Tag: self employed

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Brandon Blog Post

CERB REQUIREMENTS: ASTONISHING MIXUP UNDERSTANDING CERB REQUIREMENTS LEADS TO A BAD OUTCOME

cerb requirements
cerb requirements

We hope that you and your family are safe and healthy.

The Ira Smith Trustee Team is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

If you would like to listen to the audio version of this CERB requirements Brandon’s Blog, please scroll to the very bottom and click play on the podcast.

CERB requirements introduction

This year that is soon ending (YAY!!) has certainly been full of new learning experiences because of the COVID-19 pandemic. CERB requirements are just one of them. Since March, I have been writing about different financial issues relating to Canada’s COVID-19 Economic Response Plan, including the Canada Emergency Response Benefit (CERB). My two prior blogs on CERB were:

Even though the CERB program has ended, we now find that a new CERB requirements issue has just arisen concerning self-employed people. I will describe it for you.

A CERB requirements refresher

Just to refresh your memory, I think an overview of the Canadian CERB requirements will nicely set the stage.

To be eligible for the $2,000 CERB payment by applying to the Canada Revenue Agency (CRA), you have to have met particular CERB requirements for each of the CERB periods you were applying for. The Government of Canada specified the eligibility criteria to be:

  • You did not try to find or get, CERB or Employment Insurance from Service Canada for the specific CERB dates being applied for.
  • You did not stop your work voluntarily.
  • You reside in Canada and are at least 15 years of age.
  • You earned a minimum of $5,000 (before taxes) in the preceding 12 months, or in 2019, from 1 or more of:
    • work earnings
    • self-employment income
    • provincial benefit payments for maternity or parental leave
    • 1 of:
      • Your work hours have in fact been decreased as a result of COVID-19.
      • You have actually quit or will quit working because of COVID-19.
      • You are unable to work as a result of COVID-19, for example, due to the fact that you are caring for a person.
      • You have actually been paid EI benefits for at the very least one week of benefits after December 29, 2019, and finished your entitlement to such benefits.
  • One of:
    • If you are applying for the first time: You have actually quit or will stop working, or you are working decreased hours, as a result of the coronavirus. Additionally, you don’t expect to earn over $1,000 in gross employment or self-employment income for at least 14 days straight during the 4-week period.
    • If you are applying for a subsequent period: You are still not employed or self-employed, or you are doing lowered hours because of COVID-19. You do not anticipate making over $1,000 in gross employment or self-employment income, and you expect this to continue throughout the whole 4-week duration.

The Canadian CERB program is finished. The CRA accepted and paid retroactive applications until December 2, 2020. Now they are doing audits to see if people who received CERB did not actually qualify. This has uncovered a problem unique to self employed people.

The $5,000 CERB requirements problem

The $5,000 consists of all employment income and self-employment income. This includes among others: gratuities you have declared as earnings; non-eligible dividends; nominal amounts paid to emergency service volunteers; and royalties (e.g., paid to artists). If you are not eligible for Employment Insurance, you might additionally include pregnancy and parental benefits you obtained from the Employment Insurance program and/or comparable advantages paid in Quebec under the Quebec Parental Insurance Plan.

Pensions, student loans and bursaries are ruled out as employment income and must not be included.

So why is the $5,000 threshold of CERB requirements a problem for the self-employed?

Are CERB requirements gross?

The issue that has recently been uncovered for self-employed workers in the calculation of income. The employment and or self employment income does not need to be earned in Canada, but you need to reside in Canada. But the eligibility requirements, rules and eligibility criteria when it comes to self employed income have been misinterpreted.

Self employed Canadians have said that when they reviewed the government of Canada’s CERB website, they read that their business had to have earned (before taxes) a minimum of the $5,000 threshold. The devil is really in the details.

To “earn” $5,000, if you are deducting business expenses, which you should be, then your net income must be the minimum of $5,000 in order for you to earn $5,000. CRA and Service Canada spokespeople have now confirmed this.

Unfortunately, it appears that many self employed individuals misinterpreted this. They believed that if they billed gross income of a minimum of $5,000 (before taxes) in the preceding 12 months, or in 2019, then they met the cerb. They applied for CERB and received their payments totalling some $14,000. If they billed way more than $5,000 and after deducting expenses to earn that income their net income before tax is still above the $5,000 threshold, then there is no problem.

However, if they billed not much more than the $5,000 and after deducting expenses their net income is either minimal or has created a business loss, then they do have a problem because they will not have met the threshold of the CERB requirements.

So the CERB requirements are not gross. They are net.

cerb requirements
cerb requirements

What is CRA now saying?

CRA has now sent letters to many self employed people. It has been estimated in the media that CRA has identified to date some 200,000 self employed that CRA believes received CERB but did not meet the CERB requirements. The letters advise that, for self-employed Canadians, the qualifying earnings had to be “net pre-tax income,” which means gross income minus the expenses incurred to earn that gross income.

Self employed Canadians who misinterpreted the CERB requirements and requested and received CERB based upon their gross income made a mistake. They are being told by CRA that they will need to pay back up to $14,000 worth of benefits, according to many social media posts and news reports. Sounds simple, right?

It may sound simple, but, the misinterpretation of the CERB requirements has now caused many problems. The money was applied for because Canadians needed help with daily living expenses due to the economic effects of the COVID-19 pandemic. The money has been spent.

If the CERB money is not returned to the government before January 1, 2021, every self employed person in this conundrum will have to pay tax on the CERB amount received in 2020. Hopefully paying income tax on the CERB is not something these Canadians also did not overlook or misinterpret. Even if they pay the income tax when they file their 2020 income tax return, there is no guarantee that CRA will not still continue trying to collect the CERB payments.

There is a simple fix, but, will the Federal Government use it?

In my view, there is a simple fix for anyone who ran their own business as either a sole proprietor or partner and who received such a letter from CRA about their not having met the CERB requirements. It is a simple fix, but it will require what must be considered out of the box thinking for the government.

These people applied for CERB because they were hurting financially. They needed this help to buy food, pay rent, make mortgage payments. It wasn’t used for travel and fancy dinners. The last thing these people need is to repay the money they do not have anymore. So what is the simple fix? Let them keep the money and do not demand repayment. Let these people pay the income tax on that money.

If critics want to make sure that it does not look like these people took from the government in order to merely survive, then you could always deny them business expenses that would otherwise qualify up to the amount of CERB money they received. That way the government will collect additional income tax from them.

Given all the circumstances and the true reason for sending out the CERB money in the first place, it would be an awful ending for these people to be faced with being chased by CRA collection people for repayment.

CERB requirements summary

I hope you have enjoyed this CERB requirements Brandon’s Blog. Do you or your company have too much debt? Are you or your company in need of financial restructuring? The financial restructuring process is complex. The Ira Smith Team understands how to do a complex restructuring. However, more importantly, we understand the needs of the entrepreneur or the person who has too much personal debt.

You are worried because you are facing significant financial challenges. It is not your fault that you are in this situation. You have been only shown the old ways that do not work anymore. The Ira Smith Team uses new modern ways to get you out of your debt troubles while avoiding bankruptcy. We can get you debt relief freedom.

The stress placed upon you is huge. We understand your pain points. We look at your entire situation and devise a strategy that is as unique as you and your problems; financial and emotional. The way we take the load off of your shoulders and devise a debt settlement plan, we know that we can help you.

We know that people facing financial problems need a realistic lifeline. There is no “one solution fits all” approach with the Ira Smith Team.

That is why we can develop a restructuring process as unique as the financial problems and pain you are facing. If any of this sounds familiar to you and you are serious about finding a solution, contact the Ira Smith Trustee & Receiver Inc. team today.

Call us now for a free consultation.

We will get you or your company back on the road to healthy stress-free operations and recover from the pain points in your life, Starting Over, Starting Now.

We hope that you and your family are safe and healthy.

The Ira Smith Trustee Team is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

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Brandon Blog Post

WHEN ARE 2019 TAXES DUE CANADA: 4 AMAZING WAYS TO CRA PERSONAL DEBT RELIEF

The Ira Smith Trustee Team Is Absolutely Operational And Ira, In Addition To Brandon Smith, Is Readily Available For A Telephone Consultation Or Video Meeting.

When are 2019 taxes due Canada introduction

I have noticed recently that Canadians are searching online the question “when are 2019 taxes due Canada“. That leads me to believe that many people are unclear about the changes this year. Some people are searching because they don’t want to miss the payment deadline. Others may be searching because they want to know when the deadline is that they are going to miss because of the COVID-19 pandemic has hit them right in the wallet or purse.

The purpose of this Brandon’s Blog is to go over for individuals:

  • the important tax filing and payment dates for 2019 taxes;
  • what needs to happen on those dates and what if you can’t make it on time; and
  • ways you can deal with Canada Revenue Agency (CRA) to eliminate your tax debt

I remind you that I and my Firm are not personal or corporate tax advisors. We are licensed insolvency trustees. This Brandon’s Blog is not meant to be income tax advice or to replace professional income tax advice. To learn when are 2019 taxes due Canada for your personal situation, contact your own professional income tax advisor.

Is the Tax Deadline Delayed for 2019 Tax Returns?

You may have wondered how COVID-19 influences the filing of your 2019 tax return, repayment of any income tax owing and your tax obligations generally in terms of deadlines, or payments or refunds and tax credits. Apart from those that are self-employed, the income tax return filing date is usually April 30 of every year.

Identifying the turmoil brought on by COVID-19, the CRA provided most Canadians extra time to submit a 2019 tax return. CRA provided us till June 1, 2020, aside from self-employed people operating as a proprietorship or partnership. For those self-employed people, the filing day remained June 15, 2020, for a 2019 tax return.

So since that due date has passed, nevertheless, this year there might be a technicality as I describe below. The government wants every cent they are owed and they want it in a good time. Thus, there are fines for filing a late income tax return if you have an unpaid tax amount. If you are entitled to a refund or your tax balance is nil, there will be no charges for sending in your return after the deadline date.

Charges for filing your income tax return late when you owe the CRA are levied. The CRA will charge you a late-filing penalty if you file your 2019 income tax return after September 30, 2020 (notwithstanding the actual filing date was June 1), and you owe tax obligation that continues to be unpaid. The fine is 5% of your 2019 tax owing, plus 1% of your income tax owing for each complete month your return was filed after September 30, 2020, to a maximum of twelve months.

So without making you any guarantees, there is a real possibility that if you missed out on the June 1 due date, if you submit and pay on or prior to September 30, 2020, and you do not have any kind of prior years’ late-filing penalty, one may not be levied for 2019.

If the CRA charged a late-filing penalty on your return for 2016, 2017, or 2018 your late-filing fine for 2019 may be 10% of your 2019 balance owing, plus 2% of your 2019 balance owing for each and every complete month your return was submitted after September 30, 2020, to a maximum of 20 months.

So it seems the CRA will forgo arrears interest on 2019 tax obligations related to the specific income tax returns from April 1, 2020, to September 30, 2020. This procedure for your 2019 tax obligation does not terminate penalties and interest on a taxpayer’s account prior to April 1, 2020, to September 30, 2020. It does make it less complicated on a taxpayer’s 2019 tax debt that it will certainly not rise via interest charges throughout this challenging coronavirus pandemic time.

Why file by the June 1 deadline if no payment is due until September 30?

Filing your income tax return on time lessen any negative results on your tax credits and benefits payments. If your 2019 return has actually not been assessed by the CRA, details from your 2018 return will be used to compute benefits as well as credits payments up until September 2020. That will guarantee you continue to obtain vital payments. Nevertheless, without filing your 2019 tax return, you may not be getting exactly the correct amounts you are entitled to.

I doubt you desire any kind of disturbance to benefit payments you get for government programs such as the Canada Child Benefit (CCB) and GST/HST tax credits, as well as amounts from provincial programs that are carried out by the CRA.

By filing a return by the due date, you will lessen this impact. Also, if you are owed a refund, the earlier you file, the earlier it will show up in your pocket. By registering for direct payment, you’ll get your refund quicker.

If you are expecting a tax refund for sure you would certainly want to submit on time. CRA may not chase you for it if you don’t owe them for 2019. Submitting your tax return is the only way to get that refund. Remember, a refund means that you gave too much of your money to CRA during the year. For sure you want it back!

However, registering for a direct deposit could lead to other problems. For more information on that, read my Brandon’s Blog CANADA REVENUE AGENCY LOGIN: MASSIVE CREDENTIAL STUFFING CAUSES MANY PROBLEMS.

When are 2019 taxes due Canada: Are there new deadlines for GST/HST returns and payments as well?

Excellent information for the self-employed as well as entrepreneur small-business owners: while the CRA is not changing the filing target dates for GST/HST returns, it is forgoing late filing charges for returns submitted by the end of June. As for payments, any type of GST/HST installments that are due March 27 through June 2020 can be deferred up until June 30, interest-free.

When are 2019 taxes due Canada: What is the payment date?

The target date to pay amounts owed was initially extended to September 1, 2020. On July 27, the CRA revealed that the payment deadline for a person’s 2019 income tax obligation was additionally extended to September 30, 2020.

There are a few other concerns surrounding the declaring of your 2019 income tax return and the payment of any balance owing that you must understand:

  • Some taxpayers may have received a Notification of Assessment that says the date for settlement is April 30, 2020, or September 1, 2020. If you did get such a notice giving those dates for when are 2019 taxes due Canada, it is now incorrect.
  • On May 15, it was revealed that qualified Canadians who are currently obtaining the GST/HST credit and/or CCB payments will continue to get them up until the end of September 2020. Benefits starting in July 2020 and those arranged for August and September won’t be disrupted.
  • If CRA is unable to evaluate your 2019 return by early September 2020, your estimated benefits and/or credits will certainly stop in October 2020 and you’ll have to repay the approximated amounts that were released to you starting in July 2020.
  • By prolonging the due dates for federal returns and instalments, the CRA is additionally expanding the due dates for provincial/territorial individual returns and instalments. Note that the CRA does not administer the tax system for the province of Quebec.

When are 2019 taxes due Canada: What if I owe CRA and cannot pay it?

If you find yourself to be in a financially challenging situation then you need to take proactive activity. The COVID-19 pandemic has hit Canadians hard. I envision there will be many individuals that do not have the needed cash to pay their 2019 income tax debt by September 30. It is necessary to be proactive and positive since the CRA has special powers.

The CRA does have the capacity to take collection procedures without having to go via the court system. The federal government can garnishee your wages or salary, get the money you have on deposit at a bank as well as freeze your bank accounts. They can also make demand on anyone they think owes you money.

There are 4 ways to CRA personal debt relief:

  • If you are able to, borrow the money you owe and pay it to CRA on or before September 30. I don’t think this option needs any further explanation.
  • Contact a CRA collection officer and make a payment arrangement repayment plan. A payment arrangement is an agreement you make with the CRA. This allows you to agree on a monthly amount to pay that you can afford and then provide CRA with a series of post-dated cheques.
  • Consider filing a consumer proposal to consolidate your income tax and other debts so you can make one manageable monthly payment. Through a consumer proposal, you will pay much less than the total of all your debts.
  • If you cannot see your way to being able to do any of the three options listed above, the final one is to use personal bankruptcy to eliminate your income tax and other debts.

If you are able to make a settlement arrangement you have to maintain the payment plan by making certain your regular monthly post-dated cheques clear the financial institution every single time. Also, ensure that all your returns are filed promptly. If you fail to do any of these things, they can terminate the payment arrangement and begin collection action to recoup the tax debt.

September 30, the date when are 2019 taxes due Canada is coming up fast. If you know that you will not be able to pay that liability, don’t fret and don’t waste time. Give us a call. We will help you put together the best strategy that meets your overall needs.

When are 2019 taxes due Canada: A consumer proposal

A consumer proposal is a government-regulated debt negotiation program submitted with a Licensed Insolvency Trustee (Trustee). The purpose of submitting one is to eliminate problem financial debts to make sure that you can start the process of resuming life debt-free.

It can just be filed with a Trustee. When you sign your papers, they are filed with the federal government. It is a legal process under the Bankruptcy and Insolvency (Canada) (BIA).

This procedure is a lawful arrangement between you and you’re unsecured creditors to eliminate all of your debt by repaying only a part of the debt that you owe. If a simple majority by dollar amount accept the terms you have offered, then your consumer proposal is binding on all your unsecured creditors.

This court-sanctioned procedure enables you to bargain negotiation with your creditors. When you are carrying out your consumer proposal by making your required payments, you must also file your income tax returns as normal. CRA manages your refunds in the normal course. If you owe tax for any time period after the filing date of your consumer proposal, you additionally pay that amount as regular.

In a consumer proposal, you maintain your assets and as long as you make all the required payments you promised to make, nobody can garnishee your salary or earnings. If you have filed a consumer proposal, personal income tax obligations arising before your filing is an unsecured debt. When you have filed CRA can’t take any type of additional action against you, like wage garnishment, or freezing your bank accounts. As the Trustee, we alert CRA once you file as well as advise it to stop any additional action against you.

For further information on how a consumer proposal could work for you, please get in touch with me. If you know that when are 2019 taxes due Canada you will not be able to pay them, give us a shout so we can help put together a plan of attack for you.

When are 2019 taxes due Canada: Personal bankruptcy in Canada

If none of the above ways can work for you, then you will have to consider personal bankruptcy in Canada. Personal bankruptcy should be considered by anyone who:

  • is insolvent;
  • has seen a Trustee who has assessed you and determined that you will not be able to complete a consumer proposal; and
  • owes more than $1,000.

As soon as you become bankrupt you will be required to surrender most assets to the Trustee, other than those that are exempt under provincial law or are fully encumbered. These assets will then be sold and the money gained from the sale of the properties will be dispersed according to the BIA. You may additionally have to pay a part of your earnings to the Trustee for the benefit of your creditors.

Personal tax obligations can be discharged when you receive your discharge from personal bankruptcy. Many various other financial debts will also be released. If you have liability to CRA from being a director of a company, those financial obligations can also be discharged.

If you have actually declared personal bankruptcy, personal income tax debt is an ordinary unsecured financial debt. As soon as you’ve applied for bankruptcy CRA can’t take any kind of additional action versus you, consisting of a wage garnishment or freezing your accounts. We will inform CRA when you file as well as instruct it to quit any additional activity against you to try to collect their debt.

Your spouse will not be affected by your bankruptcy unless your spouse:

  • co-signed a debt;
  • owns assets with you jointly; or
  • has received a transfer of property from you at a time when you owed CRA money.

A creditor can go after your spouse for payment in these circumstances and also he/she will be called to account and pay.

You may also wish to check out our Top 20 personal bankruptcy FAQs. So if you know now that when are 2019 taxes due Canada you will not be able to pay it, consider giving us a call and we can run through your various options and tailor a plan to fit your unique circumstances.

When are 2019 taxes due Canada: Summary

I hope you found this is Canada when are 2019 taxes due Canada Brandon’s Blog informative. The Ira Smith Team family hopes that you and your family members are remaining secure, healthy, and well-balanced. Our hearts go out to every person that has been affected either via misfortune or inconvenience.

We all must help each other to stop the spread of the coronavirus. Social distancing and self-quarantining are sacrifices that are not optional. Families are literally separated from each other. We look forward to the time when life can return to something near to typical and we can all be together once again.

Ira Smith Trustee & Receiver Inc. has constantly used clean, safe and secure ways in our professional firm and we continue to do so.

Income, revenue, and cash flow shortages are critical issues facing entrepreneurs, their companies, and individual Canadians. This is especially true these days.

If anyone needs our assistance for debt relief Canada COVID-19, or you just need some answers for questions that are bothering you, feel confident that Ira or Brandon can still assist you. Telephone consultations and/or virtual conferences are readily available for anyone feeling the need to discuss their personal or company situation.

The Ira Smith Trustee Team is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

when are 2019 taxes due Canada
when are 2019 taxes due Canada
Categories
Brandon Blog Post

CANADA REVENUE AGENCY FOR INDIVIDUALS: 4 KILLER WAYS TO FULL LOAN RECOVERY

The Ira Smith Team is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

Stay healthy, well balanced and safe and secure everyone.

Introduction

On July 4, 2018, my Brandon’s Blog MORTGAGE LENDING CRITERIA SELF EMPLOYED: BIGGEST MYTH MAY BE RIGHT, I described the case of Canada v. Toronto-Dominion Bank, 2018 FC 538 (CanLII) which was heard in Federal Court. I described where the Federal Court ruled in favour of the claim of Canada Revenue Agency for individuals running an unincorporated business either as a proprietorship or in partnerships.

The Bank appealed the decision to the Federal Court of Appeal. The case was heard on October 8, 2019, in Toronto. The judgment was released at Ottawa, Ontario, on April 29, 2020. I want to remind you about the facts of the case, what was decided and provide my 4 killer ways that mortgage lenders to people who also run an unincorporated business, but you don’t lend to the business, can protect themselves.

The original Canada v. Toronto-Dominion Bank case

The original case was very simple. A man had a landscape design business he ran as a sole proprietor. In 2007 and 2008, prior to becoming a customer of the Bank, he collected GST that he did not pay over totalling $67,854.

In 2010, the Bank advanced both a mortgage loan and a home equity line of credit (HELOC) loan to the man. Security for both loans was registered against the man’s home. It was the Bank’s standard from mortgage and HELOC security documents. At the time, the Bank had no knowledge of the man’s Canada Revenue Agency for individuals’ liability for unremitted GST. There was no registration by the government against the man’s home for this outstanding tax amount either.

In late 2011, the man sold the home. His real estate lawyer issued two trust cheques to the Bank from the house sale. One paid off the mortgage and the other cheque paid off the HELOC. In return, the Bank discharged its mortgage and HELOC security charges and the house sale was completed.

In 2013 and 2015, the Canada Revenue Agency made deemed trust claims against the Bank under Section 222 of the Excise Tax Act (ETA) for the amount of the man’s collected and unremitted GST. GST or HST under the ETA and employee source deductions (amounts withheld by employers from salaries and wages paid to employees on account of income tax, the Canada Pension Plan and Employment Insurance) under the Income Tax Act, that is collected but not remitted, forms a deemed trust claim against the assets of the business.

If the business is not a company, that is unincorporated, then there is no difference between the proprietor’s or partner’s personal assets and business assets. They are just assets of the person.

Canada Revenue Agency argued that the Bank was in possession of funds from the sale of the man’s property. The Crown also submitted that when the man sold his home, he was obliged to pay his GST obligation out of the sale proceeds. He did not do that. Rather, he used part of the money from the sale to pay the Bank off. Keep in mind the Bank was a secured creditor. The Crown further argued that under this scenario, the Bank had a statutory responsibility to pay the GST tax debt out of the money it received.

The Bank argued on its behalf that the repayment of the money only applied if there was an event that triggered other events leading to the repayment, such as a secured creditor enforcing its security.

The Federal Court disagreed and ruled in favour of the taxman.

The Canada Revenue Agency for individuals claim to appeal to the Federal Court of Appeal

The Bank appealed the lower Court’s decision. The Bank’s appeal rested on three issues where they claimed that the Federal Court judge erred:

  • By finding that the deemed trust does not need an event that creates the crystallization around the assets.
  • In finding that secured creditors cannot avail themselves of the bona fide purchaser for value defence.
  • Ignored the fact that the Bank’s loans to the man had nothing to do with his business.

The Federal Court of Appeal judges went through a detailed analysis of cases and legislation. In the end, the Federal Court of Appeal did not find that the lower court judge erred in any way and dismissed the Bank’s appeal on all three grounds.

Triggering event – The Bank argued that the concept of priority can only be determined when there is an event that triggers competing claims to the priority over the assets. Since the right to a priority is essentially remedial in nature, it develops upon the enforcement action initiated by one or more creditors. When there is a competition between claimants, and it is obvious there will be a shortfall, that is when the Crown is able to assert its priority. Here, the Bank was not a secured lender at the time the Crown asserted its priority.

The appeal court decided that the lower court was correct. The relevant section of the Excise Tax Act creates a trust when there is unremitted GST or HST where the property is beneficially owned by Her Majesty in spite of any security interest in the property or in the sales proceeds thereof.

So the Bank was unsuccessful in this part of its argument.

Bona fide purchaser for value defence – This argument by the Bank is that it is a bona fide buyer for value of the cash paid to it by the debtor. Because the considered trust fund provisions of the Act do not extend to such buyers for the value the Bank submits that it is entitled to keep the funds provided in payment of the borrower’s HELOC and mortgage.

The appeal court ruled against this argument on the basis that if the bona fide purchaser for value defence was available to secured creditors who got paid off, it would render the deemed trust provision useless in probably every situation. The Court stated this was not Parliament’s intention.

The loans to the man had nothing to do with his business – This argument is that the court should distinguish between the taxpayer acting in his capacity as a business distinct from the tax debtor acting in a personal capacity. Further, it was argued that the Bank had no knowledge of the man’s business affairs.

The Court rejected this argument for two reasons. First, the statute that establishes the deemed trust states “…every person…”. It does not differentiate between different types of persons. Second, there was nothing in the evidence before the lower court that indicated what knowledge the Bank had about the man’s business.

4 killer ways to full loan recovery

So how can someone who lends money by way of a property mortgage on a personal residence of a self-employed person who runs an unincorporated business protect themselves? Here are our 4 killer ways:

  1. The mortgagee needs to ask the question on the mortgage application to determine if the person is self-employed.
  2. The proposed mortgagee must get a true copy of a statement from CRA showing that there are no amounts owing by the person on account of either unremitted HST/GST or source deductions as the employer of others. This condition should be in the term sheet for the loan being offered. The statement should be given before the lender advances the funds.
  3. Lenders should add language to their term sheet, loan and security documents and discharge or other documents issued when the loan is repaid. The new language would be an attestation by the borrower that there are no amounts owing to any government authority that would be regarded to be a deemed trust claim.
  4. Even more, the language would have to make it clear that in the event there were any kind of such claims, even if the mortgage loan was totally repaid, the borrower is still responsible to pay that additional amount to the lender. The lender would then pass on the deemed trust amount to Canada Revenue Agency for individuals.

Summary

I hope you found this CRA deemed trust claim case review helpful. It should be of particular interest to contractors, developers and builders in Ontario.

The Ira Smith Team family hopes that you and your family members are remaining secure, healthy and well-balanced. Our hearts go out to every person that has been affected either via misfortune or inconvenience.

We all must help each other to stop the spread of the coronavirus. Social distancing and self-quarantining are sacrifices that are not optional. Families are literally separated from each other. We look forward to the time when life can return to something near to typical and we can all be together once again.

Ira Smith Trustee & Receiver Inc. has constantly used clean, safe and secure ways in our professional firm and we continue to do so.

Revenue and cash flow shortages are critical issues facing entrepreneurs and their companies and businesses. This is especially true these days.

If anyone needs our assistance, or you just need some answers for questions that are bothering you, feel confident that Ira or Brandon can still assist you. Telephone consultations and/or virtual conferences are readily available for anyone feeling the need to discuss their personal or company situation.

The Ira Smith Team is fully functional and Ira, together with Brandon Smith, is readily available for a telephone or video meeting no-cost strategy session.

Continue to be healthy, well balanced and protected everybody.canada revenue agency for individuals

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Brandon Blog Post

WHEN ARE TAXES DUE CANADA 2019?: ARE YOU SERIOUSLY CONFUSED?

The Ira Smith Team is operating fully and both Ira, as well as Brandon Smith, are available for a telephone appointment, conference call or online video chat.

Stay healthy and balanced and safe everybody.

Introduction

This is the time of year where you see all the advertisements for income tax preparation services. There are always two parts to every income tax season: 1. preparing and filing your income tax return, and 2. getting your refund or paying what you owe. I have in the last couple of weeks received several phone calls from people asking when are taxes due Canada 2019? People seem to be confused.

So, in today’s Brandon’s Blog, I discuss when personal and corporate income taxes are due for both filing and payment. I also discuss what happens if you owe money and cannot pay and if CRA payment arrangements are possible.

“One thing is clear: The Founding Fathers never intended a nation where citizens would pay nearly half of everything they earn to the government.”
― Ron Paul

When are taxes due Canada 2019 for Canadians?

This year, due to COVID-19, Canadians are allowed to file taxes later.

When can I file my taxes 2019 canada: When are taxes due Canada 2019? The deadline for people to file has been postponed to June 1, 2020. The due date to pay any kind of amounts owing has been extended to September 1, 2020. This includes the June 15, 2020, instalment payment for those who have to pay by instalments.

CRA self-employed income tax deadline: For individuals carrying on a business either as a sole proprietor or an unincorporated partnership in 2019, when are taxes due Canada 2019? Your return for 2019 needs to be filed on or before June 15, 2020. However, if you have a balance owing for 2019, you need to pay it on or prior to September 1, 2020. The June 15, 2020 instalment payment, for those that need to pay by instalments, is also due September 1.

When are corporate taxes due in Canada: When are taxes due Canada 2019? June 1, 2020, is the filing due date for all corporations that would otherwise have their filing due after March 18 and before June 1, 2020. The payment date for the fiscal tax year is September 1, 2020. This includes balances and instalments under Part 1 of the Canadian Income Tax Act due on or after March 18 and before September 1, 2020.

So when are taxes due Canada 2019 for trusts and charities? I am glad that you asked!

Trusts: When are taxes due Canada 2019? The filing for the current tax year, including the T3 information return, is extended to May 1, 2020. This applies to charities with a tax year-end of December 31, 2019.

The new filing date for all trusts that would otherwise have a filing due in April or May is extended to June 1, 2020.

Payment for the current tax obligation year is now September 1, 2020. This applies to income tax obligation balances and instalments due on or after March 18 and before September 1, 2020.

Charities: When are taxes due Canada 2019? The filing for charities with a Form T3010 due between March 18 and December 31, 2020, is now December 31, 2020. Obviously, registered charities do not need to bother with knowing their payment date, because they do not have one!

when are taxes due Canada 2019
when are taxes due Canada 2019

What about International students?

I have seen a lot of chatter online about international students studying in Canada. This group has a challenging time determining whether they ought to file a Canadian tax return. This is because international students may not owe Canadian taxes or have access to all tax refunds or credits.

International students need to submit a tax return if they owe tax or if they intend to claim a refund or credits.

Considering that Canadian-earned income is constantly taxed in Canada, employment with a Canadian firm is a clear sign that you should submit an income tax return, even as a non-resident. Therefore, international students employed in Canada may find themselves either owing to tax or being able to claim a refund.

Students who have actually established considerable property connections to Canada can be considered residents of Canada. Significant property connections consist of a home, whether owned or rented, Canadian savings account or drivers’ license or living with a spouse or dependents.

Like all other Canadian citizens, international students under this classification are eligible for GST credits, tuition carry-forward credits, and other provincial credits or tuition rebates.

Students who spend less than 183 days (6 months) in Canada, and who do not establish residential ties in Canada, are usually classified as non-residents. Non-residents are not qualified for benefits or credits. They are just required to submit an income tax return to either pay taxes or to receive a refund on earnings from Canadian sources.

CRA payment arrangements

So you will remember I said there are two parts to when are taxes due Canada 2019 season: 1. preparing and filing the return, and 2. paying what you owe. Possibly you owe CRA back taxes and cannot afford to pay 2019 income tax. Regardless of when are taxes due Canada 2019, you have tried very hard to pay, but especially in this COVID-19 coronavirus world, you just won’t have the money.

If this sounds familiar, then one day you can expect to get a call from a CRA collection officer because of when are taxes due Canada 2019. They will listen to your story and suggest that you enter into a payment arrangement with CRA. They will, of course, expect you to pay the most possible. Once you reach an agreement, and you provide post-dated cheques to CRA, then you just need to make sure that each cheque clears on the payment due date.

But what happens if all the post-dated cheques you gave to CRA is only for say, one year’s worth of payments that do not pay off what you owe in total? Or worse, what if one of your cheques does not clear your bank for insufficient funds.

You will then get a call from a collection officer who says what you have done so far is not good enough. They will want details from you about your bank accounts. If it is your proprietorship, partnership or company, CRA will want a copy of your accounts receivable listing and all your bank account information, other than for the account you have given the post-dated cheques on. If you have a job, they already know who you work for.

What do they do with that information? They garnishee your wages and your bank accounts. By doing that, they can shut you or your company down without even having to go to Court. Then you will not be able to buy food, pay your rent or mortgage or run your business.

At that stage, you will have only one choice. That will be to not walk but run, to a licensed insolvency trustee in order to take steps for a formal restructuring of your debt. This will provide you with the time to free up your wages and bank accounts and run your business. That is the only way you will be able to survive.

Summary

I hope that you enjoyed this when are taxes due Canada 2019 Brandon’s Blog.

The Ira Smith Team family hopes that you and your family members are remaining secure, healthy and well-balanced. Our hearts go out to every person that has been affected either via misfortune or inconvenience.

We are all citizens of Canada and we need to coordinate our initiatives to stop the spread of the coronavirus. Social distancing and self-quarantining are sacrifices that are not optional. Families are literally separated from each other. We look forward to the time when life can return to something near to typical and we can all be together once again.

Ira Smith Trustee & Receiver Inc. has constantly used clean, safe and secure ways in our professional firm and we continue to do so.

I hope that you got some useful information from this when are taxes due Canada 2019 Brandon’s Blog. Revenue and cash flow shortages are critical issues facing entrepreneurs and their companies and businesses.

If anyone needs our assistance, or you just need some answers for questions that are bothering you, feel confident that Ira or Brandon can still assist you. Telephone consultations and/or virtual conferences are readily available for anyone feeling the need to discuss their personal or company situation.

Are you now worried just how you or your business are going to survive? Those concerns are obviously on your mind. This pandemic situation has made everyone scared.

The Ira Smith Team understands these concerns. More significantly, we know the requirements of the business owner or the individual that has way too much financial debt. You are trying to manage these difficult financial problems and you are understandably anxious.

It is not your fault you can’t fix this problem on your own. The pandemic has thrown everyone a curveball. We have not been trained to deal with this. You have only been taught the old ways. The old ways do not work anymore. The Ira Smith Team makes use of new contemporary ways to get you out of your debt problems while avoiding bankruptcy. We can get you debt relief now.

We look at your whole circumstance and design a strategy that is as distinct as you are. We take the load off of your shoulders as part of the debt settlement strategy we will draft just for you.

We understand that people facing money problems require a lifeline. That is why we can establish a restructuring procedure for you and end the discomfort you feel.

Call us now for a no-cost consultation. We will listen to the unique issues facing you and provide you with practical and actionable ideas you can implement right away to end the pain points in your life, Starting Over, Starting Now.

The Ira Smith Team is absolutely operational and both Ira, as well as Brandon Smith, are right here for a telephone appointment, conference calls and also virtual meetings.

Stay healthy and safe everybody.

when are taxes due Canada 2019
when are taxes due Canada 2019
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MORTGAGE LENDING CRITERIA SELF EMPLOYED: BIGGEST MYTH MAY BE RIGHT

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Mortgage lending criteria self employed: Introduction

Mortgagees rely upon the provincial land registry system to decide what obligations are secured against real property and in what order of priority. When it comes to mortgage lending criteria self employed, a recent Court decision has proven that when it comes to a self employed person’s mortgage, if there is a deemed trust claim by Canada Revenue Agency (CRA), you cannot solely rely upon the registry system.

Mortgage lending criteria self employed: The Court case

The Court case I am referring to is Canada v. Toronto-Dominion Bank, 2018 FC 538 (CanLII) which was heard in Federal Court. In this matter, the Crown on behalf of Her Majesty looked to recover funds Toronto-Dominion Bank (TD) obtained from one of its clients who repaid a loan secured by a home mortgage upon the sale of his house. The client was a self employed person.

The Crown claimed that there was an outstanding deemed trust claim for collected but unremitted GST. The Crown further claimed that the proceeds from the sale of the home collected by TD was subject to the CRA deemed trust claim, was property of Her Majesty and that TD had to pay it over. TD did not take the position that it had a registered first charge and can keep the funds. It argued that as a “bona fide purchaser for value” it is not subject to the deemed trust claim and does not have to pay over the money.

Mortgage lending criteria self employed: The undisputed facts

The borrower carried on a landscaping business as a sole proprietor. In 2007 and 2008, he collected and did not remit GST totaling $67,854. TD held both a registered mortgage and a home equity line of credit (HELOC) against the borrower’s home. The home was sold in 2011. The borrower repaid the mortgage and HELOC in full from the sale of the home.

Almost two years later in April 2013, CRA made demand on TD for repayment of $97,327, revised in 2015 by amended demand for $67,854. TD refused to pay.

Mortgage lending criteria self employed: What the Court said

The Federal Court reviewed the legislation. The Court decided that the funds paid to TD were proceeds of sale of his property. Therefore, it is covered by the deemed trust CRA claim. So the Court found that the requirements of Section 222 of the Excise Tax Act were met.

The Court agreed with the Crown’s position that the deemed trust Canada claim covered the debtor’s house. This is in spite of there was no registration on title and that the Bank had proper valid registrations. The Court further agreed that according to Section 222(3) of the Income Tax Act, the Bank has an obligation to pay over the proceeds it received which were impressed with the deemed trust.

The Judge disagreed with TD’s position. TD stated that the payment of proceeds only applied if a secured creditor enforces its security. This was not the case in this situation. The Court further disagreed with TD’s position that it was a bona fide purchaser for value. The Court agreed that money could be considered property available in such a defence. However, it stated that a secured creditor facing a deemed trust claim could not use that defence. TD also offered certain public policy issues in its defence, but the Court was not swayed.

TD is liable to pay over the amount of $67,854, interest and costs.

Mortgage lending criteria self employed: So what is the biggest myth?

The biggest myth is as follows. To find out what claims against the real property, you only have to perform a title search.

This is an important decision for mortgage lending criteria self employed people. Now TD is in the position of having to make demand on and possibly sue in 2018 its borrower who ostensibly repaid the loan in full in 2011! It would be suing as an unsecured creditor.

What this means for mortgagees is that they can no longer just accept funds from a self employed person who wishes to pay off a loan, be it a mortgage or other type of loan, from the sale of property. It also cannot merely accept funds to pay off a loan from a self employed individual’s business bank account.

Mortgage lending criteria self employed: So what is the fix?

Rather, the lender also must now get a true copy of a statement from CRA showing that there are no amounts owing by the self employed person on account of either HST or source deductions as the employer of others.

Lenders would also be well advised to add language to their loan term sheet, loan documents and any other documents issued when a loan is repaid. The new language would be an attestation by the self employed borrower that there are no amounts owing to any government authority that would be considered or deemed to be a trust claim.

Further, the language would have to make it clear that in the event there were any such amounts owing, even if the loan was fully repaid, the lender had the right to demand and sue the borrower for any amounts proven to be a deemed trust claim that the lender was required to pay over to the government at some later date.

No doubt this case will be relied upon by Her Majesty when the Callidus Capital Corporation v. Her Majesty the Queen case is heard by the Supreme Court of Canada in November 2018

Mortgage lending criteria self employed: Does your business need HST and source deductions you collected to stay afloat?

Does your business need HST and source deductions you collected to stay afloat? Can your business not afford to pay over to the government deemed trust claim amounts collected? If so, then your business is in trouble and requires restructuring immediately. You need the advice of a professional trustee now!

The Ira Smith Team have decades of experience in complex corporate and other business financial restructurings. We first look at how we can reorganize and restructure your business to rescue it. You are worried because your business is facing significant financial challenges. The stress placed upon you because of your business’s financial challenges are enormous. We understand your pain points, and we know how to relieve them for you.

If you or your company cannot survive without a restructuring, contact Ira Smith Trustee & Receiver Inc. NOW for a free consultation. You are just one phone call away from getting back on the road to financial health and reducing your stress levels, Starting Over, Starting Now.mortgage lending criteria self employed

 

Call a Trustee Now!