Top 3 Canadian Income Tax Stories of 2015 as Determined by Canadian Income Tax Lawyer
Looking back on every year there are numerous Canadian income tax developments and changes. However in deciding on the top income tax stories for the year our Canadian income tax law firm looked for tax related developments that have the potential to affect a large number of Canadian taxpayers. With this is mind, here are Canadian income tax lawyer picks for top tax stories for 2015.
Fraudsters Impersonating CRA Collections Officers
The most important income tax story of the year is the Canada wide epidemic of phony phone calls from crooks claiming to be CRA collections officers. You’ve heard of “phishing” scams where fraudsters try to get you to click on email links that then download malware or spyware on your computer.
But the latest wave of fraud has to do with old-fashioned phone calls made by crooks posing as Canada Revenue Agency (CRA) collections officers telling that you owe more taxes—something that strikes fear into the heart of every Canadian. And fear is the currency of fraudsters. These fraud artists call Canadian taxpayers and threaten imprisonment if immediate payments for back income taxes owing are not made. Payment arrangements using wire transfers, Western Union, prepaid credit cards or even immediate withdrawals from bank ATMs are then made. Thousands of Canadian taxpayers have been contacted, and hundreds of Canadians have been duped into making payments to these criminals in 2015. Numerous warnings have been issued by CRA, local and provincial police forces and by the RCMP.
The CRA does not demand payment of income tax debts by wire transfer or by any means other than cheque or money order payable to CRA. A tax collections officers will initiate phone calls and may visit a taxpayer’s home or, in the case of corporations, the office however CRA does not jail Canadian taxpayers for unpaid income tax debts. If you have tax concerns and don't want to contact CRA directly, you can always speak to one of our Canadian tax lawyers who can do so on your behalf.
Income Tax Changes by new Liberal Government
A vigorous debate about Canadian income taxes was a prominent feature of the 2015 Canadian election. The election of the Liberal government under new Prime Minister Justin Trudeau brought immediate tax changes that will affect the majority of Canadians. The 3 most notable income tax changes, that will affect the majority of taxpayers, are:
- Reduction of taxes for the middle class
- Increase of the tax rate from 29% to 33% on income over $200,000
- Rollback of the tax free savings account (TFSA) limit from $10,000 in 2015 to $5,500 in 2016
Americans in Canada and the new FATCA rules
This change affects all US citizens in Canada, so it’s of widespread effect. A new Canada- US cross-border tax agreement to exchange financial information is now in place, and a legal challenge to the agreement failed. The U.S. Foreign Account Tax Compliance Act (FATCA) is designed to target tax non-compliance by U.S. taxpayers with foreign accounts, and this includes US citizens resident in Canada who may have no other connection with the US. FATCA requires U.S. persons including Canadian residents holding reportable accounts at foreign financial institutions, in other words Canadian banks, to report information on an information form attached to their annual tax US return. Failure to meet these reporting requirements could result in fines of up to $50,000, and the CRA will enforce IRS penalties. The act also requires non-U.S. banks, that is to say Canadian banks, to provide information about U.S. citizens to the IRS.
"This article provides information of a general nature only. It is only current at the posting date. It is not updated and it may no longer be current. It does not provide legal advice nor can it or should it be relied upon. All tax situations are specific to their facts and will differ from the situations in the articles. If you have specific legal questions you should consult a lawyer."