27 October 2011

Income Tax Law in Canada: Five Things You Need To Know

Card Money from New France. Photo Credit: The Canadian Paper Money Society.
People get really worked up about taxes. Crazy kind of worked up. Shoot yourself in the foot, pay a dollar to save a penny kind of worked up. It doesn't have to be that way.

When I was working as a federal tax prosecutor, I would see people construct what they thought were these elaborate evasion schemes with the intent of stopping the government from getting any of "their" money. Turns out if they had been keeping proper records, and filed a proper tax return, the government would have owed them money!

They expended immense time, effort and expense, fearful the government was going to grab a big chunk of the income they had worked so hard to bring in, only to find out when we uncovered whatever evasion scheme they had dreamed up that they hadn't been committing  an offence after all. Didn't even civilly owe taxes. They did what they did out of ignorance, and had they been better informed about Canadian tax law they would have worried a whole lot less, and been financially better off.

Now a private practice tax lawyer in Cornwall and Eastern Ontario, I believe that disputes with the Canada Revenue Agency (CRA) can often be avoided with a little knowledge on the part of the taxpayer. Here are five things you need to know about income tax law in Canada.

1. The fact that taxation in Canada is based on a self-reporting, self-assessment system fundamentally shapes the powers, modes of operation, and rulings of the CRA and the courts. In some countries, the government tells you what taxes you owe - in Canada, you tell the government what taxes you owe. Sure the government may eventually challenge you on it - but often it won't. As a result, you need to hold onto your tax records for quite a long time in case you do get asked for them, and you need to be aware that the government possesses some pretty intrusive powers to make you and your associates talk about your taxable income.

 2. Everyone does not have to file a tax return every year. But corporations (other than charities) regardless of their tax position and individuals who have tax payable, a taxable capital gain, or who have disposed of capital property in that year must file. There are legal benefits for individuals filing every year even when they do not have to pay any tax for a particular year.

3. All "residents" of Canada are taxed on their worldwide income. The Income Tax Act deems you to be a resident if you sojourn in Canada for over 182 days in a taxation year, or you have certain connections to the Government of Canada such as being a member of the Canadian Forces. Sojourning that leads to deemed residence can amount to multiple, unconnected visits to Canada which add up to 183 days. And even if you are not in Canada for over 182 days in a year, the law may still find you to be a resident if your dwelling place, family connections, or personal property and social ties are in Canada. Although a tax holiday through moving outside Canada is attractive to a lot of Canadians, in order to terminate your Canadian residency you must sever as many ties to Canada as possible, and usually live outside of Canada for over two years.

4. The General Anti-Avoidance Rule (GAAR) of the Income Tax Act empowers the CRA to deny a tax benefit where a transaction is not undertaken for primarily bona fide purposes other than to obtain a tax benefit. The bona fide purposes do not have to be related to business reasons, and for example could be for family purposes. The GAAR will not apply where no provision of the Income Tax Act has been misused and there has been no abuse of the Income Tax Act read as a whole. When the GAAR is or is not triggered is therefore fraught with uncertainly, and it's wise to seek an advance ruling from the CRA before proceeding with a questionable transaction that might trigger the GAAR.

5. If you disagree with the Notice of Assessment you have received from the CRA, you usually have only 90 days from the date of the mailing of the Assessment to file a Notice of Objection. The first stage of a tax appeal is before an Appeal Officer within the CRA. Should you not be satisfied with the result, you have 90 days from the date the CRA mails the Notice of Confirmation to file an appeal with the Tax Court of Canada; for relatively small amounts in dispute you may choose the “Informal Procedure” which will usually be much quicker than the “General Procedure” that must be used for larger amounts of federal tax in dispute. You may seek to appeal a decision of the Tax Court to the Federal Court of Appeal within 30 days of the Tax Court judgment issuing. If you chose the informal procedure there is no route of appeal, but a more restrictive “judicial review” may be sought. After the Federal Court of Appeal, you may seek leave to appeal to the Supreme Court of Canada, but leave will usually only be granted where the issues is of "national importance."

If you're unsure about how to handle you taxes, you should: (1) call the CRA - it's an endless source of free, detailed advice; (2) see an accountant; or (3) see a lawyer who deals with tax law. Be aware that there are a lot of accountants out there who deal with tax issues and not many lawyers. For routine tax matters an accountant will usually be the way to go if you aren't getting the answers you need from the CRA, but for heated disputes or risky transactions a lawyer is the one who can give you formal legal advice and represent you in court.

Read More About How an Income Tax Law Lawyer Could Help You

24 October 2011

Child Support Canadian Style


There have been two especially bright spots in the evolution of Canadian family law over the last fifteen years: standardized rates of basic child support, and robust enforcement mechanisms. Fifteen years really is a little hiccup in the legal temporal continuum, but it's made a big difference in the spectrum of things one can effectively fight about or avoid in family law. Yes, it's still possible to fight, and to avoid, but both tactics are considerably less effective than they used to be when it comes to child support.

All parents have a joint responsibility to financially support their children, according to their respective means and child expenses. Ontario Child Support Guidelines (and their equivalents under federal and other provincial laws) mandate fixed support payments according to income of payor, subject to limited exceptions for shared custody or undue hardship, and in addition to special and extraordinary expenses (things like orthodontists, summer camps, or college expenses). Basic upport is paid according to the “table amount” which is pegged to income and other expenses are split between the parents according to ratio of incomes.

For example, if the mother earns $50,000, the father $10,000 per year, and the child lives with the father most of the time, then extraordinary expenses would be split 80-20. The mother would also pay the father monthly support at the table level for someone earning $50,00 per year. And the payor must provide the recipient with confirmation of income each year, such as from line 150 of an Income Tax Assessment.

Support enforcement is possible with a court order and the assistance of the FamilyResponsibility Office (FRO) (or equivalent in another province) to garnish a payor’s employed wages or bank account, seize RRSPs, put a lien on the payor’s house or other property, suspend the payor’s driver’s licence or federal licences/privileges like a passport, deduct support debt from income tax refunds or EI benefits, or even jail a defaulting payor for contempt of court. Interjurisdictional support enforcement within Canada is now coordinated among provinces - so you can enforce a support order against a parent who has moved to another province in a fairly straight forward manner. Out of country enforcement is also possible, but it gets a lot more complicated.

Support calculation and enforcement will still be challenging against a parent who quits his job and flees the country - though no longer having a passport could put a crimp in his long term plans - and those who are self-employed will continue to be a bit more difficult to pin down as to income and garnishment, but for the majority of Canadians who will live in Canada throughout their lives, and hold jobs as employees receiving fairly predictable fixed pay cheques, calculating and collecting child support is now mainly a question of time and effort, rather than some kind of lottery.

Two good links to leave you with today:

Because Life Goes On … Helping Children and Youth Deal with Separation and Divorce - a good Health Canada publication of a few years back which would have been long forgotten in a dusty federal government publication warehouse were it not for the wonders of the Internet (it seemed in my previous government jobs we would get 100,000 copies of a booklet printed, and manage to give away 10,000 copies);

www.mysupportcalculator.ca - gives you an accurate estimate of spousal and child support owing according to income and where you live within Canada, brought to you by the people who create family law calculation software for lawyers.

Read More on How a Family Law Lawyer Could Help You

18 October 2011

Everyone Doesn't Have to Lose in Family Law: Child Custody and Access


Photo Credit: Glen Campbell. 
If people have been unhappy about lawyers and the courts for a long time, they've been especially unhappy about outcomes in family law cases - though for only the last few decades, since prior to that time family law was a niche practice in a BNFD world - before no fault divorce. 


This dissatisfaction is unfortunate, because the family lawyers are among the more committed members of the profession I know - there isn't a lot of glory in it, the clients often can't afford to pay much, and protracted litigation often leads to lose-lose results. It's also likely the area of legal specialization with the highest lawyer burnout rate - they usually don't quit law completely, they just get out of family law, adding to the already serious shortage of lawyers willing to take on these kinds of cases. 


I practice family law myself at least in part because of the shortage of available lawyers, and because I believe the results are perhaps as crucial to client happiness as any kinds of legal results can be. Because this is a relatively new area of the law, it remains a very dynamic one where courts and legislatures are constantly creating new principles. One set of principles which has stabilized of late involves child custody and access.

Everyone now agrees that the best interests of the child are the key consideration when making decisions about child custody and access. The law throughout Canada on this topic is pretty similar, but what follows focusses especially on Ontario law.

Custody and access can be agreed upon Informally, in a Parenting Plan, in a Separation Agreement, or by Court Order. Choice of means to agreement depends on ability of parents to communicate and the need for future enforceability (the more formal the agreement, the more enforceable it will be). Negotiationmediationarbitration, and collaborative family law are all viable, less expensive, and potentially more effective alternative dispute resolution (ADR) processes to court-based processes.

Having custody means you can generally make decisions about care, education and religious instruction unless agreement or court order says otherwise – but views of non-custodial parent can’t be completely ignored and the non-custodial parent has right to general information about these decisions and welfare of child. Joint or Shared Custody means both parents share decision making – although it may not mean the child spends equal amounts of time living with each parent. Supervised Access can be agreed to or ordered by a court where there are concerns about child safety, parent safety, or child return.

The federal Divorce Act s. 16 considers the best interests of child to be “as determined by reference to the conditions, means, needs and other circumstances of the child.” Courts are prohibited from taking past conduct of a parent into account unless relevant to ability to parent. Sub-section 16(10) promotes maximum contact with each parent. The provincial Children’s Law Reform Act governs where there are no divorce proceedings. It's more explicit than the Divorce Act in defining “best interests,” including the child’s preferencesstability of environment, and abilities of parents.

Courts will often maintain the status quo, so initial informal arrangements concerning custody, access and parenting can become very important factors in the longer term. While a court may order an Assessment of the needs of the child and ability and willingness of the parties, such assessments are time-consuming, expensive, intrusive and will not finally determine custody and access issues (which are left to the court to decide).

A court order may also be sought to involve the Office of the Children’s Lawyer, either to have a government-funded lawyer appointed to represent the interests of the child (unlikely if the children are very young and can’t express preferences), or to have a social worker assigned to conduct a Clinical Investigation which will be similar to a Custody and Access Assessment except be funded by the government – however the Office of the Children’s Lawyer can decline a file. 

While it's hard to say whether people fall to fighting more over money or children when relationships break up, it's certain that disputes over children have the potential for lasting much longer and taking a much greater emotional toll. The legal lessons of custody and access for separating parents are:
  • ideally, be aware of the law of child custody and access before you separate;
  • try to take an objective view of what others will perceive to be in the best interests of the children; 
  • structure your proposed parenting plan around those best interests;
  • don't take an extreme position that forces a court to be the final decision maker about those best interests, instead be proactive in attempting to agree on a plan that is acceptable to both parents;
  • use every ADR tool available to retain some control over the form the final custody and access agreement will take, and to limit your legal fees;
  • it will be expensive, time consuming, and difficult to enforce every detail in a child custody and access agreement through a court - if you run into compliance difficulties, return to those ADR tools and use the courts as a last resort. 

17 October 2011

The Top Ten Principles of Canadian Privacy Law For Business


It's funny how people like lists of ten. Like David Letterman's Top Ten List that started in 1985 with Top Ten Things That Almost Rhyme With Peas. It seemed not such a promising beginning, but it certainly appears to have worked for him.

Type TOP TEN LISTS into Google, and you get such oddities as Top Ten Unusual But Fascinating Cloud Formations, Top Ten Superstitious Hockey Players, and my personal favourite: Top Ten Rescuers Made to Regret it By the Rescued.

And so in this long tradition of august knowledge enhancements, I give you Top Ten Principles of Canadian Privacy Law for Business. Perhaps not as amusing as some other lists, but hopefully more useful.

For personal information to be validly collected by a business under Canadian law, you've generally got to comply with the following top ten principles:
1. Accountability – must designate individual(s) within your organization as responsible for privacy.
2. Identifying Purposes – at or prior to time information collected.
3. Consent – must be informed and can be withdrawn, but may be granted through various means.
4. Limiting Collection – to that which is necessary for identified purposes of collection.
5. Limiting Use, Disclosure, and Retention – to purposes for which collected, except with consent or as required by law.
6. Accuracy – only as necessary for purpose.
7. Safeguards – appropriate to sensitivity of information.
8. Openness – about organization's policies on personal information management.
9. Individual Access – to existence, use, disclosure and content of own personal information that has been collected, including ability to challenge accuracy and completeness of information.
10. Challenging Compliance – create accessible procedure to receive and respond to complaints.
They're all based on principles developed by the Canadian Standards Organization, and were later incorporated into the Protection of Personal Information and Electronic Documents Act.

The bottom line is, regardless of how small of a business you are running, if you're collecting personal information - and it' s almost impossible to run a business without grabbing some kind of personal information - you should have a policy that accords with the above ten principles. It can be a really simple policy, but you need something. If you've got a larger business - or a smaller one that collects a lot of personal information - you should probably be speaking with a lawyer or consultant about your obligations. Check out the site of the Privacy Commissioner of Canada for more details. 

08 October 2011

Pardoning the Pardon

Collins Bay Institution, established 1930. Photo credit: Parole Board of Canada.
Pardons have been around for thousands of years. They're used in various forms by virtually every country on earth as a means of acknowledging that an offender has paid his or her debt to society, and should be fully welcomed back into the community fold without the ongoing stigma and legal limitations that accompany a criminal record.

The record usually isn't erased, but it's segregated, and domestic legal restrictions accompanying a criminal conviction will often be lifted - although this won't address how other countries treat someone convicted of an offence.

In Canada, it's the Parole Board of Canada who handles Pardon applications. The vast majority of people who submit the correct and complete paperwork get a Pardon after waiting the required period of time following the completion of their sentences - the more serious the offence, the longer the waiting period.

Until 1995 applying for a Pardon in Canada was free. Then a $50 cost recovery fee was imposed. Not too steep.

Fifteen years later - in 2010 - it tripled to $150, supposedly reflecting the true cost of the process. Getting a little pricey for those of modest means, but hey, passport fees went up a lot as well. A whole year later, the government announced plans to more than quadruple the fee - to $631. More than a month's income for many of those stuck on welfare.

The Parole Board of Canada launched a public consultation on the new fee. 1074 submissions were made opposing the fee. 12 supported it. A ratio of 90 to 1 against.

Next, the Government of Canada's proposed Safe Streets and Communities Act which is currently before Parliament and would: (1) completely eliminate the word "pardon" and replace it with "record suspension"; (2) almost double the waiting periods after completion of sentence for making a pardon application; and (3) introduce a three strikes rule making people convicted a certain multiple offences completely ineligible for pardons.

So what's someone who has been considering on and off over the last many years of applying for a pardon to think of all this? APPLY NOW.

With waiting times for record request responses prior to being able to make your formal pardon submission, you might not be able to beat the changes in the system. But no dates have been set for any of the changes and the legislation hasn't even been passed by Parliament yet, so you have a good chance if you act now. Pardons will still exist later, but they won't be called Pardons, you will have to wait longer, it will cost you a lot more, and the rules might become increasingly difficult to comply with. There appears to be no Pardon for the Pardon.

Anyone wanting to apply for a Pardon has three options:

(1) hire a lawyer;
(2) hire a pardon consultant service;
(3) do it yourself.

All three are completely viable options. Number three is definitely the cheapest. However there may not be a lot of cost difference between numbers one and two - don't assume lawyers will always be a lot more expensive. I assist people with their pardon applications, and my fees aren't a lot different than a pardon service. With a lawyer, in Canada you are guaranteed insurance and professional accreditation. If you decide to go with a pardon consultant service - and many people do - just make sure you check out their credentials.

One consultant service I have heard good things about is The Commissionaires, which is largely staffed by former military and police personnel, and able to provide fingerprint as well as document preparation services. Be aware that not all of their offices offer fingerprint or pardon services. In Eastern Ontario, you need to deal with head offices in either Kingston or Ottawa.

Whatever route you choose to pursue, I urge you not to wait any longer - just do it.

03 October 2011

Been Wondering About Policing In Eastern Ontario?

Because I know all my readers have been dying for a brief run down on law enforcement operating in Eastern Ontario, and since I'm a criminal defence lawyer in Cornwall, Brockville, Alexandria and elsewhere in the area, I thought I would offer some pointers on knowing who the players are. It's a bit more complicated than in some big cities, where just one police services looks after everything (or almost everything). But it is pretty typical of the layers of criminal and regulatory law enforcement which exist in many countries with a federal systems of government.

First, we've got the Ontario Provincial Police operating several rural detachments. They're the third largest police service in Canada (after the RCMP and Toronto Police), boasting around 5,500 officers, about 1000 of whom are based in what they call the "East Region." They patrol all the major highways, the towns without police services, and the countryside. Personally, I find them very responsive because they provide local, small town service backed by provide-wide resources.

First OPP Highway Patrol Car 1941 Chevy

Second, we've got the Royal Canadian Mounted Police. To my readers outside of Canada, they're probably the ones you've heard of. While they have a presence all over Canada, including at the training academy in Regina where I've taught, in Ontario they don't do "response" policing. They limit themselves to "federal" policing, including in my area operating the Cornwall Regional Taskforce devoted in large part to border smuggling issues. In addition to their land vehicles, they have a long history of operating aircraft and vessels - including one called the Nicholson which I used to ride around in as H.M.C.S. Nicholson after its transfer to the Royal Canadian Naval Reserve where I served as a Master Seaman.


We also have the Cornwall Community Police Service, which while only policing within the boundaries of the City of Cornwall, still deploys almost 100 officers.


Last, but not least, is the Canada Border Service Agency who controls customs and immigration entry and exit for Canada, and whose primary location in my area is near the Cornwall international border crossing. We also have lots of other regulatory enforcement agencies operating in the area, but the CBSA is by far the largest presence.

CBSA Detector Dog Program

Feel better, now that you've been able to start your collection of law enforcement trading cards?