Have Canadians Ever Had the Right to Pay the Lowest Tax Allowed by
Law? Part I of II :CRA SOTW
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Due to request, this week and next week we’ll be rerunning one of our
most popular tax tales from the Canada Revenue Agency SOTW Library
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Every court in the land has affirmed that Canadians have the right to
pay lowest amount of tax allowed by law.
Makes perfect sense. Doesn't it?
But although National Department of Revenue, Revenue Canada, the CCRA
or the CRA (or whatever name they choose to use) has been present at
each and every one of these court decisions somehow... well... lets
just say that for some reason they consider this to be a guideline
rather than an actual set-in-stone law.
Let's consider audits for a moment. Oft times auditors do find
discrepancies in Books and Records and so they are right in adjusting
income/expenses and tax owed. But, other times, it seems that a CRA
auditor will decide on a discrepancy simply because they feel they
have to - to justify their job (and paycheque). After all if they
don't find error than they don't need auditors do they?
Now of course we all have the right to appeal questionable
assessments. So, for example let's say that you're unjustly reassessed
with tax, penalty and interest totalling $1000. To fight this you may
have to pay an accountant to help you out. If you go to court you may
decide on hiring legal representation. You have to take a day or more
off work to prepare everything and appear in court - that's lost pay.
There's the time and expense of travel. And the possibility of further
appeals. This could all add up to $1000. Or more. Much more. And of
course the aggravation and stress. So in the end very often it is
cheaper to pay tax that you don't owe than to challenge a bogus
assessment.
And some feel that by paying a tax debt that they don't owe that the
CRA will just let them be while if they challenge... well the CRA will
just go after them with a vengeance. But is this true? Or does it just
make them bolder? If we got an extra $1000 this tax year why not go
for $1500 the next?
Still not convinced?
Well then lets go back a number of years to a chap by the name of
Blair Longley.
Blair Longley (Blair T. Longley and Her Majesty the Queen) dreamed up
a plan whereby Canadians could receive federal political contribution
tax credits for contributions made to a political party. But his idea
was a bit different because the contributor could direct their
contribution so as to benefit the contributor or to benefit the
contributor's designate. This plan became known as the "Contributor's
Choice Concept" (the "CCC"), or "Longley's Loophole". But because some
were skeptical of his scheme Mr. Longley requested confirmation from
the tax collector that his idea was legal. For five long years he
pursued RevCan seeking written confirmation that his idea was legal.
But Revenue Canada refused to acknowledge this to him in writing.
His patience finally wearing thin he decided to take this issue to
Court. It was the Court's decision that:
"Revenue Canada dealt dishonestly with Mr. Longley. It is apparent
that Revenue Canada was aware from early on that Mr. Longley's scheme
did not appear to be contrary to the provisions of s. 127(3) of the
Act. Nevertheless, they set out to discourage him and his potential
contributors by refusing to confirm that fact and, ultimately, to
mislead him with respect to the legal strength of the Department's
position. The Department acted without regard for its obligation to
deal fairly and openly with all taxpayers and to administer the Act in
accordance with the law."
But the judge's decision did not end here, he concluded by stating:
"I am of the view that the award in this case ought to be one which
reflects the Court's displeasure with the abuse by Revenue Canada of
its position. In the circumstances of this case I have concluded that
the appropriate award of punitive damages, intended to dissuade
Revenue Canada from acting again in such a high handed, arrogant and
dishonest way, is $50,000."
Convinced? No? You're not?
Well than stay tuned for next weeks stunning conclusion to the
question "Have Canadians Ever Had the Right to Pay the Lowest Tax
Allowed by Law?" For a pair of Court cases that you just will not
believe.
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Alan Baggett – Tax Collector’s Bible
