off. ### Case Study: Appealing a Confirmed Reassessment to the Tax Court of Canada Date: 2026-04-20T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/case-study-tax-court-appeal An illustrative Tax Court scenario: after a notice of objection was denied, a taxpayer appealed to the Tax Court of Canada. This composite shows how an appeal is pleaded, how discovery is used, and how most appeals resolve. ### How to Save Money in a CRA Audit: Risk Factors and a Calm Plan Date: 2026-04-20T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/pay-way-less-tax-survive-a-cra-audit An audit can cost thousands if it goes badly — but much of the outcome is in your control. Learn the risk factors that attract audits and the practical steps that keep one from spiralling. ### Lose Twice, Win Once: Why CRA Cases Are Often Won in Tax Court Date: 2026-04-16T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/victory-over-the-cra-losing-twice-winning-in-tax-court Inside the four walls of the CRA, an auditor can ignore evidence and an appeals officer can confirm a bad assessment. But the Tax Court of Canada applies the rules of evidence — which is why many cases lost at audit and objection are won at court. ### Getting Back Into Tax Compliance: A Step-by-Step Path for Non-Filers Date: 2026-04-16T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/getting-back-into-tax-compliance If you have fallen out of the tax system, getting back in follows a clear sequence — gather your records, decide between the Voluntary Disclosure Program and straightforward filing, prepare returns oldest-to-newest, and arrange to deal with any balance owing. ### Leaving Canada: How Departure Tax Catches Your Net Worth Date: 2026-04-15T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/leaving-canada-departure-tax-explained When you cease to be a Canadian tax resident, section 128.1 of the Income Tax Act treats most of your worldwide assets as sold at fair market value the day you leave. Here's the rule and how to plan around it. ### Tax Court Forms and Deadlines: A Checklist for Self-Represented Taxpayers Date: 2026-04-15T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/tax-court-forms-and-deadlines-checklist Everything a self-represented taxpayer needs to file a Tax Court appeal: the Notice of Appeal, the 90-day deadline and how extensions work, filing fees, and a printable step-by-step checklist. ### Net Worth Audits: How the CRA Builds an Indirect-Income Assessment Date: 2026-04-14T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/net-worth-audits-indirect-income-assessments A net worth audit reconstructs your income from changes in your wealth rather than from your records. This guide explains how the CRA builds an indirect-income assessment, why these files are difficult, and how the reconstruction can be challenged. ### Crypto and the CRA: Audit Risks, Exchange Data Requests, and Record-Keeping Date: 2026-04-14T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/crypto-cra-audit-risks-recordkeeping The CRA now receives transaction data directly from Canadian crypto exchanges and uses blockchain-analysis tools. This guide explains crypto audit triggers, unnamed-persons requirements, the records to keep, and voluntary disclosure for unreported crypto. ### Business Records That Survive an Audit: What to Keep, and for How Long Date: 2026-04-14T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/startup-business-records-that-survive-an-audit There is no rule in the Income Tax Act that you must keep an original receipt — yet an auditor who asks for one and gets a photocopy can deny the expense outright. Here is how to keep records that hold up when the Canada Revenue Agency comes calling. ### UAE Free Zones and Qualifying Free Zone Person (QFZP) Status: How the 0% Rate Actually Works Date: 2026-04-14T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/uae-free-zones-qfzp-status-guide A UAE free zone entity can earn a 0% corporate tax rate on qualifying income — but only as a Qualifying Free Zone Person, and only if it meets substance, income, and transfer-pricing conditions every year. One stray mainland sale can cost the benefit for the whole period. ### CRA Liens and Charges on Your Property: How They Arise and How to Deal With Them Date: 2026-04-14T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/cra-liens-and-charges-on-your-property When a tax debt goes unpaid, the CRA can register a certificate in the Federal Court and secure a charge against your real property. Here is how a tax lien arises, what it does, and the options for removing it. ### Multiplying the Lifetime Capital Gains Exemption Across Your Family Date: 2026-04-13T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/lifetime-capital-gains-exemption-multipliers The LCGE shelters $1,016,836 per individual on the sale of qualifying small-business-corporation shares. A properly-structured family trust can multiply that exemption across multiple beneficiaries. ### Estate Freeze Mechanics: Section 86 vs Section 85 vs Section 51 Date: 2026-04-09T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/estate-freeze-mechanics-section-86-85-51 An estate freeze caps the value of what you own today and shifts future growth to the next generation. The three workhorse techniques — sections 86, 85, and 51 — each freeze in a different way. Here is when each applies. ### Buying U.S. Real Estate as a Canadian: Ownership Structures and Tax Date: 2026-04-09T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/buying-us-real-estate-as-a-canadian A Florida condo is simple to buy and complicated to own. Here is how the ownership structure you choose drives your income tax on rent, your withholding when you sell, and your estate-tax exposure at death — and how to choose before you sign. ### When Should an Accountant Refer a Client to a Tax Lawyer? Date: 2026-04-09T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/when-to-refer-a-client-to-a-tax-lawyer Audit escalation, objection deadlines, gross-negligence-penalty exposure, criminal-tax red flags, and the limits of accountant-client confidentiality. A practical set of triggers for when a CRA file warrants a tax lawyer. ### Denied Input Tax Credits: Why the CRA Disallows ITCs and How to Respond Date: 2026-04-09T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/denied-input-tax-credits-itc-disputes Most input tax credit denials are documentation denials, not substantive ones. This guide covers the s. 169(4) ETA requirements, supplier registration validity, the common denial reasons, and how to dispute a disallowed ITC. ### Tax Lawyer vs Accountant for a CRA Dispute Date: 2026-04-09T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/tax-lawyer-vs-accountant-cra-dispute For a CRA dispute, the choice between a tax lawyer and an accountant is not either/or. This guide explains what each professional does well, when each is the right call, why solicitor-client privilege matters, and how the two work together under a co-counsel model. ### Section 94: How Canadian Tax Reaches Foreign Trusts Date: 2026-04-08T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/section-94-cross-border-trusts Section 94 of the Income Tax Act can deem a non-resident trust to be a Canadian-resident trust — and make Canadian contributors and beneficiaries jointly liable for its tax — whenever a Canadian touches the structure. ### Costs and Cost Awards at the Tax Court of Canada Date: 2026-04-08T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/tax-court-costs-and-cost-awards Winning a Tax Court appeal can come with a cost award — but how much depends on the tariff, whether the Court grants a lump sum, and, critically, whether a written settlement offer was made under Rule 147 and beaten at trial. ### Handling a CRA Audit Yourself vs. With a Tax Lawyer: An Honest Comparison Date: 2026-04-08T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/cra-audit-representation-vs-self-representation Some CRA audits are fine to handle yourself; others put real money and legal exposure at stake. This balanced comparison weighs privilege, scope, risk, and cost — and is candid about when self-representation is the sensible choice. ### Case Study: A Voluntary Disclosure for Unreported Offshore Income and T1135 Filings Date: 2026-04-07T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/case-study-voluntary-disclosure-offshore An illustrative VDP scenario: a taxpayer with years of unreported offshore income and missed T1135 forms came forward before the CRA made contact. This composite shows how a voluntary disclosure is assessed and prepared. ### Cross-Border Move Tax Checklist (Canada ↔ U.S.) Date: 2026-04-07T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/cross-border-move-tax-checklist Moving between Canada and the U.S.? This checklist covers departure tax, account cleanup (TFSA, RESP, PFIC mutual funds), and the filing obligations that attach on both sides of the border. ### Multiplying the Lifetime Capital Gains Exemption Date: 2026-04-07T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/holistic-multiplying-the-lifetime-capital-gains-exemption The Lifetime Capital Gains Exemption shelters over a million dollars of gain on qualifying small-business shares — and a family trust can let several family members each claim their own. Here are the QSBC tests, multiplication, and crystallization. ### What to Expect at a Tax Court Hearing Date: 2026-04-07T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/what-to-expect-at-a-tax-court-hearing The day of a Tax Court hearing can feel intimidating. This guide walks through where the hearing happens, who is in the room, the order of events, how examination and cross-examination work, and when to expect the judgment. ### Salary vs Dividend: The Owner-Manager Question for 2026 Date: 2026-04-06T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/salary-vs-dividend-2026 For most Canadian owner-managers, the salary-vs-dividend mix is the largest annual tax decision. Here's the framework, the math, and the changes for 2026. ### Snowbirds and the IRS: How Many Days Is Too Many? Date: 2026-04-01T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/snowbird-substantial-presence-test The IRS's substantial-presence test counts your US days on a rolling three-year formula. Cross 183 and you become a US tax resident — unless you file the right form, in the right window, with the right facts. ### Post-Mortem Tax Planning: Avoiding Double Tax on Death Date: 2026-03-31T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/post-mortem-tax-planning-double-tax When a Canadian dies owning private corporation shares, the same value can be taxed twice — once on the terminal return and again when the corporation distributes its surplus. Pipeline planning and the subsection 164(6) loss carryback are the two answers. ### The 21-Year Rule and What to Do About It Date: 2026-03-30T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/twenty-one-year-rule-family-trusts Every family discretionary trust faces a deemed disposition under ITA s. 104(4) every 21 years. The unwind, the restate, and the rollout — three responses depending on what the family needs. ### The Peril of Family Asset Transfers: Section 160 and the $1 Transaction Date: 2026-03-26T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/victory-over-the-cra-family-asset-transfers-section-160 People deposit money in each other's accounts, add a parent to title, or sell the cottage to a child for a dollar — and inadvertently create tax problems that can be impossible to fix. This guide explains section 160 and the non-arm's-length rules. ### Vehicle and Home-Office Deductions: Claim Them Without Losing Them Date: 2026-03-26T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/pay-way-less-tax-vehicle-home-office-deductions Vehicle and home-office expenses are two of the most audited deductions in Canada — not because they are improper, but because they are so often estimated. A simple log and a measured percentage make them defensible. ### Corporate-Owned Life Insurance and the Purification Strategy for Pharmacists Date: 2026-03-26T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/pharmacist-corporate-owned-life-insurance-and-purification Held in the right entity, corporate-owned life insurance funds estate taxes, supports buy-sell agreements, and protects QSBC status. Held in the wrong entity, its cash value can taint the pharmacy corporation and cost the LCGE. ### Arbitrary and Notional Assessments: When the CRA Files for You Date: 2026-03-26T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/arbitrary-and-notional-assessments-explained When you don't file, the CRA can assess you anyway under subsection 152(7) of the Income Tax Act — an arbitrary or notional assessment built from the slips it holds, without your deductions. This guide explains how those assessments work and how to displace them. ### FIRPTA: Why Canadian Sellers of US Real Estate Often Over-Pay at Closing Date: 2026-03-25T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/firpta-withholding-canadian-sellers When a Canadian sells US real estate, the buyer is required to withhold up to 15% of the gross sale price under FIRPTA — far more than the actual tax in most cases. Form 8288-B reduces the hold-back if filed early. ### Case Study: Challenging a Section 163(2) Gross-Negligence Penalty Date: 2026-03-25T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/case-study-gross-negligence-penalty-removed An illustrative scenario: the CRA proposed a 50% gross-negligence penalty under section 163(2) on top of a reassessment. This composite shows how the penalty was contested as a separate ground and ultimately withdrawn. ### Powers of Attorney in Canada: Property, Personal Care & Incapacity Date: 2026-03-25T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/wills-estates-powers-of-attorney-explained A will takes effect when you die; a power of attorney takes effect while you are alive but unable to act. Here is how financial and personal-care POAs work, what an enduring POA adds, and the pitfalls that make a POA fail when it is needed most. ### Common Mistakes Self-Represented Taxpayers Make at the Tax Court (and How to Avoid Them) Date: 2026-03-25T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/common-mistakes-self-represented-taxpayers-tax-court The recurring pitfalls that sink self-represented Tax Court appeals — missed deadlines, the wrong procedure, arguing facts as if they were law, and showing up with no evidence — and how to sidestep each one. ### Estate Planning & Freeze Checklist for Business Owners Date: 2026-03-24T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/estate-freeze-checklist-business-owners Planning an estate freeze for your private company? This checklist covers valuation, share structure, the family trust, the documents to put in place, and the ongoing items that keep the structure sound. ### When Your Business Actually Needs a Holdco Date: 2026-03-23T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/holding-company-when-needed Holding companies are sometimes pitched as a one-size-fits-all answer for Canadian business owners. They're not — but when they're the right structure, they're the right structure for serious reasons. ### Registering for GST/HST and Payroll: The Trust-Tax Obligations That Reach You Personally Date: 2026-03-20T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/startup-registering-gst-hst-and-payroll GST/HST you collect and source deductions you withhold are not your money — you hold them in trust for the Canada Revenue Agency. Mishandle them and the corporate shield will not save you. Here is how registration and remittance actually work. ### Streamlined Filing Procedures: A Path Back to US Compliance Date: 2026-03-18T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/streamlined-filing-procedures-canadian-us-persons The IRS's Streamlined Foreign Offshore Procedures provide a structured, penalty-free path for US persons abroad who haven't been filing. Three years of returns, six years of FBARs, one signed certification — and the file is closed. ### Comparing Canadian Tax Law Firms: A Practical Framework Date: 2026-03-18T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/comparing-canadian-tax-law-firms-framework A neutral, criteria-based way to compare Canadian tax law firms: tax-exclusivity, who handles the file, fee model, response time, dispute vs planning depth, cross-border reach, and privilege. Apply it to any firm you consider — including this one. ### Appealing a Net-Worth Assessment at the Tax Court Date: 2026-03-18T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/appealing-a-net-worth-assessment-tax-court Net-worth assessments estimate income from the growth in a person's assets. At the Tax Court, the appeal is fought on the methodology — opening balances, non-taxable sources, and the unproven assumptions baked into the CRA's calculation. ### Section 85 Rollovers: How Tax-Deferred Restructuring Works Date: 2026-03-16T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/section-85-rollover-explained Section 85 of the Income Tax Act lets you transfer property to a Canadian corporation at any agreed amount between cost and FMV — the backbone of estate freezes, incorporations, and most corporate reorganizations. ### UAE Tax Residency for Individuals: Day Tests, the TRC, and What Relocating Canadians Should Know Date: 2026-03-16T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/uae-tax-residency-for-relocating-canadians The UAE has no personal income tax, but it does have domestic tax-residency tests and issues Tax Residency Certificates for treaty purposes. For Canadians moving to the Emirates, becoming a UAE resident is only half the story — severing Canadian residency is the other half. ### Taxpayer Relief: Cancelling CRA Interest and Penalties (Form RC4288) Date: 2026-03-16T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/taxpayer-relief-cancel-interest-and-penalties The CRA has discretion to cancel or waive interest and penalties where circumstances justify it — CRA delay, financial hardship, or extraordinary events. There is a ten-year limit, and the request is made on Form RC4288. ### Case Study: Challenging a CRA Net-Worth (Indirect Income) Assessment Date: 2026-03-13T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/case-study-net-worth-assessment-challenge An illustrative net-worth assessment scenario: the CRA reconstructed a taxpayer's income from lifestyle and assets and reassessed years of alleged unreported income. This composite shows how an indirect assessment is rebuilt and challenged. ### Section 85 Rollover: Tax-Deferred Transfers to a Corporation Date: 2026-03-12T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/section-85-rollover-tax-deferred-transfers Section 85 of the Income Tax Act lets you move appreciated property into a corporation without triggering an immediate capital gain. Here is how the elected amount, boot, share consideration, and the T2057 election all fit together. ### Canadian Snowbirds and U.S. Tax: Substantial Presence, Form 8840, and Treaty Ties Date: 2026-03-12T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/canadian-snowbirds-us-tax-guide Spend enough winters in Florida and the IRS can treat you as a U.S. tax resident. Here is how the substantial-presence test works, how Form 8840 and the treaty keep you Canadian, and the estate-tax trap that survives even when you win. ### The Co-Counsel Model: How Accountants Work With Barrett Tax Law Date: 2026-03-12T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/co-counsel-model-for-accountants Barrett Tax Law works alongside Canadian accountants as co-counsel — not as a competitor. Your client stays your client. Here is how the referral structure works, who does what, and how privilege attaches once a lawyer is engaged. ### US Estate Tax for Canadians: Who's Exposed and Why Date: 2026-03-11T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/us-estate-tax-for-canadians-snowbirds Canadians who own US-situs assets — Florida condos, US-corporation shares, tangible US property — are exposed to US estate tax at death. The treaty's prorated unified credit helps, but doesn't eliminate the risk for larger estates. ### Succession Planning for Business Owners Date: 2026-03-10T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/succession-planning-for-business-owners Every business owner exits eventually — by transition to family, a sale to a third party, or by default on death. Planning the exit years ahead turns a tax problem into a tax plan. Here are the options, the structures, and the timing. ### Corporate Year-End Tax Checklist Date: 2026-03-10T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/corporate-year-end-tax-checklist A year-end checklist for incorporated business owners: the salary-vs-dividend remuneration mix, capital dividend account planning, instalments, and the filing deadlines that follow your fiscal year-end. ### Cryptocurrency Tax in Canada: Capital Gains vs Business Income, Reporting, and the CRA Date: 2026-03-10T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/cryptocurrency-tax-canada-guide Canada taxes cryptocurrency as property, not currency. Whether your gains are capital gains or business income, every disposition is taxable, and how you track adjusted cost base and report it determines what you owe. ### How to File a Notice of Appeal to the Tax Court of Canada Date: 2026-03-10T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/how-to-file-a-notice-of-appeal-tax-court After the CRA confirms a reassessment, you have 90 days to appeal to the Tax Court of Canada. This step-by-step guide covers the deadline, extensions, choosing a procedure, filing methods, what goes in the notice of appeal, and the Crown's reply. ### TOSI: How the Tax on Split Income Rules Apply to Your Family Date: 2026-03-09T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/tosi-tax-on-split-income Section 120.4 of the Income Tax Act applies top marginal rates to most family-member dividends from a related business. The exceptions matter — here's how to use them. ### GST/HST New Housing & Rental Rebate Disputes Date: 2026-03-06T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/gst-hst-new-housing-rebate-disputes The CRA reviews and claws back new housing and rental rebates more than almost any other GST/HST item. This guide covers eligibility, the primary-place-of-residence test, common denials, assignment sales, and the objection route. ### Preparing Your Own Tax Court Case: Documents, Chronology, and Issues Date: 2026-03-05T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/preparing-your-own-tax-court-case How a self-represented taxpayer builds a Tax Court case: organizing your documents, writing a chronology, pinning down the real issues, and giving the judge exactly what is needed to rule your way. ### Cross-Border Estate Planning When One Spouse is American Date: 2026-03-04T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/cross-border-estate-planning-mixed-citizenship A US citizen who leaves property to a non-US-citizen spouse loses the unlimited marital deduction. The QDOT defers the estate tax, but at the cost of trustee complexity. The right structure depends on where the survivor will live. ### Case Study: Defending a CRA Audit That Alleged Unreported Income and Disallowed Expenses Date: 2026-03-04T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/case-study-cra-audit-defence An illustrative CRA audit scenario: a small-business owner faced a reassessment for unreported income and disallowed expenses. This composite walks through how an audit defence is built and how the proposed adjustments were challenged. ### Inside CRA Collections: The Officer, the Powers, and How to Negotiate Date: 2026-03-04T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/victory-over-the-cra-cra-collections-powers CRA collections officers behave nothing like private-sector collectors — they are rewarded for closing files, not collecting money. This guide explains the collector's incentives, the powers they wield, and how a payment plan actually gets made. ### Owner-Manager Tax Savings: Corporations, Family Wages, and Income Splitting Date: 2026-03-04T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/pay-way-less-tax-owner-manager-income-splitting Owner-managers have planning tools employees do not: a corporation that defers tax, reasonable wages to family, and partnership structures. Here is how each works — and the TOSI and attribution traps to respect. ### Testamentary Trusts, Henson Trusts & Blended-Family Planning Date: 2026-03-04T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/wills-estates-trusts-and-blended-families A plain will divides property; a will with the right trusts protects it. Discretionary trusts, Henson trusts, life estates, and mutual wills let you provide for a second spouse, a disabled child, or young beneficiaries without unintended consequences. ### Selling Your Pharmacy: Maximizing Value and Minimizing Tax Date: 2026-03-04T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/pharmacist-selling-your-pharmacy-tax-efficiently Selling a pharmacy is both a business transaction and a life milestone. Purification, a share-vs-asset decision, family-trust multiplication of the LCGE, and a going-concern HST election can change the after-tax result by hundreds of thousands of dollars. ### What Happens If You Don't File Your Taxes in Canada Date: 2026-03-04T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/what-happens-if-you-dont-file-taxes-canada Not filing a Canadian tax return sets off a predictable chain of consequences: late-filing penalties, daily compounding interest, arbitrary assessments, collections enforcement, and — in serious cases — prosecution. Here is what each stage actually looks like. ### Tax Planning for High-Net-Worth Families Date: 2026-03-04T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/tax-planning-for-high-net-worth-families Trusts, estate freezes, philanthropy, cross-border exposure, and asset protection — the planning building blocks for families with substantial wealth, and how they interact over a generation. ### Family Trusts in Canadian Estate Planning Date: 2026-03-03T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/holistic-family-trusts-in-canadian-estate-planning A discretionary family trust can split income, multiply the capital gains exemption, and hold growth shares for the next generation — provided the attribution rules and the trust's design are handled with care. Here is how they work. ### Post-Mortem Tax Planning: Pipeline, Bump, and Loss Carryback Date: 2026-03-02T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/post-mortem-pipeline-bump When a Canadian shareholder dies owning private-company shares, the estate has 36 months to deploy three coordinated tax strategies. Skipping them costs heirs hundreds of thousands. ### Incorporating Your Business: What Changes, and Why It Matters Date: 2026-02-26T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/startup-incorporation-guide Incorporation turns your business into a separate legal person — with its own tax return, its own liability shield, and its own planning opportunities. Here is what actually changes when you incorporate, and the pitfalls to avoid. ### Appealing Gross Negligence Penalties at the Tax Court Date: 2026-02-26T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/appealing-gross-negligence-penalties-tax-court The gross negligence penalty under section 163(2) is one of the few assessments where the onus shifts to the Minister. At the Tax Court, that reversal of burden is the centre of the case — and the reason these penalties so often fall. ### RRSP Withdrawals for US Residents: How the Treaty Mechanics Work Date: 2026-02-25T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/rrsp-distributions-us-residents An RRSP earned while you lived in Canada is sheltered from US tax during accumulation under Article XVIII of the Canada-US treaty. Withdrawals are US-taxable in the year received, with foreign tax credit relief for the Canadian withholding. ### The Tax Court General Procedure, Explained Date: 2026-02-24T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/tax-court-general-procedure-explained The General Procedure is the Tax Court's full-litigation track: formal pleadings, documentary discovery, oral examinations, undertakings, expert evidence, and a trial under the rules of evidence. Here is how each stage works and when it applies. ### Pre-Immigration to Canada: Resetting Your Tax Cost Base Date: 2026-02-18T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/pre-immigration-canada-cost-base-reset When you become a Canadian tax resident, paragraph 128.1(1)(b) of the Income Tax Act gives you a fair-market-value cost base reset on most of your worldwide assets. Pre-immigration planning ensures the reset captures the right gains. ### UAE Corporate Tax Explained: What Canadians and Cross-Border Businesses Need to Know Date: 2026-02-17T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/uae-corporate-tax-explained-for-canadians The UAE introduced a 9% corporate tax for financial years starting on or after 1 June 2023. Here is how the regime works — scope, the AED 375,000 threshold, residency by management and control, free zone treatment, and what it means for Canadian-owned entities. ### CRA Payment Arrangements: How to Negotiate a Plan You Can Live With Date: 2026-02-17T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/cra-payment-arrangements-how-they-work When you cannot pay a tax debt in full, a payment arrangement spreads it over time. The CRA expects financial disclosure, will push for the shortest term, and can say no — here is how the process actually works. ### Beware the Net Worth Audit: Five Pitfalls of the CRA's Lifestyle Method Date: 2026-02-12T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/victory-over-the-cra-net-worth-audit The net worth method is the fastest and crudest way the CRA can audit a taxpayer — and it produces large, unfair reassessments. Here are the five pitfalls Dale Barrett sees in nearly every net worth file, and how to push back. ### A Canadian Business Owner's Guide to Deducting Expenses the Right Way Date: 2026-02-12T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/pay-way-less-tax-business-deductions-canadian-owners Most of the tax a small business owner saves comes from claiming the right expenses and being able to prove them. Here is how business deductions work, what you can claim, and how to keep claims audit-ready. ### Years of Unfiled Tax Returns in Canada: What to Do Now Date: 2026-02-12T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/unfiled-tax-returns-canada-what-to-do Several years of unfiled Canadian tax returns is a fixable problem — but the way you fix it matters. This guide covers the risks of waiting, how to bring the returns current, and when the Voluntary Disclosure Program is the right path versus simply filing. ### Becoming a US Resident: Year-One Planning for Canadians Date: 2026-02-11T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/becoming-us-resident-year-one-planning The Canadian who moves to the US triggers Canadian departure tax in the year of move AND a US tax-residency transition mid-year. The dual-status return, the Form T1244 election, and the PFIC clean-up all need to happen in the same calendar year. ### The Estate Freeze: Locking In Today's Value for Tomorrow's Tax Date: 2026-02-10T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/holistic-estate-freeze-locking-in-todays-value An estate freeze fixes the value of a business owner's interest at today's number, so future growth — and the tax on it — accrues to the next generation instead of the estate. Here is what a freeze does and how it is built. ### What Makes a Will Valid in Canada Date: 2026-02-10T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/wills-estates-what-makes-a-will-valid A will only does its job if it is legally valid. Age, capacity, free choice, signing, and impartial witnesses are the building blocks — and the rules vary by province. Here is what each requirement means and where wills most often go wrong. ### Pharmacy Succession Planning: Corporate Reorganizations That Preserve Value Date: 2026-02-10T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/pharmacist-business-succession-and-corporate-reorganizations Every pharmacist eventually retires, sells, or transfers the practice. A succession plan built on section 85 rollovers, purification, an estate freeze, and a Holdco preserves QSBC status and the Lifetime Capital Gains Exemption. ### Choosing a Business Structure: Sole Proprietorship, Partnership, or Corporation Date: 2026-02-10T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/startup-choosing-a-business-structure Before you invoice your first client, you have to decide what your business is in the eyes of the law. The choice among a sole proprietorship, a partnership, and a corporation shapes your tax bill, your liability, and your exit for years. ### The Tax Court Informal Procedure, Explained Date: 2026-02-10T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/tax-court-informal-procedure-explained The Informal Procedure is the Tax Court's faster, cheaper track for smaller disputes — generally $25,000 or less in federal tax per year, or $12,000 in disputed GST/HST. Here is how it works, the simplified rules, and when to choose it. ### How to Represent Yourself at the Tax Court of Canada (Informal Procedure) Date: 2026-02-10T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/represent-yourself-tax-court-informal-procedure A start-to-finish guide for self-represented taxpayers using the Tax Court's Informal Procedure: filing your appeal, the timeline, getting ready, and what happens on hearing day. ### GST/HST Appeals at the Tax Court of Canada Date: 2026-02-10T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/gst-hst-appeals-at-the-tax-court Denied input tax credits, a clawed-back new-housing rebate, or a backdated registration assessment can all be appealed to the Tax Court. The procedure differs from an income-tax appeal in ways that matter for timing, collections, and onus. ### Tax Planning for Business Owners: A Practical Guide Date: 2026-02-10T12:00:00.000Z URL: https://www.barretttaxlaw.com/blog/tax-planning-for-business-owners-guide Remuneration mix, income splitting and TOSI, holding companies, the lifetime capital gains exemption, RDTOH and CDA, and year-end planning — the moving parts of a business owner's tax plan, explained in plain language. ### Support Payments as Deductible Expenses and Taxable Income Date: 2023-08-01T21:54:21Z URL: https://www.barretttaxlaw.com/blog/support-payments-deductible-expenses-and-taxable-income By Martina Caunedo This memorandum is intended to provide information regarding the deductibility of support payments as expenses for the payor and their taxation as income for the recipient. Support payments are deductible expenses for the payor and taxable income for … ### Victim Surcharge – Section 737 of the Criminal Code Date: 2023-08-01T11:03:48Z URL: https://www.barretttaxlaw.com/blog/victim-surcharge-section-737-of-the-criminal-code Victim Surcharge – Section 737 of the Criminal Code By Matthew Rochester Introduction This memo seeks to identify how a defendant can successfully apply for exemption to the imposition of a victim surcharge under section 737 of the Criminal Code. Exceptions under statut… ### Intercompany Loans: Mitigating Tax Risks under Canadian Law Date: 2023-07-20T14:51:27Z URL: https://www.barretttaxlaw.com/blog/intercompany-loans-mitigating-tax-risks-under-canadian-law Intercompany Loans: Mitigating Tax Risks under Canadian Law By Dale Barrett Navigating the business landscape is no easy task, particularly when it comes to intercompany loans between corporations with a common owner. If you are a business owner who owns multiple compan… ### Maximizing The Small Business Deduction: Preventing Corporations from Being Associated Date: 2023-05-28T00:14:39Z URL: https://www.barretttaxlaw.com/blog/small-business-deduction-preventing-corporations-from-being-associated Maximizing The Small Business Deduction: Preventing Corporations from Being Associated Barrett Tax Law The Small Business Deduction. The government giveth a wondrous gift, but if you're not careful, they taketh back. In Ontario, there are preferential tax rates that app… ### Directors’ Liability and Section 160 Assessments Date: 2021-09-07T06:07:55Z URL: https://www.barretttaxlaw.com/blog/directors-liability-and-section-160-assessments Directors can be held liable for a corporation’s debt Under Canadian tax law, directors of a corporation can be held personally liable for certain components of a corporation’s tax debt which the corporation cannot pay, such as in the case of an insolvency. Generally sp… ### Tax Guidance with Respect to Real Estate Property for Canadian Non-Residents Date: 2021-09-07T05:17:42Z URL: https://www.barretttaxlaw.com/blog/tax-guidance-with-respect-to-real-estate-property-for-canadian-non-residents When a non-resident of Canada earns income from a rental property or disposes of a real property in Canada, the tenant or purchaser may be required to withhold certain amount of tax which is usually 25% and remit that to the Canada Revenue Agency (CRA). This article wil… ### Section 116: A Purchaser's Liability in a Real Estate Transaction When Buying from a Potential Non-resident Date: 2021-09-07T05:12:52Z URL: https://www.barretttaxlaw.com/blog/section-116-a-purchasers-liability-in-a-real-estate-transaction-when-buying-from-a-potential-non-resident A non-resident is generally taxable in Canada on the disposition of Canadian real estate. It is more difficult for the Canada Revenue Agency (CRA) to collect tax from a non-resident, so there are additional provisions to ensure the tax is pre-paid to protect against the… ### Conditions of a Valid Voluntary Disclosure Program Application Date: 2021-09-07T05:08:40Z URL: https://www.barretttaxlaw.com/blog/conditions-of-a-valid-voluntary-disclosure-program-application What is the Voluntary Disclosure Program In recent years, the CRA has taken a rather aggressive approach in recovering uncollected taxes. The Offshore Tax Informant Program awards informants 5 to 15 percent of the federal tax collected if their leads result in more than… ### Voluntary Disclosure Program – Guidance from a Canadian Tax Lawyer Date: 2021-09-07T05:05:28Z URL: https://www.barretttaxlaw.com/blog/voluntary-disclosure-program-guidance-from-a-canadian-tax-lawyer What is the Voluntary Disclosure Program Taxpayers in Canada are supposed to file their tax returns accurately and timely, otherwise there may be interest and penalties or even criminal prosecutions depending on the situation. If a taxpayer fails to do so, he is not ent… ### Section 216 election – guidance from Canadian tax lawyers on rental income and non-resident tax. Date: 2021-08-18T03:01:20Z URL: https://www.barretttaxlaw.com/blog/section-216-election-guidance-from-canadian-tax-lawyers-on-rental-income-and-non-resident-tax Section 216 election – guidance from Canadian tax lawyers on rental income and non-resident tax. When non-residents receive rental income from rental or immovable property in Canada, the tenant or agent must withhold non-resident tax which is 25% on the gross rental inc… ### Tax Residence Determination in Canada – guidance from Canadian tax lawyers Date: 2021-07-27T15:14:02Z URL: https://www.barretttaxlaw.com/blog/tax-residence-determination-in-canada-guidance-from-canadian-tax-lawyers The basis for Canadian taxation The Canadian income tax system is based on residence status. Under subsection 2(1) of the Income Tax Act , an income tax is payable on the taxable income of every person resident in Canada at any time in the year. There is a common misund… ### Canada Revenue Agency Focussing on Staffing (Employment) Agency Audits – Guidance from Canadian Tax Lawyers Date: 2021-07-25T15:42:06Z URL: https://www.barretttaxlaw.com/blog/canada-revenue-agency-focussing-on-staffing-employment-agency-audits-a-canadian-tax-lawyers-guidance Canada Revenue Agency is shifting attention to Staffing Agencies Recently the Canada Revenue has been ramping up their audits of Employment Agencies, an industry which is estimated to have defrauded the CRA of hundreds of millions of dollars of HST. The problem (for the… ### How to Deal with Tax Search Warrants – Guidance from Canadian Tax Lawyers Date: 2021-07-17T13:10:16Z URL: https://www.barretttaxlaw.com/blog/how-to-deal-with-tax-search-warrants-tax-guidance-from-a-canadian-tax-lawyer The CRA cannot use its civil audit powers in a criminal investigation When the Canada Revenue Agency (CRA) investigates potential tax fraud, they will typically rely on search warrants in order to seize books and records to gather evidence. This is because when the CRA … ### Specified Foreign Property - Guidance from Canadian Tax Lawyers Date: 2021-07-16T23:15:59Z URL: https://www.barretttaxlaw.com/blog/specified-foreign-property-guidance-from-a-canadian-tax-lawyer Foreign property reporting requirements in Canada – A Canadian tax lawyer’s guidance on T1135 obligations When a Canadian resident holds specified foreign properties with a cost exceeding $100,000 anytime during the taxation year, he or she must file the T1135 form – Fo… ### The “Unnamed Persons” Search: An Enhanced Ability For The CRA To Identify Taxpayers To Audit. Date: 2021-07-05T20:41:53Z URL: https://www.barretttaxlaw.com/blog/the-unnamed-persons-search-an-enhanced-ability-for-the-cra-to-identify-taxpayers-to-audit By Alex Kerslake Taxpayers are often aware of the common triggers for a Canada Revenue Agency (CRA) audit, such as claiming large expenses, failing to report a tax slip, or simply working in an industry known to underreport their income. There are many other methods the… ### Deducting life insurance costs: Why opportunity may be overlooked (Originally on The Lawyer’s Daily) Date: 2021-01-28T11:53:35Z URL: https://www.barretttaxlaw.com/blog/deducting-life-insurance-costs-why-opportunity-may-be-overlooked-originally-on-the-lawyers-daily By Dale Barrett and Simon Townsend (January 26, 2021, 12:42 PM EST) -- In part one, we discussed paragraph 20(1)(e.2) in the Income Tax Act (the Act), which allows an individual or business to deduct the reasonable cost of life insurance in the event it is used as colla… ### Social media influencers and game streamers: Beware of CRA (Originally on The Lawyer’s Daily) Date: 2021-01-25T16:31:56Z URL: https://www.barretttaxlaw.com/blog/social-media-influencers-and-game-streamers-beware-of-cra-originally-on-the-lawyers-daily Social media influencers and game streamers can earn hundreds of thousands of dollars per year and are paid in both cash and merchandise. What many of them don’t realize is that the $3,000 free trip to Hawaii that they received as promotional consideration may end up co… ### Deducting life insurance costs: Paragraph 20(1)(e.2) of Income Tax Act explained (Originally on The Lawyer's Daily) Date: 2021-01-21T09:56:03Z URL: https://www.barretttaxlaw.com/blog/deducting-life-insurance-costs-paragraph-201e-2-of-income-tax-act-explained-originally-on-the-lawyers-daily By Dale Barrett and Simon Townsend (January 18, 2021, 3:21 PM EST) -- The cost of life insurance is a cost which is usually borne by individuals and is not something that people think of as a deductible expense. With numerous deductions for loss from a business (or prop… ### Year End RESP Considerations Date: 2020-12-07T16:28:17Z URL: https://www.barretttaxlaw.com/blog/year-end-cerb-considerations While many Canadians are aware that the government provides annual grants on contribution to RESPs, many people are simply unaware of the small but important nuances in maximizing those grants. The Canada Education Savings Grant (“CESG”) is currently limited to 20% of t… ### COVID-19 — Updates on Employment Expenses Date: 2020-11-02T12:35:20Z URL: https://www.barretttaxlaw.com/blog/covid-19-updates-on-employment-expenses To Whom It May Concern: On September 11, 2020 the Canada Revenue Agency (“ CRA ”) conducted a consultation hosted by the Canadian Chamber of Commerce. At this consultation, the CRA provided guidance on the deductibility of home office expenses as a result of the COVID-1… ### COVID 19 - New Deductions From Income Sources Date: 2020-09-29T19:12:36Z URL: https://www.barretttaxlaw.com/blog/covid-19-new-deductions-from-income-sources The following are considerations on deductions that independent contractors and salaried employees may count against their income due to the current COVID-19 pandemic. If salaried employees are required by contract (written or implied) to maintain a home office, they fu… ### So You’re Working From Home – Deduct your Expenses and Pay Less Tax Date: 2020-08-18T18:22:59Z URL: https://www.barretttaxlaw.com/blog/so-youre-working-from-home-deduct-expenses-and-pay-less-tax-originally-on-the-lawyers-daily Almost all of us have been working from home during the Covid-19 pandemic and many of us will continue to work from home for some time to come. Google just announced that it is going to have its employees to work from home for at least the next year, and personally I ha… ### Estate Freezes: A Silver Lining of COVID-19 (Originally On The Lawyer’s Daily) Date: 2020-04-09T16:45:11Z URL: https://www.barretttaxlaw.com/blog/estate-freezes-a-silver-lining-of-covid-19 With the world in flux and an unprecedented shutdown of the world’s economy, those who were planning to transfer businesses to the next generation have been given what is (hopefully) a once-in-a-lifetime opportunity to defer additional taxes for many years. As valuation… ### Wondering about Canada's 75% Emergency Wage Subsidy? Date: 2020-03-30T16:28:24Z URL: https://www.barretttaxlaw.com/blog/canada-emergency-wage-subsidy-covid19 Here is what we know so far about Canada's Emergency Wage Subsidy, a government program helping businesses avoid having to lay-off their employees during the Covid-19 Pandemic. We will be updating this article as new details are released. The Canada Emergency Wage Subsi… ### A Sad Story about Mr. X. from Country Y (Originally on The Lawyer's Daily) Date: 2020-02-10T20:49:44Z URL: https://www.barretttaxlaw.com/blog/a-sad-tax-story-unfair-cra-audits-and-reassessments Meet Mr. X. Don’t judge him by his country of residence. It is not his fault. It wouldn’t be fair. He was taken there as a child by his parents who were fleeing another country for a better life. They could never have predicted how the government of Mr. X’s adopted coun… ### I Lost My Battle with the CRA, but I Won the War (originally on The Lawyer’s Daily) Date: 2019-11-22T13:50:21Z URL: https://www.barretttaxlaw.com/blog/winning-in-the-tax-court-of-canada My law firm cannot make the claim that we have won all of our cases in the Tax Court of Canada, but what we can tell you is that every single case we have won in tax court — either in trial or a settlement — was lost at the CRA objection stage. And in many cases, beside… ### A Tale of Two Taxpayers: The Fiscal Arbitrators Client (originally on The Lawyer’s Daily) Date: 2019-11-22T11:45:53Z URL: https://www.barretttaxlaw.com/blog/fiscal-arbitrators-tax-scheme In part one of this series , I considered the situation of a hypothetical wealthy client who was involved in the KPMG tax scheme promoted by a big accounting firm. In the end, the taxpayer signed a settlement with the CRA. Part two relates the story of a typical client … ### 20 Tax Audit Triggers Date: 2019-10-10T12:23:26Z URL: https://www.barretttaxlaw.com/blog/20-tax-audit-triggers Sometimes a taxpayer is randomly selected for an audit. It’s like winning the worst lottery in the world, and there’s nothing you can do to change that. But apart from a random tax audit, the odds of being targeted for an audit are dependent on a variety of risk factors… ### A Tale of Two Taxpayers: the Wealthy Client (originally on The Lawyer's Daily) Date: 2019-10-08T18:46:03Z URL: https://www.barretttaxlaw.com/blog/a-tale-of-two-taxpayers-the-wealthy-client-originally-on-the-lawyers-daily By Dale Barrett – Managing Partner at Barrett Tax Law, Founder of Lawyers & Lattes Legal Cafe , Author of Tax Survival for Canadians: Stand up to the CRA , Editor of the Family Law and Tax Handbook, and Tax Columnist at the Lawyer’s Daily. Originally published by Th… ### The Peril of Family Asset Transfers (originally on The Lawyer’s Daily) Date: 2019-05-31T16:45:19Z URL: https://www.barretttaxlaw.com/blog/the-peril-of-family-asset-transfers-originally-on-lawyers-daily By Dale Barrett – Managing Partner at Barrett Tax Law, Founder of Lawyers & Lattes Legal Cafe , Author of Tax Survival for Canadians: Stand up to the CRA , Editor of the Family Law and Tax Handbook, and Tax Columnist at the Lawyer’s Daily. Originally published by Th… ### Dale Barrett Answers Your Pressing Tax Questions (originally on Global News) Date: 2019-05-21T13:40:03Z URL: https://www.barretttaxlaw.com/blog/dale-barrett-answers-your-pressing-tax-questions-originally-on-global-news As seen on GlobalNews.ca, Dale Barrett, Managing Partner at Barrett Tax Law, answers your pressing tax questions: THE QUESTION: I don’t understand the implications of adding my adult child as a joint tenant on my home. I know that there can be capital gains tax implicat… ### More Reasons to Abandon the HST (originally on Lawyer's Daily) Date: 2019-04-09T14:46:26Z URL: https://www.barretttaxlaw.com/blog/more-reasons-to-abandon-the-hst-originally-on-lawyers-daily By Dale Barrett – Managing Lawyer at Barrett Tax Law and Tax Columnist at the Lawyer’s Daily. Originally published by the Lawyer’s Daily . In my first article in this series, I expressed the opinion that the entire Harmonized Sales Tax system and its legal framework are… ### HST Hurts Economy and Should be Abandoned (originally on Lawyer's Daily) Date: 2019-04-09T14:14:19Z URL: https://www.barretttaxlaw.com/blog/hst-hurts-economy-and-should-be-abandoned-originally-on-lawyers-daily By Dale Barrett – Managing Lawyer at Barrett Tax Law and Tax Columnist at the Lawyer’s Daily. Originally published by the Lawyer’s Daily . According to the 2008 federal budget, the Harmonized Sales Tax (HST) was claimed by the federal government to be “the single most i… ### CRA Auditors Less Concerned with Correctness than with the Size of Reassessments (originally on Lawyer's Daily) Date: 2019-04-08T20:02:41Z URL: https://www.barretttaxlaw.com/blog/cra-auditors-less-concerned-with-correctness-than-with-the-size-of-reassessments-originally-on-lawyers-daily By Dale Barrett - Managing Lawyer at Barrett Tax Law and Tax Columnist at the Lawyer's Daily. Originally published by the Lawyer's Daily . In any self-reporting or honour system like we have in Canadian taxation, there must be a means by which the state can verify the c… ### Ombudsman Not Protecting Rights of Taxpayers (originally on Lawyer's Daily) Date: 2019-04-08T17:44:42Z URL: https://www.barretttaxlaw.com/blog/ombudsman-not-protecting-rights-of-taxpayers-originally-on-lawyers-daily Dale Barrett - Managing Partner of Barrett Tax Law This article was originally published by The Lawyer’s Daily , part of LexisNexis Canada Inc. Although not an actual law as it is in the United States, the Taxpayer “Bill of Rights” sets out sixteen rights, eight of whic… ### Beware The Net Worth Audit Date: 2018-08-03T13:33:19Z URL: https://www.barretttaxlaw.com/blog/beware-the-net-worth-audit Beware The Net Worth Audit (re-published from TheGaap.net) August 1, 2018 Dale Barrett Managing Partner Barrett Tax Law Arguably, the cheapest, fastest, and dirtiest way in which the CRA can audit a taxpayer is by employing the “net worth” method. It throws all principa… ### Taxation of a Partnership - The Basics Date: 2018-06-18T14:50:51Z URL: https://www.barretttaxlaw.com/blog/taxation-of-a-partnership-the-basics June 18, 2018 By Vivian Esper Tax Lawyer Barrett Tax Law 1-866-278-8424 416-907-8429 TAXATION OF A PARTNERSHIP - THE BASICS The Canadian common law of all provinces defines a partnership as the relation that subsists between or amongst persons carrying on a business in … ### AON Inc. - Current vs. Capital Expenditures Date: 2018-04-24T13:49:35Z URL: https://www.barretttaxlaw.com/blog/aon-inc-current-vs-capital-expenditures On September 6, 2017, the Tax Court released its decision of AON Inc. v. Canada 2015-1043 (IT) G ruling on the issue of classification of expenditures (current vs. capital). The Honourable Justice Gaston Jorre confirmed the established legal test used to determine the n… ### Late Filing Penalties for RRSP Over-Contribution Canceled by Tax Court Date: 2018-04-24T13:45:39Z URL: https://www.barretttaxlaw.com/blog/late-filing-penalties-for-rrsp-over-contribution-canceled-by-tax-court On August 31, 2017, the Tax Court of Canada released a judgment Chiang v. The Queen (2016-2715(IT)I where Sommerfeldt J. canceled late filing penalties under section 204.3 and section 162(1) of the ITA.In brief, the appellant, Mr. Chaing, over-contributed to his RRSPs d… ### Cryptocurrency Profits in Canada: Capital Gains vs. Business Income Date: 2018-03-12T17:53:16Z URL: https://www.barretttaxlaw.com/blog/cryptocurrency-profits-in-canada-capital-gains-vs-business-income March 12, 2018 By Dale Barrett Managing Partner Barrett Tax Law 1-866-278-8424 416-907-8429 Cryptocurrency Profits in Canada: Capital Gains vs. Business Income I am asked all the time whether somebody has to pay capital gains tax on their cryptocurrency gains or whether… ### Tax Treatment of Cryptocurrency Theft and Loss Date: 2018-01-13T06:54:10Z URL: https://www.barretttaxlaw.com/blog/tax-treatment-of-cryptocurrency-theft-and-loss January 13, 2018 By Dale Barrett Managing Partner Barrett Tax Law 1-866-278-8424 416-907-8429 So, after investing in Bitcoin and Ethereum, the North Koreans hacked one of your cryptocurrency exchanges and you lost a Bitcoin after it had hit $20,000 USD (and you bought t… ### A Canadian First – Battered Women’s Syndrome can help prove Due Diligence Date: 2017-05-09T12:14:49Z URL: https://www.barretttaxlaw.com/blog/a-canadian-first-battered-womens-syndrome-can-help-prove-due-diligence Barrett Tax Law successfully litigated what could be a first in Canada. Using the defence of battered women’s syndrome to show L (shortened for privacy of client) never had the opportunity to file her taxes and exercised due diligence. In the case of R v. L. a woman was… ### Vehicle Expenses Date: 2016-05-12T11:42:07Z URL: https://www.barretttaxlaw.com/blog/vehicle-expenses When a vehicle is used for both personal and business purposes, it is necessary to keep a log to record the business use of the vehicle. Please see our article on keeping a vehicle log found here: Unincorporated Business An unincorporated business may write off (deduct)… ### Transfers of Property while Having a Tax Debt Date: 2016-05-12T11:40:54Z URL: https://www.barretttaxlaw.com/blog/transfers-property-tax-debt Income Tax Act Subsection 160 ( http://laws-lois.justice.gc.ca/eng/acts/I-3.3/section-160.html ) Excise Tax Act Subsection 325 ( http://laws-lois.justice.gc.ca/eng/acts/E-15/section-325.html ) Subsection 160 and subsection 325 assessments are the most powerful collectio… ### Transfer Pricing Date: 2016-05-12T11:40:01Z URL: https://www.barretttaxlaw.com/blog/transfer-pricing Income Tax Act Subsection 247 Transfer prices are the prices at which services, tangible property, and intangible property are traded across international borders between related parties. Canada’s transfer pricing legislation requires, for tax purposes, terms and condit… ### Tax Residency Date: 2016-05-12T11:38:27Z URL: https://www.barretttaxlaw.com/blog/tax-residency Income Tax Act Subsection 250(1) Canada allows its citizens to be residents of Canada for tax purposes, and non-residents of Canada for tax purposes. This is an important distinction as a non-resident of Canada for tax purposes will only be subject to Canadian taxation … ### GST/HST Small Supplier Date: 2016-05-12T11:37:45Z URL: https://www.barretttaxlaw.com/blog/gsthst-small-supplier Excise Tax Act s. 148 A small supplier is a supplier whose worldwide annual GST/HST taxable solutions are less than $30,000, or less than $50,000 for public service bodies. The supplies include zero-rated supplies, and includes the supplies of all associates. An importa… ### Small Business Deduction Date: 2016-05-12T11:36:54Z URL: https://www.barretttaxlaw.com/blog/small-business-deduction Income Tax Act subsection 125 The small business deduction is available on active business income for a Canadian Controlled Private Corporation. It provides a reduction in the corporate tax rate up to the federal limit of $500,000. What the above means is if you are ear… ### Qualified Small Business Corporation Shares Date: 2016-05-12T11:36:07Z URL: https://www.barretttaxlaw.com/blog/qualified-small-business-corporation-shares Income Tax Act Subsection 110.6(1) and 110.6(2.1) In order to claim the lifetime capital gains exemption on a share sale, the shares must meet certain conditions to qualify for the special treatment. If the shares qualify, then the seller would be able to use his or her… ### Qualified Fishing Property Date: 2016-05-12T11:35:29Z URL: https://www.barretttaxlaw.com/blog/qualified-fishing-property Income Tax Act Subsection 110.6(1), 110.6(1.2), and 110.6(2.2) In 2015, the amount increased that a taxpayer can claim for the lifetime capital gains exemption as it relates to qualified fishing property. The amount is now $1,000,000. The definition of qualified fishing… ### Principal Residence Exemption (PRE) Date: 2016-05-12T11:34:33Z URL: https://www.barretttaxlaw.com/blog/principal-residence-exemption-pre Income Tax Act s. 40(2)(b) The benefit of the principal residence exemption is obvious. The gain is not subject to tax if the property has been the individual’s principal residence for the entire time it has been owned by that individual. When you normally sell a proper… ### Precious Metals Date: 2016-05-12T11:33:37Z URL: https://www.barretttaxlaw.com/blog/precious-metals Income Tax Act subsection 123(1) A "precious metal" is a bar, ingot, coin or wafer of gold, platinum or silver that is refined to a purity level of at least: 5% in the case of gold and platinum; and 9% in the case of silver. If a “precious metal” is sold, then the sale … ### Personal Services Business Date: 2016-05-12T11:32:49Z URL: https://www.barretttaxlaw.com/blog/personal-services-business Income Tax Act subsections 125(7) and 123.4(1) A personal services business (PSB) is a corporation that carries on business through an individual, and that individual performs services while actually acting like an employee. This is occasionally known as the incorporate… ### Permanent Establishment Date: 2016-05-12T11:32:09Z URL: https://www.barretttaxlaw.com/blog/permanent-establishment Income Tax Act Subsections 124(1) and 124(4) Income Tax Regulations subsection 400(2) A permanent establishment is a fixed place of business, which allows a certain jurisdiction to tax the income being made at that fixed place of business. The typical types of permanent… ### Lifetime Capital Gains Exemption Date: 2016-05-12T11:29:22Z URL: https://www.barretttaxlaw.com/blog/lifetime-capital-gains-exemption Income Tax Act subsection 110.6 The Lifetime Capital Gains Exemption (LCGE) allows a taxpayer to receive $800,000 or $1,000,000 of otherwise taxable capital gains on a tax-free basis. The difference in tax-free amounts directly relates to the property that the gain rela… ### Income Splitting Through Loans Date: 2016-05-12T11:28:10Z URL: https://www.barretttaxlaw.com/blog/income-splitting-loans Income Tax Act Subsection 74.5(2) Income Tax Regulations Subsection 4301(c) Income splitting is an attempt by one taxpayer to send taxable income to another taxpayer in a lower bracket. Typically this is done by splitting income between family members. Income splitting … ### Illegal Income Date: 2016-05-12T11:27:17Z URL: https://www.barretttaxlaw.com/blog/illegal-income Taxpayers are typically surprised to learn that income from illegal activities is still subject to tax here in Canada. The scenario usually plays out that someone is convicted of a crime (drug-dealing), and following this, that same individual is then audited for unrepo… ### Gross Negligence Penalties Date: 2016-05-12T11:26:33Z URL: https://www.barretttaxlaw.com/blog/gross-negligence-penalties Income Tax Act Subsection 163(2), 163(3) If you, knowingly or under circumstances amounting to gross negligence, made a false statement or omission on your tax returns, the Canada Revenue Agency (“CRA”) may charge you with a penalty. The penalty is equal to the greater … ### Gifts and Inheritances Date: 2016-05-12T11:25:49Z URL: https://www.barretttaxlaw.com/blog/gifts-inheritances In Canada, there will be no amount of taxes due from the receipt of a gift or inheritance in most circumstances. The giver of the gift may have a taxable event occur if they are gifting capital property. The gift will be deemed to have occurred at fair market value, and… ### General Anti-Avoidance Rule (GAAR) Date: 2016-05-12T11:24:55Z URL: https://www.barretttaxlaw.com/blog/general-anti-avoidance-rule-gaar Income Tax Act Subsection 245 The General Anti-Avoidance Rule essentially states that where a transaction, or a series of transactions results in a reduction, avoidance, or deferral of taxes owing, and the transaction or the series of transactions are only being attempt… ### Fraudulent Filing Date: 2016-05-12T11:23:43Z URL: https://www.barretttaxlaw.com/blog/fraudulent-filing Fiscal Arbitrators, Demara Consulting, and various other companies will tell you they know the secret to Canadian Income Tax. They will tell you they can file your returns in such a way that you will retrieve all taxes paid for the last 3, 7, or even 10 years. Should yo… ### Directors Liabilities Date: 2016-05-12T11:22:58Z URL: https://www.barretttaxlaw.com/blog/directors-liabilities Income Tax Act Subsection 227 Excise Tax Act Subsection 323 Typically in Canada, your debts are your own. However, where corporations are involved that is not always the case. The Canada Revenue Agency (“CRA”) can assess director’s of a corporation for certain kinds of … ### Change in Use Date: 2016-05-12T11:22:04Z URL: https://www.barretttaxlaw.com/blog/change-use Deemed Disposition Where there is a change in use of property (real estate), the owner of the property is deemed to have sold the property, and to have immediately re-purchased it. This occurs whether the change in use is from personal use to income producing, or from i… ### Allowable Business Investment Loss Date: 2016-05-12T11:21:08Z URL: https://www.barretttaxlaw.com/blog/allowable-business-investment-loss Income Tax Act Subsection 3(d), 38(c), 39(1)(c), 40(2)(g)(ii), and 50 An allowable business investment loss (“ABIL”) is half of a capital loss, which was incurred on the sale of shares, or a debt of a small business corporation. The importance of receiving and ABIL rath… ### Active Business Income Date: 2016-05-12T11:20:00Z URL: https://www.barretttaxlaw.com/blog/active-business-income Income Tax Act subsection 125(7) A Canadian Controlled Private Corporation’s first $500,000 of active business income is taxed at a much lower rate. This is known as the small business deduction. Active business income is essentially exactly what is sounds like. Active … ### Canadian Controlled Private Corporation Date: 2016-05-12T11:19:00Z URL: https://www.barretttaxlaw.com/blog/canadian-controlled-private-corporation A Canadian Controlled Private Corporation (or "CCPC") is a private corporation being controlled by Canadian residents. The definition strictly prohibits public companies from qualifying, and also those run by non-residents. The major benefit of being a CCPC is access to… ### Attribution Rules Date: 2016-05-12T11:18:13Z URL: https://www.barretttaxlaw.com/blog/attribution-rules Income Tax Act subsections 74.1(1), 74.2(1), 74.5(2) The rules of attribution come into play when income-producing property is transferred or loaned to a non-arms length party with certain exeptions (directly or indirectly or by means of a trust). The income from the pr… ### Employee v. IC Date: 2016-05-12T11:16:52Z URL: https://www.barretttaxlaw.com/blog/employee-v-ic Many individuals choose to categorize themselves as an independent contractor (self employed) because of the various tax advantages. The Canada Revenue Agency has its own rules regarding whether a person is in a business relationship (independent contractor), or in an e… ### Vehicle Expenses - Keeping a Log Date: 2016-05-12T11:15:18Z URL: https://www.barretttaxlaw.com/blog/keeping-log If you use the same vehicle for business and pleasure, a logbook should be kept to identify the business, and personal use. If you are able to deduct vehicle expenses, then only the business portion can be deducted from income. If a business is providing you with a vehi… ### Qualified Farm Property Date: 2016-05-12T11:13:50Z URL: https://www.barretttaxlaw.com/blog/qualified-farm-property Income Tax Act Subsection 110.6(1), 110.6(1.3), 110.6(2) In 2015, the amount increased that a taxpayer can claim for the lifetime capital gains exemption as it relates to qualified farm property. The amount is now $1,000,000. The definition of qualified farm property co… ### Non-Taxable Income Date: 2016-05-12T11:12:35Z URL: https://www.barretttaxlaw.com/blog/non-taxable-income You do not have to report certain amounts in your income, including the following: Any GST/HST credit or Canada child tax benefit payments, as well as those from related provincial and territorial programs ; Child assistance payments and the supplement for handicapped c… ### CANADIANS LINKED TO THE PANAMA PAPERS Date: 2016-05-10T09:38:11Z URL: https://www.barretttaxlaw.com/blog/canadians-linked-panama-papers-2 Below is the complete list of Canadian officers of entities associated with the Panama Papers. If your name is in the list below, it means that you have been linked to the Panama Papers. If you are affected, call Barrett Tax Law at 1-866-278-8424 or visit www.barretttax… ### Hey Mr. Putin and Mr. Signumdur … We can help you with your Panama Papers tax problems Date: 2016-04-08T11:46:01Z URL: https://www.barretttaxlaw.com/blog/hey-mr-putin-mr-signumdur-can-help-panama-papers-tax-problems For most understanding tax matters can be a brain-numbing experience. With the recent stories of the Panama papers, it may be a challenge to truly comprehend what this international tax scandal is really about, why it affects Canada, and how the Canada Revenue Agency (“… ### Scammers Impersonate Barrett Tax Law Employees Date: 2016-03-22T11:40:31Z URL: https://www.barretttaxlaw.com/blog/scammers-impersonate-barrett-tax-law-employees It has come to our attention that there are scammers claiming to be working with Barrett Tax Law, when in fact they do not. If you receive a call from a man named Timothy Rufus, claiming to be working with our firm, or calling from this phone number: (613) 366-5293, ple… ### The Forgotten Tax: Withdrawing from US Dollar Accounts Date: 2016-03-03T09:44:04Z URL: https://www.barretttaxlaw.com/blog/forgotten-tax-withdrawing-us-dollar-accounts The Canadian dollar has dropped more than 25% since only a short while ago when it was on par with the US dollar. As a result, not only has the cost of living increased dramatically, but also costs for those visiting the United States have skyrocketed. The depressed loo… ### Watch out tax shelter participants: The CRA may be able to collect 50% of disputed amounts before the courts rule! Date: 2016-02-25T09:59:58Z URL: https://www.barretttaxlaw.com/blog/watch-tax-shelter-participants-cra-may-able-collect-50-disputed-amounts-courts-rule Many taxpayers have participated in tax shelters and donation schemes and have filed objections with respect to reassessments issued by the Canada Revenue Agency. Many of these objections are outstanding, and some are already before the courts. Generally when you file a… ### Trouble Ahead for Taxpayers Involved in the GLGI Program Date: 2015-12-02T09:28:30Z URL: https://www.barretttaxlaw.com/blog/trouble-ahead-taxpayers-involved-glgi-program The Tax Court has concluded that the donation program known as Global Learning Gift Initiative (or “GLGI”) is in fact a “sham”. The GLGI website states that this program works as a “gifting arrangement tax shelter where Canadians are able to utilize available tax incent… ### Eligible Dependant Tax Credit Requirements Date: 2015-11-06T17:21:39Z URL: https://www.barretttaxlaw.com/blog/eligible-dependant-tax-credit-requirements If you’re a parent interested in the eligible dependant tax credit, then being aware of the rules and regulations is crucial. The reason why is quite simple. There are a number of rules involved in the eligible depend tax credit which could prevent you from eligibility.… ### CRA Scams Continue Nationwide Date: 2015-10-29T12:05:50Z URL: https://www.barretttaxlaw.com/blog/cra-scams-continue-nationwide Canadians beware: The RCMP has issued yet another warning about Canada’s ongoing tax scams. It has come to light that there are people impersonating Canada Revenue Agency employees in an attempt to steal your hard earned money. According to Global News Edmonton , “in th… ### Government Toughens Up on Snowbirds Date: 2015-10-27T11:49:43Z URL: https://www.barretttaxlaw.com/blog/government-toughens-snowbirds If you’re a Canadian who moves to a warmer country in the winter then beware of Canada’s new border exit-tracking system. CTV News reports that the federal government plans on cracking down on snowbirds that leave Canada for too long but still collect social benefits - … ### Thinking of Purchasing a Franchise? Buyer Beware!! Date: 2015-09-14T05:29:16Z URL: https://www.barretttaxlaw.com/blog/thinking-purchasing-franchise-buyer-beware If you are thinking of purchasing a franchise, it is imperative that you be protected and that you fully understand your rights and obligations prior to getting started. Although there are many perks to entering into a franchise, there are also heavy restrictions and hi… ### The Canada Revenue Agency (“CRA”) is investigating KPMG for a tax avoidance scheme Date: 2015-09-10T12:08:22Z URL: https://www.barretttaxlaw.com/blog/canada-revenue-agency-cra-investigating-kpmg-tax-avoidance-scheme In 2000, a wealthy B.C. family invested approximately $26 million in a KPMG tax product in the Isle of Man, a self-governing territory. This tax product was targeted for high net worth Canadian residents, resulting in the family paying close to no tax over several years… ### DeMara Consulting Update Date: 2015-09-08T11:18:44Z URL: https://www.barretttaxlaw.com/blog/demara-consulting-update Donna Marie Stancer and Deanna Lynn Lavalley have been convicted of six fraud related charges after filing nearly $192-million in false expenses for themselves and 224 clients of their now closed Vernon tax preparation company, DeMara Consulting. Here at Barrett Tax Law… ### Michael Citrome’s Article “A Defective GST/HST New Housing Rebate Claim Can Lead to Costly Tax Trouble” Date: 2015-09-01T06:11:30Z URL: https://www.barretttaxlaw.com/blog/michael-citromes-article-defective-gsthst-new-housing-rebate-claim-can-lead-costly-tax-trouble August 31, 2015 - Michael Citrome's article 'A Defective GST/HST New Housing Rebate Claim Can Lead to Costly Tax Trouble' published in the Ottawa Business Journal touches on the issues that arise if you didn't give a lot of thought to the GST/HST New Housing Rebate. "If… ### Income Splitting Date: 2015-08-26T07:32:37Z URL: https://www.barretttaxlaw.com/blog/income-splitting Income Splitting is a tax planning strategy designed to shift income from a taxpayer paying a high rate of tax to another taxpayer paying tax at a lower rate. The Income Tax Act has many provisions attempting to limit income splitting, but you should be aware of the opp… ### The Liaison Officer Initiative – Have you been asked to participate? Date: 2015-08-24T11:40:09Z URL: https://www.barretttaxlaw.com/blog/liaison-officer-initiative-asked-participate This summer, a number of small and medium-sized business owners have been asked by the Canada Revenue Agency (CRA) to participate in the Liaison Officer Initiative (LOI) - a part of the CRA’s 3-point plan to provide early tax compliance support to businesses. Through th… ### Uber GST/HST Issue Date: 2015-08-17T12:53:42Z URL: https://www.barretttaxlaw.com/blog/uber-gsthst-issue Self-employed cab drivers are required by the Canada Revenue Agency to register, collect and remit HST/GST from their fares to the government. This requirement does not correspond to a certain amount of money being made by cab drivers. Rather, if you drive a cab as a se… ### Michael Citrome's Article "Moving Provinces? Avoid a Tax Bill" Date: 2015-08-10T13:09:36Z URL: https://www.barretttaxlaw.com/blog/michael-citromes-article-moving-provinces-avoid-tax-bill August 7, 2015 - Michael Citrome's blog post "Moving Provinces? Avoid Surprise Tax Bill" that was posted in the Ottawa Business Journal discusses the issues regarding income taxes and moving between provinces. "People move between provinces all the time. Here in Ottawa,… ### Has your IRS filing deadline changed? Date: 2015-08-05T11:20:59Z URL: https://www.barretttaxlaw.com/blog/irs-filing-deadline-changed Many IRS filing deadlines have recently been changed by Congress, in H.R. 3236, the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015. Effective as of December 31, 2015, if you are required to file with the IRS for your C corporation, partne… ### How will the Budget 2015 affect your Foreign Income Reporting requirements? Date: 2015-07-29T04:56:10Z URL: https://www.barretttaxlaw.com/blog/will-budget-2015-affect-foreign-income-reporting-requirements The Department of Finance Canada’s Budget 2015 proposes to put into operation a new streamline reporting system for foreign assets. Presently, Canadian resident individuals, partnerships, corporations, and trusts that own a total value of more than $100,000 of specified… ### Bitcoins: Are They Considered Specified Foreign Property? Date: 2015-07-28T09:42:03Z URL: https://www.barretttaxlaw.com/blog/bitcoins-considered-specified-foreign-property If a Canadian taxpayer owns certain foreign property, the collective cost of which exceeds $100,000 CDN, the taxpayer must file a Form T1135 (Foreign Income Verification Statement). The Canada Revenue Agency (“CRA”) recently provided its views on whether digital currenc… ### Dale Barrett was interviewed for Global News' 'Booming shared economy leaves governments of all levels scrambling to keep up on taxes' Date: 2015-07-24T06:39:01Z URL: https://www.barretttaxlaw.com/blog/dale-barrett-interviewed July 22, 2015 - Global News reports on the issues surrounding taxes and companies such as Uber and Etsy in their "Booming shared economy leaves governments of all levels scrambling to keep up on taxes." See Dale Barrett's comments regarding the issue and planning ahead … ### Tax Scam Update: DeMara Consulting Inc. has been found guilty of Tax Evasion Date: 2015-07-24T05:35:56Z URL: https://www.barretttaxlaw.com/blog/tax-scam-update-demara-consulting-inc-found-guilty-tax-evasion In 2010, Donna Marie Stancer and Deanna Lynn Lavalley started a tax consultation company by the name of DeMara Consulting Inc. It wasn’t until March of 2012 that the Canada Revenue Agency (the “CRA”) raided the DeMara Consulting Inc. office in downtown Vernon looking fo… ### Cross-border Real Estate Planning: Have you done your due diligence? Date: 2015-07-23T11:19:54Z URL: https://www.barretttaxlaw.com/blog/cross-border-real-estate-planning-done-due-diligence Today, many Canadians own real property in the U.S. as vacation or rental property. There are various ways to hold such property, and the choice of how to hold your foreign real estate depends on the goal(s) you wish to achieve. Some of these goals may include avoiding … ### First Court Decision on Provincial Residency of a Trust Date: 2015-07-22T09:00:17Z URL: https://www.barretttaxlaw.com/blog/first-court-decision-provincial-residency-trust Generally, the test applied to determine the residency of a trust is where its “central management and control” is located. The Newfoundland Supreme Court rendered a decision which recognizes the reality of the “trust” relationship. In Discovery Trust v. Minister of Nat… ### Taking the CRA to Court Date: 2015-07-21T06:03:05Z URL: https://www.barretttaxlaw.com/blog/taking-cra-court July 20, 2015 - The Ottawa Business Journal published a blog post written by Barrett Tax Law's Ottawa Managing Lawyer, Michael Citrome. "Here in Ottawa, many people think of the government as an employer, rather than as an obstacle to doing business. Even still, for man… ### Tax Planning & The Solicitor-Client Privilege: Are You Covered? Date: 2015-07-16T16:58:18Z URL: https://www.barretttaxlaw.com/blog/tax-planning-solicitor-client-privilege-covered There is a common misconception that all communications with a lawyer are privileged. A recent Federal Court case, Canada (National Revenue) v. Revcon Oilfield Constructors Incorporated, 2015 FC 524, is a reminder that not all communications with a lawyer are protected … ### Dividends as Compensation to Shareholder/ Employees Date: 2015-07-15T14:25:35Z URL: https://www.barretttaxlaw.com/blog/dividends-compensation-shareholder-employees Are you a shareholder of a non-arm’s length company and also employed for the same corporation? If so, you should think carefully before making an agreement where you are paid in dividends instead of being paid a salary or other form of compensation. If dividends are di… ### Section 225.1 and Tax Shelters Date: 2015-07-08T13:05:30Z URL: https://www.barretttaxlaw.com/blog/section-225-1-tax-shelters With the passing of this new section, the Minister is now allowed to collect 50% of the amount assessed in respect of a tax shelter even if the related assessment is in dispute. Meaning even if you object, or appeal to Tax Court, the Minister can still come after you fo… ### Is your agreement with the CRA binding? Date: 2015-07-06T13:53:41Z URL: https://www.barretttaxlaw.com/blog/agreement-cra-binding Rosenberg v. Canada , 2015 FC 549 The taxpayer in the above noted case entered into an agreement with the CRA’s auditor. The CRA agreed not to reassess the 2006 and 2007 taxation year, except to make one specific adjustment. Three years later, the CRA commenced a second… ### Tax Scam: Jason White Date: 2015-06-25T20:16:31Z URL: https://www.barretttaxlaw.com/blog/tax-scam-jason-white Have you received a call from someone calling themselves Jason White? He typically calls from 1-613-912-4377. This Jason White may be pretending to be a Canada Revenue Agency employee who claims there is a warrant out for your arrest. He then informs taxpayers that the … ### FAPI (Foreign Accrual Property Income) Date: 2015-06-18T17:19:09Z URL: https://www.barretttaxlaw.com/blog/fapi-foreign-accrual-property-income In Canada, residents are taxed on their worldwide income. Some Canadians think that they can invest in corporations outside of Canada, and because corporations are separate entities, there is no taxes to pay on the income the corporation is earning. While this can be co… ### Group RRSPs Date: 2015-06-04T16:16:27Z URL: https://www.barretttaxlaw.com/blog/group-rrsps A Group Registered Retirement Savings Plan ("RRSP") is an employer-contribution retirement plan, that it similar to an individual RRSP. However, it is administered by the employer. The significant advantage to a Group RRSP is that contributions from your employer are ma… ### Dale Barrett was quoted in "What to do if the CRA comes calling" Date: 2015-04-28T13:04:39Z URL: https://www.barretttaxlaw.com/blog/dale-barrett-quoted-cra-comes-calling April 27, 2015 - Augusta Dwyer from The Globe and Mail wrote an informative piece on What to do if they CRA comes calling. Mr. Barrett suggests meeting with CRA staff in a neutral atmosphere free of details about the business owner’s personal life, such as vacation phot… ### Barrett Tax Law in "Tax advice for entrepreneurs, no strings attached" Date: 2015-04-27T13:30:03Z URL: https://www.barretttaxlaw.com/blog/barrett-tax-law-tax-advice-entrepreneurs-no-strings-attached April 27, 2015 - Diane Jermyn from The Globe and Mail wrote a helpful article "Tax advice for entrepreneurs, no strings attached." Barrett Tax Law: This Toronto-based business offers a toll-free number throughout Canada (1-877-8-TAX-TAX) where small business owners, the… ### Dale Barrett was quoted in Yahoo Finance's article "Can the CRA use your social media accounts against you?" Date: 2015-04-24T17:05:07Z URL: https://www.barretttaxlaw.com/blog/dale-barrett-quoted-yahoo-finances-article-can-cra-use-social-media-accounts April 24, 2015 - Andrew Seale from Yahoo Finance wrote a riveting article on whether or not the CRA can use your social media accounts against you. Of course, technically and ethically, they should start by looking at your books and records to determine how much you’re … ### Barrett Tax Law in "Be Prepared When Canada Revenue Agency Comes Calling" Date: 2015-04-20T13:45:46Z URL: https://www.barretttaxlaw.com/blog/barrett-tax-law-prepared-canada-revenue-agency-comes-calling April 18, 2015: Brian McCullough from National Post wrote a very informative article "Be Prepared When Canada Revenue Agency Comes Calling" Tax lawyer Dale Barrett has one simple question for small-business owners and self-employed people who run afoul of the Canada Rev… ### How to Hold Title to Property Ownership in Florida to Avoid Ancillary Probate Date: 2015-04-16T13:57:45Z URL: https://www.barretttaxlaw.com/blog/how-to-avoid-ancillary-for-property-ownership-in-florida Many Canadians who own property in Florida are inadvertently bound by Florida probate law. This means that upon the death of a Canadian or nonresident, if real property was owned and located in Florida, ancillary probate is required by Florida State Law despite having a… ### Capital Gains Exemption for Qualified Small Business Corporations Date: 2015-04-15T13:54:36Z URL: https://www.barretttaxlaw.com/blog/capital-gains-exemption-qualified-small-business-corporations The Lifetime Capital Gains Exemption is a tax planning technique that is available to business owners who are selling shares of their private companies. This is an economic incentive to help raise the level of investment in small businesses, however, not everyone meets … ### Reporting Foreign Property Date: 2015-04-10T13:02:39Z URL: https://www.barretttaxlaw.com/blog/reporting-foreign-property Form T1135 – Foreign Income Verification Statement Are you a Canadian resident who is an individual, corporation, partnership, or trust? If so, you are required to report holdings of Specified Foreign Property that, collectively, costs $100,000 or more at any time durin… ### Jeopardy or Collection Orders Date: 2015-04-09T17:02:38Z URL: https://www.barretttaxlaw.com/blog/jeopardy-collection-orders If a taxpayer does not agree with an assessment from the Canada Revenue Agency (“CRA”), there are a number of avenues the taxpayer may explore to dispute the assessment. Once an assessment is in dispute, the taxpayer usually does not have to pay the amount in dispute un… ### Yet Another CRA Tax Scam to be Aware of Date: 2015-04-07T14:47:58Z URL: https://www.barretttaxlaw.com/blog/yet-another-cra-tax-scam-aware With the growth of technology has come an increase with ways in which scammers can reach victims. Within the past few weeks we have been made aware of an email that has been going around claiming that they are the Canada Revenue Agency (the “CRA”). If you have received … ### Income From Illegal Activities Date: 2015-04-01T15:19:06Z URL: https://www.barretttaxlaw.com/blog/income-illegal-activities Canadians are always surprised to learn that an illegal business must pay tax on its income. Be it drugs, prostitution, theft, etc., the Canada Revenue Agency (the “CRA”) still wants their cut. If a taxpayer is caught committing a criminal act they will obviously be bro… ### Real Estate Audits Date: 2015-03-31T13:35:37Z URL: https://www.barretttaxlaw.com/blog/real-estate-audits Have you bought and sold a new condo over the past seven years? The Canada Revenue Agency (“CRA”) has deployed abusive audit practices and has been targeting the booming real estate markets in Toronto and Vancouver. The focus of this audit trend is primarily on individu… ### Is now a good time to come forward to the IRS? Date: 2015-03-25T14:40:34Z URL: https://www.barretttaxlaw.com/blog/now-good-time-come-forward-irs U.S. Citizens worldwide have recently learned, especially through the enactment of FACTA, that they have a responsibility to come forward to the IRS. U.S. Citizens, whether residents or non-residents, dual citizens, and even non-U.S. Citizens who are deemed U.S. Residen… ### Do you have assets, investments or a savings account outside of Canada? Date: 2015-03-24T14:19:03Z URL: https://www.barretttaxlaw.com/blog/assets-investments-savingsaccount-outside-canada If you are a Canadian with offshore property and/or income, be advised that there are new reporting requirements due to changes imposed by the federal government. There have been signs to indicate that they are serious about making people pay. It is important to note th… ### Spike in the Number of Nurses being Audited Date: 2015-03-18T13:34:33Z URL: https://www.barretttaxlaw.com/blog/spike-number-nurses-audited I have seen a huge spike in the number of nurses being audited. The number has increased dramatically over the last year. The CRA is steadfast in going after the homecare sector and appears to be attempting to disallow virtually all of their deductions – despite the fac… ### The CRA is Financially Destroying Victims of Tax Scams Date: 2015-03-16T14:48:33Z URL: https://www.barretttaxlaw.com/blog/the-cra-is-financially-destroying-victims-of-tax-scams The Canada Revenue Agency is financially destroying victims of tax scams through the imposition of gross negligence penalties! You may have fallen victim to a tax scam, or perhaps one of your family members, friends or co-workers has been victimized. After a wave of tax… ### Dale Barrett’s Book is on Amazon’s Bestseller list for the millionth week in a row! Date: 2015-03-16T13:35:38Z URL: https://www.barretttaxlaw.com/blog/dale-barretts-book-amazons-bestseller-list-millionth-week-row March 16, 2015: For the millionth week in a row Dale Barrett’s book is featured on Amazon’s bestsellers list. No other Canadian tax lawyer’s book appears in the top 100! Tax Survival for Canadians: Stand up to the CRA, which was published in March 2013, ranks 7th in tax… ### Have you ever wondered whether you are getting correct advice from the CRA? Date: 2015-03-12T13:44:13Z URL: https://www.barretttaxlaw.com/blog/ever-wondered-whether-getting-correct-advice-cra Have you ever phoned the Canada Revenue Agency seeking advice or clarification about an important tax matter? Have you ever wondered whether you are getting correct advice? Well a recent internal survey (conducting by the government itself) asking that very question pro… ### Barrett Tax Law was referenced in the Yahoo Finance article, " What happens when your tax return gets audited" Date: 2015-03-10T16:27:14Z URL: https://www.barretttaxlaw.com/blog/whathappens_taxreturn_audited February 23, 2015: Gail Johnson from Yahoo Finance wrote a useful article on "What Happens when your tax return gets audited" According to Barrett Tax Law , the CRA performed more than 370,360 audit and review actions in the 2008-09 tax season. During that period, it co… ### Barrett Tax Law was quoted in CBC’s article “10 ways to attract a CRA auditor’s attention” Date: 2015-03-09T13:08:49Z URL: https://www.barretttaxlaw.com/blog/barrett-tax-law-quoted-cbcs-article-10-ways-attract-cra-auditors-attention March 2, 2015: Tom McFeat, from CBC News, wrote a very informative article on how to attract a CRA auditor's attention. The tax department "has tools to investigate and gather information about your industry," says Barrett Tax Law . "If your numbers don't fit the typica… ### Dale Barrett's contribution to the Toronto Star's tax article, "7 triggers that may lead to a tax audit" Date: 2013-06-28T19:58:11Z URL: https://www.barretttaxlaw.com/blog/dale-barretts-contribution-to-the-toronto-stars-tax-article-7-triggers-that-may-lead-to-a-tax-audit May 19, 2013: Business reporter, Madhavi Acharya-Tom Yew, of the Toronto Star, wrote a useful article informing readers of the common triggers that increase the likelihood of a CRA tax audit, which are: Being self-employed Any big changes Recurring losses Big expenses N… ### April 23, 2013: BNN (Business News Network) news broadcast: "Surviving a tax audit: Debunking CRA myths" Date: 2013-04-24T11:32:11Z URL: https://www.barretttaxlaw.com/blog/bnn-business-news-network-news-broadcast-surviving-a-tax-audit-debunking-cra-myths Canadian tax lawyer at Barrett Tax Law, Dale Barrett, looks at the various myths many Canadians have about the Canada Revenue Agency in this informative interview on the Business News Network. The first myth debunked is "The CRA will not find out what I have not told th… ### Financial Post article: "How to handle tax audits — and how to avoid them in the first place" Date: 2013-04-23T19:32:28Z URL: https://www.barretttaxlaw.com/blog/financial-post-article-how-to-handle-tax-audits-and-how-to-avoid-them-in-the-first-place April 13, 2013: Dale Barrett of Barrett Tax Law provided Financial Post reporter, Melissa Leong, with effective tax tips for avoiding CRA tax audits: "You face a higher risk of being audited if you are self-employed or in an industry with a lot of cash transactions such… ### Tax Survival for Canadians: Stand up to the CRA, a valuable tax resource written by Canadian tax lawyer Dale Barrett and published by Self Counsel Press, is now available for purchase! Date: 2013-04-18T14:57:32Z URL: https://www.barretttaxlaw.com/blog/tax-survival-for-canadians-stand-up-to-the-cra-a-valuable-tax-resource-written-by-canadian-tax-lawyer-dale-barrett-and-published-by-self-counsel-press-is-now-available-for-purchase If you are currently involved in a tax dispute with the Canada Revenue Agency or if you're simply looking to be proactive and avoid tax problems with the often heavy-handed CRA, Tax Survival for Canadians: Stand up to the CRA , is a useful tax guide (and interesting rea… ### Vancouver Sun investigates Jeff Eshun of DSC Lifestyle Services Date: 2013-03-11T19:02:21Z URL: https://www.barretttaxlaw.com/blog/vancouver-sun-investigates-jeff-eshun-of-dsc-lifestyle-services February 16, 2013: David Baines, reporter at the Vancouver Sun, continues his investigation of Jeff Eshun, owner of JV Raleigh Superior Holdings Inc. who has been fined $6.95 million by the B.C. Securities Commission and consequently banned from selling investment notes… ### ATTENTION WINDSOR, ONTARIO COMMUNITY! Free Emergency Tax Seminar on Wednesday, February 27 at 6:30pm Date: 2013-02-26T13:09:59Z URL: https://www.barretttaxlaw.com/blog/attention-windsor-ontario-community-free-emergency-tax-seminar-this-wednesday-february-27-at-630pm In light of events recently reported in the media regarding tax savings schemes that have instead resulted in significant tax reassessment bills and penalties issued by the Canada Revenue Agency to many hardworking residents of Windsor , Dale Barrett, Canadian tax lawye… ### Dale Barrett's book, Tax Survival for Canadians: Stand Up to the CRA, is now available for purchase on Amazon.ca Date: 2013-02-20T20:59:02Z URL: https://www.barretttaxlaw.com/blog/dale-barretts-book-tax-survival-for-canadians-stand-up-to-the-cra-is-now-available-for-purchase-on-amazon-ca Canadian tax lawyer and principal at Barrett Tax Law, Dale Barrett, had his book published, Tax Survival for Canadians: Stand up to the CRA, by Self-Counsel Press and is now available for purchase on Amazon.ca. This valuable tax resource explains how hardworking Canadia… ### Members of the Peterborough and Kawarthas Association of Realtors will be given a special tax seminar presented by Dale Barrett, Canadian tax lawyer and principal at Barrett Tax Law Date: 2013-02-20T15:25:48Z URL: https://www.barretttaxlaw.com/blog/members-of-the-peterborough-and-kawarthas-association-of-realtors-will-be-given-a-special-tax-seminar-presented-by-dale-barrett-canadian-tax-lawyer-and-principal-at-barrett-tax-law Dale Barrett, Canadian tax lawyer and principal at Barrett Tax Law, will be presenting an informative tax seminar to members of the Peterborough and Kawarthas Association of Realtors at their annual general meeting to be held at the Peterborough Golf and Country Club on… ### The Windsor Star interviews Dale Barrett from Barrett Tax Law regarding the Fiscal Arbitrators tax program Date: 2013-02-13T23:21:56Z URL: https://www.barretttaxlaw.com/blog/the-windsor-star-interviews-dale-barrett-from-barrett-tax-law-regarding-the-fiscal-arbitrators-tax-program Dale Barrett, Canadian tax lawyer at Barrett Tax Law, was interviewed for an article published in the Windsor Star on February 12, 2013 regarding the Fiscal Arbitrators tax program. Barrett Tax Law is currently defending approximately 200 taxpayers across Canada against… ### Attention Kincardine community & surrounding areas: Date: 2012-10-12T00:20:35Z URL: https://www.barretttaxlaw.com/blog/attention-kincardine-community-surrounding-areas October 7, 2012 Dale Barrett, expert tax lawyer and principal at Barrett Tax Law, will be giving a free seminar this Saturday, October 13th for Canadians concerned about illegal tax schemes. The seminar, How to Protect Yourself from Fraudulent Tax Schemes, consists of a… ### Article as published in the Canadian Real Estate Wealth magazine: "The dreaded Canada Revenue Agency tax audit: tax tips for the self-employed" Date: 2012-10-02T19:46:16Z URL: https://www.barretttaxlaw.com/blog/article-published-in-the-canadian-real-estate-wealth-magazine Dale Barrett, expert tax lawyer and owner of Barrett Tax Law, briefly explores strategies on avoiding as well as facing a tax audit. Does the CRA target small business owners and the self-employed? The CRA focuses on the groups who are more likely to omit or misrepresen… ### Canada: Safe to Apologize Date: 2011-11-14T17:15:11Z URL: https://www.barretttaxlaw.com/blog/canada-safe-to-apologize Canada: Safe to Apologize Article by Dale Barrett and Barry Leon, November 8, 2006 Originally published in Mediation Committee Newsletter , September 2006 The province of British Columbia is the first Canadian jurisdiction to introduce a law providing a safe harbour for… ## 16. Disclaimer Information on this site is general information about Canadian tax and corporate law and is not legal advice. No solicitor–client relationship is created by reading this content. For advice on a specific situation, contact us for a free consultation.