webtip

SPOUSAL SUPPORT OR PROPERTY SETTLEMENT?

In a February 16, 2015 Tax Court of Canada case (Cathryn McBride vs. H.M.Q., 2014-2631(IT)I)), the taxpayer had been assessed tax on monthly payments on the basis that they were spousal support.

Taxpayer loses
Even though the Order listed the payments as non-taxable, the Court determined that they were actually monthly support payments instead of equalization payments. The payments met all the requirements of taxable support payments (Paragraph 56(1)(b) and Subsection 56.1(4)). Neither the parties nor the Courts could dictate the taxability of these payments – their tax status was governed by the Income Tax Act.

For further information see VTN Monthly Tax Update Seminar, Issue No. 404

    STUDENTS OUTSIDE OF CANADA

    On March 3, 2015, CRA released Guide RC192, Information for Students - Educational Institutions Outside Canada.

    This Guide notes that if the stay is temporary and significant residential ties in Canada have been kept, the individual would be considered a “factual resident” of Canada and be required to file a Canadian income tax return and report worldwide income. Residency determinations can be explored using Income Tax Folio S5-F1-C1, Determining an Individual’s Residence.

    For further information see VTN Monthly Tax Update Seminar, Issue No. 404

      TAXPAYER RELIEF – INTEREST BUT NOT PENALTIES WAIVED

      In a January 30, 2015 Federal Court of Canada case (Robinson vs. CRA, T-1109-14), the taxpayer requested a Judicial Review of CRA’s Taxpayer Relief decision to waive all $28,000 of interest but not the associated $10,000 in penalties.

      CRA cancelled all of the interest but did not waive penalties as the Applicant had not identified any circumstances that had prevented him from filing his income tax returns when they were due. In addition, the Court opined that he had not taken reasonable care in the conduct of his affairs and had knowingly allowed a balance to exist.

      The Court concluded that CRA’s decision fell within a range of possible outcomes which are defensible in respect of the facts and law (Subsection 220(3.1)), and therefore, dismissed the Judicial Review application.

      For further information see VTN Monthly Tax Update Seminar, Issue No. 404

       

        DONATION SOFTWARE FOR SMALL CHARITIES

        For small charities investing in software to track donors and donations and issue charitable receipts, the cost and complexities can be very daunting. DONATION Software offers a free option, Lite Version, which can be used to track up to 100 donors per year. For a small fee, the software can be upgraded to track up to 100,000 donors per year, for use by a number of organizations and/or users.

        For further information see VTN Monthly Tax Update Seminar, Issue No. 403