Edgar Froese vs Her Majesty The QueenSignificant experience and understanding was added through personally appealing two cases against the CRA and winning.
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NEWS & EVENTS
Edgar Froese vs Her Majesty The QueenSignificant experience and understanding was added through personally appealing two cases against the CRA and winning.
Restoring ACT Advanced Cultural Technologies Inc. (ACT) was restored on December 2, 2016. The Company has been dormant since 2011.
Restoring FibresourcesManagement is also undertaking to restore Fibresources Corporation, which was halted on the TSX Venture Exchange in 2009. It remains listed on the TSX NEX Exchange under the symbol FB.H.
Upcoming Financings NetEquity Capital expects to undertake several financings on behalf of Affiliate Issuers in latter 2016 and 2017, subject to regulatory approvals.
Does Tax Sheltering Your Income Make You A Tax Cheat?
The answer is clearly "No!"; you are using provisions of the Income Tax Act and programs that governments have established that reduce your taxes to incent you to in make certain decisions and investments. You are in fact participant in a government initiative. Our VCC is for example identified as a Prescribed Venture Capital Corporation in Section 6700 (a) (vi) of the Income Tax Act.
How Our Tax System Works: The Burden Of Proof
What You Say Is Right, Unless...
We have a self-reporting tax system where what you file is deemed correct, unless...
The CRA Says You Are Wrong, Then...
The CRA is right, until you show them by your records why what you said was in fact correct.
Final Burden Of Proof Is On The CRA
The CRA must then prove that the supportive material you have provided is wrong.
For Our VCC, Supportive Documents We Supply You With
BC Gov't Tax Credit Receipt
For investments made in our VCC, the VCC files investment reports with the BC Government which in turn issues a Tax Credit Receipt for you to include with your Income Tax Return.
RRSP Contribution Receipt
Should you contribute your investment to an RRSP, the RRSP Trustee will issue you a contribution receipt to include with your Income Tax Return.
Legal Counsel Letter Of Eligibility and Valuation
Legal Counsel for the VCC will provide you with a Letter Of Eligibility and Valuation that the RRSP Trustee uses to accept your VCC investment as a contribution to your RRSP.
Examples Of Tax Shelter Schemes That Were Denied By The CRA
The At Risk Rule
The At Risk Rule states that the investor must be at risk, in particular where investments are partially paid for with a Promissory Notes.
GAAR
GAAR, or General Anti-Avoidance Regulation, is a catch-all provision that allows a tax deduction to be denied if the sole purpose of the investment was Income Tax reduction. In this case, the burden of proof is on the CRA.
At Risk Example
If an investor made a $10,000 RRSP eligible investment, paying $3,000 in cash while supplying a Promissory Note for $7,000 for the balance, at a marginal tax rate of 40% the investor would get $4,000 back in Income Tax reduction on making the RRSP contribution plus owning the stock, while the Issuer company would get $3,000 in cash.
If the Promissory Note was not a full recourse note, and was forgiven after its due date, the investor has received a benefit at no cost or risk. Such cases led to the At Risk Rule, and would now be denied.
GAAR Example
These tend to involve charitable giving schemes. Lets say pencils retailed for $.25 each, and a pencil factory went bankrupt and sold a boxcar full of pencils at $.05 each to a Tax Shelter investment. If the Tax Shelter now sold investment units for $1.00 to cover the cost of buying 20 pencils, and then donated these pencils to a Registered Charity claiming a Charitable Donation tax benefit on $5.00 for the retail value of 20 pencils purchased for $1.00, delivering the benefit to the investor as a flow-through benefit, at a 40% marginal tax rate the investor would get $2.00 in Income Tax reduction for his $1.00 investment cost in pencils. GAAR is intended to deny schemes such as this.