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Moodys Gartner musings

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Moodys Gartner Tax Law responds to Accounting Standards Board on proposed accounting treatment of redeemable preferred shares issued in tax planning arrangements

Our firm has long believed that accountants and lawyers should work together in the delivery of tax services. Both professions bring different skill sets and perspectives to the table when crafting client solutions. To that end, we purposely employ both professions in our tax law firm. It is common when dealing with tax matters that an issue will arise that requires input from both accountants and lawyers, and the subject of this article is a great example. In October 2014, the Accounting Standards Board (“AcSB”) released an Exposure Draft that, if implemented, will have great consequences for many private enterprises when reporting certain common tax planning arrangements.

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CRA / IRS are coming to town!

You better watch out
You better not cry
You better not pout I’m telling you why
CRA / IRS are coming to town!

They’re making a list
And checking it twice
Gonna find out who needs MGTL’s tax advice
CRA / IRS is coming to town!

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Restrictive covenant rules – good news update!

On July 28, 2014, our firm published a blog that discussed a recent Canada Revenue Agency (“CRA”) announcement at the 2014 Society of Trust and Estate Practitioners (“STEP”) Roundtable . The announcement involved the taxation of restrictive covenants under subsection 56.4(2) of the Income Tax Act (the “Act”). Specifically, the issue revolved around whether or not certain exceptions to the broad application of the taxation of restrictive covenant receipts could be avoided because of the strict application of the legislative requirement that no proceeds are received or receivable by the vendor for the granting of the restrictive covenant” (see paragraphs 56.4(6)(e) and 56.4(7)(d) of the Act).

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Independent contractors – read this before incorporating

In Greek mythology, Icarus flew with wings made of feather and wax but he was overly-ambitious. Ignoring his father’s warnings, Icarus flew too close to the sun and the sun melted his wings causing him to fall into the water where he then drowned. Structuring oneself to provide services as an independent contractor comes with many advantages, and incorporating that business may bring additional advantages. However, in some circumstances, incorporating a ‘one-person’ business may be the same as flying too close to the sun.

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Personal tax credits and all-inclusive resorts

So what does tax and all-inclusive resorts have in common? While away, it got me thinking how some of the recent personal tax credits announced by the Conservative Government resemble certain characteristics of an all-inclusive resort. All-inclusive resorts are a people-watching mecca but more famously are known for their numerous all you can eat buffets and unlimited alcohol (good, bad and ugly). To parallel the two, while there are certainly good sides to the recent amendments to the Children’s Fitness Tax Credit, the Universal Child Care Benefit (“UCCB”), Child Care Expense Deduction and the new “Family Tax Cut” credit, there are many distasteful aspects as well.

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Am I still a US citizen? Confusion regarding loss of US citizenship for tax purposes

Unlike virtually every other developed country, the United States bestows upon its citizens the unique pleasure of being taxed on their worldwide income, regardless of where that income is earned. To sweeten the pot, Uncle Sam also imposes estate and gift taxes on the value of property transferred by a U.S. citizen by gift or upon death regardless of the location of those assets.1 Even if a U.S. citizen in Canada (and elsewhere abroad) has a limited amount of income or pays foreign taxes such that the U.S. tax returns to be filed would show zero tax liability owing, citizens must file a complex web of income and informational returns or potentially face severe penalties.2 These intricate and confusing requirements often result in substantial and burdensome tax compliance costs for U.S. citizens living in Canada, and create ongoing risks of harsh penalties due to noncompliance.

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