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A rare example of a one-client business found by the Tax Court to not be a personal services business

On August 12, 2015, the Tax Court of Canada (“TCC”) released its judgment in C.J. McCarty Inc. v The Queen1. McCarty is one of many personal services business (“PSB”) reassessment cases published in the recent years, but what makes this case interesting is that it is one of few where the taxpayer emerges successful despite having only one significant client and being compensated at a fixed hourly rate. In this short article, we will examine the unique facts that led the court to its judgment.

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Important changes to US tax filing deadlines for Canadians

On July 31, 2015, President Obama signed into law the “Surface Transportation and Veterans Health Care Choice Improvement Act of 2015” (the Act). Although the Act was not primarily tax focused, it nevertheless contained several important changes to US tax filing deadlines, which may catch Canadians who have US tax and filing obligations off-guard.

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An introduction to FATCA and analysis of Canada’s legislation

This article provides an introduction to the Foreign Account Tax Compliance Act (FATCA)
for Canadians and analyzes Canada’s implementing legislation regarding FATCA. The
implementing legislation uniquely classifies entities subject to FATCA, in that it departs
from the classification in the US Treasury regulations, the Canada-US intergovernmental
agreement regarding FATCA (the Canadian IGA), and the implementing legislation adopted
or proposed by other jurisdictions with signed IGAs with the United States.

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Planning using principal residence trusts for immigrants to Canada

As many of our readers know, the Canadian Income Tax Act (the “Act”) provides for an unlimited exemption from the imposition of Canadian income tax on the gains resulting from a disposition of a “principal residence”. Access to the principal residence exemption can be valuable, especially in cities (e.g. Vancouver, Toronto, Calgary) where residential properties have enjoyed robust appreciation.

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Increases to Alberta Tax Rates

For better or worse, on June 18, 2015, Alberta’s newly elected NDP provincial government released Bill 2, which immediately received First Reading in the Legislature and passed. Even though the Bill is still not law, it will undoubtedly pass into law soon. Bill 2 contains corporate and personal tax increases that are, quite frankly, shocking. While “shocking” may not be a correct description, especially since the NDP had campaigned on the tax increases that are contained in the Bill, many Alberta tax practitioners, like us, are still shocked that such abrupt increases are actually going to see the light of day.

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If it quacks like a Partnership, it is a… Corporation?

At the Canada Revenue Agency (“CRA”) Roundtable session during the International Fiscal Association Conference on May 28, 2015, the CRA was once again asked to comment on the issue of foreign entity classification. In contrast to the CRA’s usual response of merely reaffirming the use of the “two-step” approach, the CRA revealed several surprising insights about their views. The CRA indicated that they are currently analyzing entity classification for Florida and Delaware Limited Liability Limited Partnerships (“LLLPs”) as well as Florida Limited Liability Partnerships (“LLPs”), none of which have previously been the subject of specific determination by the CRA with respect to their classification.

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No Social Security number, goodbye passport?

As another season of summer travel starts, Canadian residents with US ties should make sure they are thinking carefully about their tax obligations. Tax compliance may not be first in the minds of most people planning trips to the US, but Congress and the Obama administration certainly are thinking about the combination of travel and taxation. If a proposed law is enacted, US passport holders with tax debt or without a valid Social Security number could, as soon as 2016, find themselves losing that passport and maybe even being forced to remain in the US until the issues are resolved.

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Solicitor client privilege in tax matters

In a prior blog post, I said that solicitor client privilege remains strong in Canada. A recent judgment of the Federal Court included two throwaway comments, so easily quotable, that appear to suggest that solicitor client privilege does not extend to “tax planning” advice.

In Canada v. Revcon Oilfield Constructors Incorporated, 2015 FC 524, the Federal Court offered the two gems that the government will be sure to cite when they want to seek tax planning documents from a taxpayer.

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Renunciation of US citizenship is on the rise

On May 7th, 2015, the US Treasury Department published its first quarter 2015 list of individuals who have chosen to expatriate and it was yet again an eye opening number. The 1,335 published names is the highest quarterly figure ever reported in the Federal Register.

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The Alberta Election, overtime playoffs, and a night full of upsets…

Growing up in Alberta, my parents taught me a golden rule – never talk about politics in a social setting. A golden rule I still respect and one that has carried over to our firm. However, I’m going to make an exception today (sorry Mom) given the historic nature of yesterday’s Alberta election.

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Upcoming FATCA deadlines for Canadians

As part of its 2015 Federal Budget announcements, Canada committed to implementing the “Common Reporting Standard” (CRS) promulgated by the Organization for Economic Co-operation and Development (OECD). While the OECD’s efforts to facilitate information reporting via the CRS and Canada’s corresponding implementation of such a regime will certainly have lasting impact, let us not forget about the progenitor of information exchange and its looming deadlines: FATCA.

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Toronto seminar | Considering renouncing your US citizenship?

Complimentary seminar presented by: Roy A Berg JD, LLM (US TAX) and Alexander Marino JD, LLM (US TAX) Date: Thursday, June 18, 2015 Time: 4:00 – 6:00 PM Location: Fairmont Royal York (100 Front Street W) Registration: rsvp@moodysgartner.com or 1.403.693.5100 On July 1, 2014, the US’s Foreign Account Tax Compliance Act (FATCA) went into effect, and as […]

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