Read publication - Baker & McKenzie

More documents

Recommendations

Info

Canada donation programme involving timeshare units in the Turks and Caicos Islands. The lawyer personally signed many of these receipts as an officer of the charity involved in the programme. After disallowing the majority of the participants’ charitable donation tax claims, the CRA assessed the lawyer for the impugned penalty. The quantum of the penalty was based on the total penalties for which the third parties would be liable had they used the receipts in their tax filings. The Court determined that the lawyer would reasonably have been expected to know that the tax receipts were false at the time she signed them. This is noteworthy not only because of the size of the penalty involved, but also because of the far-reaching consequences to tax preparers found liable for such a penalty. 84 However, this case is particularly significant because the judge determined that the preparer penalty, which many previously considered to be civil in nature, actually constituted a criminal offence. The judge based his conclusion on the penalty’s potentially unlimited magnitude, the resulting stigma and the fact that it was designed to redress harms done to society rather than to ensure compliance with a regulatory scheme. Since other (ostensibly) civil tax penalties share certain of these characteristics, and since the civil–criminal divide affects everything from appeal rights to the reach of the CRA’s audit powers, the Court’s conclusion may have far-reaching consequences. XI OUTLOOK AND CONCLUSIONS In 2011, the CRA began the first phase of its move to a new risk-based audit system for Canada’s largest businesses. 85 Based on a variety of risk-assessment factors, 86 this new approach aims to streamline (but not reduce) audit activities by refocusing limited CRA resources onto businesses whose audits are more likely to result in increased tax revenues. Although the success of the new approach is yet to be determined, pressure arising from a difficult economic climate and the increasing globalisation of modern business (and tax avoidance strategies) suggests similar shifts may take place in related contexts. For example, the exchange of tax information with foreign tax authorities and the use of the CRA’s information-gathering powers to obtain both domestic and non-Canadian tax records are also likely to grow. It is thus important for international taxpayers to maintain cooperative dealings with tax authorities in each jurisdiction in which they operate. However, it is similarly important to keep abreast of the dispute resolution tools available in those jurisdictions, and to approach each interaction with the tax authorities 84 For example, if one partner or member of a global tax services firm is assessed a preparer penalty, the entire firm stands to lose its ability to file Canadian tax returns electronically with the CRA – a potentially devastating business consequence. See generally Paterson v. Canada, 2010 FC 644, 2010 D.T.C. 5130. 85 Businesses with annual sales greater than C$250 million. 86 Key factors may include a business’ audit history, corporate governance style and controls, transparency in dealings with the CRA, participation in aggressive tax planning, or in unusual, complex or international transactions, participation in major acquisitions or disposals, and several industry-specific risk factors. 38
Canada as an opportunity to present one’s case and avoid (or prepare for) future litigation. By keeping these principles in mind and preparing early, the well-informed international taxpayer will be able to appreciate when to cooperate and when to take a more aggressive posture, thereby minimising overall risk and avoiding unnecessary costs. 39
Page 1 and 2: The Tax Disputes and Litigation Rev
Page 3 and 4: The Tax Disputes and Litigation Rev
Page 5 and 6: Publisher Gideon Roberton business
Page 7 and 8: Acknowledgements MORAIS LEITÃO, GA
Page 9 and 10: Contents Chapter 9 INDIA ..........
Page 11 and 12: Editor’s Preface The objective of
Page 13 and 14: Canada agreements. 5 Most of the un
Page 15 and 16: ii Criminal tax prosecutions Canada
Page 17 and 18: Canada by directly substituting its
Page 19 and 20: Canada whether such an infraction a
Page 21 and 22: Canada iii Claimants The general ru
Page 23 and 24: Canada circumstances. 57 Taxpayers
Page 25 and 26: Canada stands at the forefront of t
Page 27: Canada availability of paper losses
Page 31: Baker & McKenzie LLP Brookfield Pla

Read publication - Baker & McKenzie

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?