Canada Tax Getting Tough With Reportable Transactions
Not all that long ago there was a lot of hype about the off shore tax evasion, and Canada’s course of action. Overall it would seem that the CRA is making general steps to crack down on what they consider perhaps as weak flaws in the tax system. This brings to the Canada tax rules the new reportable transactions that demand Form RC312 to be completed.
Almost anyone that has to pay a substantial amount of tax will look for ways to cut these and sometimes will implement some pretty innovative ways. As a result they end up walking a very fine line, or sometimes crossing it when it comes to what you can do and cannot do with your taxes. Often a Toronto chartered accountant will have to inform a client that what they are doing or planning to do with their taxes is going to get them into trouble. This isn’t something a tax payer likes to hear but the accountant has an obligation to inform his clients of a wrongdoing if it is identified.
Sometimes to help with their tax planning an individual will turn to an expert who specializes in financial planning. This professional is paid for their service. In some cases the tax planner will develop specific transactions that will help ease the tax burden. On occasion the amount paid to this individual will be based on getting the tax benefit for the tax payer, along with some other conditions. One of the conditions may be that as a tax planner his involvement in this tax plan is kept confidential, and a contract is agreed upon for this.
It is easy to get confused with this reportable transaction rule as being the General Anti Avoidance Rules, which is an “avoidance transaction”, but this new rule that requires the completion of the RC312 is just part of it, or you could say a related section. With this new rule tax planning that comes into this category must be filed in advance by June 30th using the RC312 form. It is filed separately.
One of the worries has been that when a person files this form that it is assumed that the submitter is admitting that the transaction being referred to automatically comes under the General Anti Avoidance Rule (GAAR) (section:245), however the CRA states this is not the case.
What has to be realized here is that just because you are using a tax planning expert to find your tax breaks for you, it is your responsibility to ensure that this tax planner is staying within the rules of the CRA.
Choosing a trusted and quality Toronto accountant will help you to keep your taxes within the law and filed on time.