Koroll & Company Blog

For most Canadians, having to pay for legal services is an infrequent occurrence, and most Canadians would like to keep it that way.

In many instances, the need to seek out and obtain legal services (and to pay for them) is associated with life’s more unwelcome occurrences and experiences — a divorce, a dispute over a family estate, or a job loss. About the only thing that mitigates the pain of paying legal fees (apart, hopefully, from a successful resolution of the problem that created the need for legal advice) would be being able to claim a tax credit or deduction for the fees paid.

Unfortunately, while there are some circumstances in which such a deduction can be claimed, those circumstances don’t usually include the routine reasons — purchasing a home, getting a divorce, establishing custody rights, or seeking legal advice about the disposition of a family estate — for which most Canadians incur legal fees.

Back in July, the Department of Finance proposed tax planning changes for private corporations with an intent to add more fairness to the Canadian Tax System. 

The proposed changes focused on three specific tax planning strategies:

1. Income sprinkling using private corporations
2. Holding a passive investment portfolio inside a private corporation
3. Converting a private corporation’s income into capital

However, after receiving substantial backlash in the form of 21,000 submissions during the 75-day consultation period, ending October 2, 2017, the Government is announcing a number of changes to tax planning for Private Corporations.

A new approach will be taken that better targets the relatively small segment of high-income individuals, that the Government believes are receiving the biggest advantage from current tax rules. 

The fact that Canadian households are carrying a significant amount of debt isn’t really news anymore. For several years, both private sector financial advisers and federal government banking and finance officials have warned of the risks being taken by Canadians who took advantage of historically low interest rates by continuing to increase their secured and unsecured debt.

The risks most commonly cited by those advising debtors on having a greater degree of borrowing restraint was the impact that an increase in interest rates would have on their ability to repay — or even service — the debt they had accumulated.

In addition, those advising debtors on borrowings secured by home equity were concerned about a downturn in the real estate market could put those borrowers at risk, or even in a negative equity position, where the amount still owing on their home-related borrowings was greater than the value of their home.

Cyberattacks on government or on a private company, in a single country or worldwide, are more frequently making headline news. The hackers who perpetrate the attacks seek to profit by it — either by demanding payment from the entity whose systems have been compromised, or by obtaining confidential personal information (especially identifying or financial information) about individuals, which can then use fraudulently or sold to others who wish to do so. 

In September of this year, the credit reporting firm Equifax, one of the largest in the industry,  announced that it had been subject to a major cyberattack. The attack was especially concerning, both because of the nature of the information Equifax holds, and because of the number of Canadians affected.

Most Canadians approaching retirement know that they will be able to receive retirement income from the Canada Pension Plan (CPP) and Old Age Security (OAS) programs. Many, however, are unaware that there is a third federal program — the Guaranteed Income Supplement (GIS) — which provides an additional monthly income amount to eligible individuals who already receive Old Age Security.

The problem is, automatic enrollment in GIS is something that is planned for future implementation, but is not yet in place, which means that anyone who wishes to receive the GIS must apply for it. As such a number of Canadians are not taking advantage of it.

The good news? Where individuals receive the Guaranteed Income Supplement, whether the full benefit or partial amounts, all such amounts received are non-taxable.

The Canada Revenue Agency (CRA) doesn’t publish information or statistics on the number of individual taxpayers who owe them money in the form of back taxes, interest, or penalties.

Nonetheless, it’s a safe assumption that some percentage of the 28 million or so Canadians who filed a tax return this past spring either couldn’t pay their 2016 taxes when due or still owe money from past years, or both.

Being unable to pay one’s bills on time obviously isn’t desirable, no matter who the creditor is. There are, however, a number of reasons why owing money to the tax authorities is a particularly bad idea.

Here are 3 reasons you should avoid not paying your taxes owed to the CRA.

The end of summer means back to school for students of all ages. For parents of elementary and secondary school students the focus is on obtaining back to school clothes and supplies and starting the process of enrollment in after-school activities for the fall.

For those already in (or starting) post-secondary education, choosing courses, finding a place to live and paying the initial bills for tuition and residence are more likely to be on the immediate agenda.

What both groups of parents and students have in common this school year, however, is that this is the first full school year which will be affected by previously announced tax changes.

Although they aren’t usually thought of in such terms, Canadian charities can be big businesses. The difference between them and a large corporation is that they collect and disperse money in order to support and advance causes, which create a public benefit.

As such, charities are afforded special status under Canadian tax laws.

Our tax system effectively subsidizes the activities of charitable organizations by providing a tax deduction or tax credit to companies and individuals that contribute to those organizations and by exempting the charities themselves from the payment of income tax.