Please note, these ideas do not originate with nor are they endorsed by any legal or other advisory firm (i.e. NOT MERCHANT LAW)
If you navigated to this page then be aware that there are strategies being explored to address the CRA collection processes and concerns. For some these make absolutely no sense... and that is OK.
Nor can anyone counsel another individual or group to NOT pay their CRA debts, legally or otherwise. No one is doing that here (and all the other legal disclaimers statements, etc).
Please make no mistake... all justified assessments, all reasonable requests, every dime of real tax obligation need always be paid when due. Otherwise, a potentially serious crime called tax evasion may be committed and prosecuted.
Not being in position to pay one's debt IS NOT a prosecutable crime... it may be due to hardship or otherwise. And make no mistake creditors like CRA have seemingly extreme measures to collect, but also rules to follow, so one's rights are protected, sometimes it may seem not.
ARE THE GLGI RE/ASSESSMENTS JUSTIFIED?
Many lived and breathed GLGI for 10+ years. It is felt by many that what GLGI did was justifiable and feel wronged by a system that allows a judge to potentially destroy the lives of 10's of thousands... 3 weeks to consider a judgement of this magnitude, and delivered on election day??? In the opinion of some legal observers he'd made his mind up long before the case was complete and was writing his decision while the case was ongoing.
Biased, punitive, insulting!!! In the opinion of some.
Cases in point about why many are riled by the decision:
Year after year through 2014, CRA issued GLGI a Tax Shelter ID.
Year after year Canadian charities that were duly registered governed acceptance and administration of donations and reporting to CRA.
Over the years legal opinions of 2 top law firms were poured over as were 3 qualified appraisal reports which validated belief that the structure was compliant to the Tax Act.
An independent Escrow agent (law firm) administered the transactions under restrictive rules knowing full well CRA's microscope would be pin-point focused on the structure and all involved entities.
This judge's opinion is that GLGI's expert appraisal witness from Price Waterhouse Cooper was not credible, while the Department of Justice's 'non-expert' witness was credible despite the judge's misgivings. PWC not credible???
Politicians from all levels of governments praised the charitable works over the years... Prime Minister Harper certainly not the least CLICK HERE
There were many 3rd party visits to 1st Nations that use the donated courseware; spoke to and listened to leaders and elders about benefits for the community; have visited learning centres in communities from schools to YMCA's to senior programs.
Further, court was presented 1,000's of pages of verification of the charity's good work - reports from research groups and testimonies of hundreds of beneficiaries of the donated courses and of the learning centres.
These and many more factors make the judge's opinion that there is little to no charitable, social or economic benefit from this 'sham' totally unacceptable!
The judge in this case rejected it all... GLGI participants had no 'donative intent', charities, advisors and beneficiaries were ALL WRONG. CRA and the Department of Justice were ALL RIGHT.
Also, CRA honestly could care less about taxpayers except that they are debt collection targets and deserve to be pursued until they extract what was ours and make it theirs... alternatively until the taxpayer is bankrupt or the debt is written off as uncollectable (both are deemed as successful as collection when reporting to the Federal Government).
Collectors earn their incomes and bonuses based on how many layers of skin they extract. The tactics and strategies they can employ appear daunting but if one is of a like mind and willing to get educated... then possible solutions are worth investigating.
THE MAJOR STRATEGIES
If one has questions or requires clarification on any of these following topics, then please communicate and we will respond.
1. APPEAL TO TAX COURT
Though no one really knows who, what or when the notices may relate to (some have suggested that fully 2 years could pass before the process is complete due to the sheer volume) after issuance of the tax notifications taxpayers will be provided two options... pay or appeal to Tax Court.
If taxpayers were of the mindset to delay collections many months or years, then appealing could work. Especially if there are hundreds or thousands… is a taxpayer not allowed his day in court and, if there are many in the cue, could it take years?
Why delay? This makes little sense to those able (and, perhaps reluctantly) willing to pay. They think it just delays the inevitable and builds more interest. Of course it is common knowledge that anyone could always stop the interest clock by paying an amount under dispute WITHOUT prejudicing their appeal, but doubters will never get it… SO THEY NEED TO PAY AS SOON AS THE NOTICES COME!
On the other hand, what about the idea of legally buying time to arrange one’s affairs in order to pay the least possible? Or until alternate funding comes in, perhaps through the Merchant class action channel?
As well, there is some talk about applying for a test or representative Tax Court case for years 2006 and beyond due to differences in the features and operations of the program, particularly after 2006. There appears to be some support from donors to fund such an effort based on 1) displeasure at the seeming biased decision and 2) delaying the outcome for years.
Depending on a variety of factors, appealing to Tax Court could cost as little as $0 or be as high as $550.
2. ASSET MANAGEMENT
When CRA collectors receive a file they have been taught that each tax debtor deserves to pay the full amount of their assessment. On the other hand they are aware some resist payment while others cannot pay the disputed amount. So the game is on to collect as much and as soon as possible by every available means at their disposal... even forcing one to bankruptcy as a written off debt is equal to a collected debt within CRA.
Note that it is rare to nil that CRA will make a 'deal' to accept less than the full principal amount owing as they cannot be seen as setting precedent for others. The only ways someone will pay less is by 1) successfully applying for interest relief 2) submitting an acceptable formal proposal through a trustee 3) claiming bankruptcy through the Insolvency Act or 4) write-off's or deletions of some or all or the debt because they are deemed uncollectable.
It is normally not legal for CRA to attempt collection within 90 days of the notice to pay. During and after that time CRA or the taxpayer may contact the other for information about the collection process. The objective of Information gathering with or without taxpayer involvement is to identify potential sources of collection... namely assets and income.
The investigation process a collector goes through to discover assets is not as simple as pushing a button. Rather, they look through banking arrangements from past dealings with CRA - cheques, T5's, RRSP receipts to determine one's bank branch; they review tax returns to indicate one's employer; they search property records to determine ownership. Note: assets that are jointly owned are not normally targets due to the challenge of determining a tax debtor's portion of the equity... unless both owners are GLGI participants, then there is risk of loss.
A 'soft' target is defined as someone whose collection sources are easy. A 'hard' target is more difficult to collect from.
Like anything else financial, does it not make sense to diversify one's collection sources to accomplish goals... namely to keep them private and protected?
Ideas some have contemplated: change banks; joint ownership; sell investments; withdraw funds from banks and hold cash; give property away; use the funds for travel; purchase property in foreign jurisdictions; buy hard assets that are not registered such private equity shares, currency grade gold and precious gems. Check those links if you have an interest in acquiring the best hard assets.
RRSP contributions ARE at risk of collection when one withdraws funds, and possibly of seizure by CRA. It is up for debate whether it is worth the tax savings to potentially expose these to CRA. Some would consider redeeming RRSP's and/or possibly transferring to another institution.
3. TRUSTEES IN BANKRUPTCY
Formal proposals to creditors (including CRA) or filing for bankruptcy are not simple considerations, but are obvious solutions for some. When CRA threatens garnishment of bank accounts or employment income, or seizes investments, RRSP's, personal or real property... then this is a strategy that merits consideration.
But that is the easy answer. What subscribers to this forum are looking for are solutions - not just to minimize tax collection activities - but also to the limit the impact of trustees. Make no mistake, trustees are there to help but as officers of the court they have an obligation to work within the parameters of the law to protect the interests of debtors AND creditors.
What does all that mean? If someone honestly wants to work their way out of the situation CRA has put them into, then they must follow the laws. However, like anything else the bankruptcy laws leave some grey in the interpretation. The grey is where opportunity lies in this collection-avoidance strategy.
Consulting a trustee is always free. The potential value may be immeasurable for some.
4. CONTRACT TRUSTS
Some are saying… ‘ I don’t agree with the judgement and I’m not wanting to bend… I'm not as interested in bankruptcy options at this time, let’s find a way’.
At the end of the day if one 'owns' nothing (assets, equity, property, income) then what can someone take from that party? The wealthiest families in the world follow trust and contract strategies to avoid lawsuits and asset seizures... Rockerfeller's, Kennedy's, Rothchild's, Dupont's, Bromfmann's, etc, etc. Asset investigators can look but will be hard pressed to identify ONE SINGLE THING that they OWN!
Contract trusts which follow the exact pattern of the wealthy are available to everyone today, for a reasonable fee... but also for an unquestioned commitment to changing one's attitudes and to the manner they live their lives... as like a corporation, no longer as an individual.
It is an intriguing concept... 'If I give it all away, but have the control and management rights of everything, then the financial comfort and peace of mind could be worth everything!'
There is much work going on with professional advisers, accountants and lawyers, to understand and validate this estate planning strategy. Once the diligence is completed it will be reported what the findings are in terms of effectiveness, costs and appropriateness.
These strategies may be methods of legally keeping what's yours out of the clutches of those who would make it theirs. Each of them may be a solution in itself or pieces of a simple or complex puzzle... building layers of protection to one's financial life.
A new field of expertise is developing to assist average Canadians 1) assess their credit risks 2) identify opportunities to manage their risks, and 3) implement effective strategies.
Again, all strategies take a relatively high level of education, a conviction that the tax shelter assessments are unjust and, most importantly, worth the effort and pressure CRA will undoubtedly bring to bear.
Global SaveTax Consultants