Late in the calendar year, which often spills over into the New Year, accountants and their private clients are busy planning remuneration strategies. Inevitably, an aggressive plan may be discussed. However, what is aggressive? That is a difficult question to answer and beyond the scope of this tip. However, at the 2012 Canadian Tax Foundation National Conference held in Calgary, AB at the end of November, the Canada Revenue Agency (“CRA”) provided an update on recent issues that are on its radar and that it is auditing. A number of these matters include aggressive owner-manager remuneration strategies that involve family trusts that were not created and/or maintained properly, aggressive diversion of income and transactions that create capital gains as opposed to dividends or salaries.
Often, aggressive owner-manager remuneration “planning” is combined with other aggressive strategies such as charitable tax shelters. Charitable tax shelters continue to be marketed and the CRA is aggressively attacking such “plans”. Overall, the Canadian taxpayer is certainly free to plan their affairs so as to pay the minimum amount of tax within the confines of tax law. However, if it seems “too good to be true” then it often is. We urge you to obtain good solid tax advice from a tax specialist when something seems too "easy" or too "generous". Neither of these terms are aligned with the tax act.
Any member of TSG would be pleased to provide a second look at any owner-manager remuneration and/or other tax planning that may seem too good to be true.
TAX TIP OF THE WEEK is provided as a free service to clients and friends of the Tax Specialist Group member firms. The Tax Specialist Group is a national affiliation of firms who specialize in providing tax consulting services to other professionals, businesses and high net worth individuals on Canadian and international tax matters and tax disputes.