Are you facing tax evasion charges? This is a serious legal matter that should never be ignored.

The stress of being pursued by the CRA can feel overwhelming, and the potential consequences of tax-related offenses are severe. However, you’re not alone—many hardworking Canadians find themselves in similar situations, unsure of where to turn.

The Canadian tax system is complex, and unintentional errors can sometimes be misinterpreted as tax evasion. Whether the issue stems from unfiled tax returns, discrepancies in reported income, or misunderstandings of tax law, the CRA’s enforcement actions can be relentless. Facing the Tax Court of Canada can be daunting, making the support of an experienced tax lawyer essential.

How a Tax Lawyer Can Help

Investigating the Allegations

A tax lawyer will carefully examine the CRA’s claims, identifying any inaccuracies in their assessment and ensuring your financial records are properly reviewed.

Negotiating with the CRA

Many cases can be resolved without going to trial. A skilled tax lawyer can negotiate on your behalf to seek a fair resolution, minimizing penalties and protecting your interests.

Developing a Legal Strategy

If your case goes to the Tax Court of Canada, a tax lawyer will craft a comprehensive legal strategy tailored to your circumstances.

Providing Peace of Mind

Beyond legal expertise, a tax lawyer offers reassurance. Knowing you have a professional defending your case can ease the stress of facing tax evasion charges.

Contact Us for Legal Support

At Taxpayer Law, we understand the complexities of Canadian tax law and the challenges you may be facing. Contact us today for a consultation and let us help you navigate this difficult time.

Let’s be honest, dealing with unfiled tax returns or errors in your Canadian taxes can feel overwhelming. But don’t worry, you’re not alone. With the right legal support, you can not only resolve the issue but do so with confidence.

What to Do to Regain Control of Your Tax Situation

The most important thing to remember is not to ignore the situation! Unfiled tax returns can lead to serious complications. If you’re wondering what to do, follow this step-by-step guide to regain control of your tax situation:

1. Gather Documentation

Collect all relevant financial records, including T-slips, receipts, bank statements, and any other documents related to your income and deductions. Thorough documentation is essential for ensuring accurate tax filings.

2. Assess Your Situation

Determine how many years of tax returns remain unfiled and identify any errors in previously filed returns. This assessment is crucial in developing a strategic plan to address your tax issues.

3. Seek Professional Assistance

A tax lawyer provides invaluable legal representation, helping you navigate the complexities of Canadian tax law. They can represent you before the CRA and, if necessary, prevent the case from escalating to the Tax Court of Canada.

4. Consider the Voluntary Disclosures Program (VDP)

The CRA’s Voluntary Disclosures Program (VDP) may provide relief from penalties if you voluntarily come forward to correct unfiled tax returns. A tax lawyer can determine if this is the right option for your situation.

5. File Outstanding Returns

Prepare and submit all outstanding tax returns accurately and completely. A tax lawyer will ensure your filings comply with CRA regulations, helping you avoid further issues.

6. Negotiate Payment Options

If you can’t pay your full tax liability, explore payment arrangements with the CRA. Demonstrating a willingness to cooperate can prevent further collection action.

7. Maintain Ongoing Compliance

Keep your tax records organized and file your returns on time to avoid future issues. Staying compliant reduces the risk of penalties and legal action.

Connect With Tax Lawyers Today

At Taxpayer Law, we specialize in helping individuals navigate the complexities of unfiled tax returns. Whether you need assistance gathering documents, assessing your situation, or negotiating with the CRA, our experienced tax lawyers are here to help. Contact us today to connect with a skilled legal professional.

Tax season can be stressful, but what happens if you miss the deadline for filing your Canadian taxes?

The thought of unfiled tax returns can be nerve-wracking, especially if you’re worried about penalties, interest, or even legal action. However, if you’ve missed the deadline, don’t panic—you’re not the first to make this mistake, and you won’t be the last.

Taxpayers across Canada find themselves in similar situations, and there are ways to navigate the complexities of the Canada Revenue Agency (CRA). A tax lawyer can be your lifeline, providing critical legal support to help you get back on track and avoid severe consequences.

Consequences of Unfiled Tax Returns

Failing to file your tax returns on time doesn’t go unnoticed by the CRA. In some cases, the agency may issue an arbitrary tax assessment. This means the CRA estimates what you owe based on available data—often using third-party information or previous filings. However, these assessments rarely account for the deductions or credits you may be entitled to, leading to a much higher tax bill than what you actually owe.

Why You Need a Tax Lawyer

If you have received a CRA assessment and your tax returns remain unfiled, a tax lawyer can help resolve the issue. With legal representation, you can better understand your rights, navigate CRA communications, and identify the best path forward.

A tax lawyer can also help challenge an arbitrary tax assessment. If the CRA’s estimate is too high, you have the right to dispute it by filing a Notice of Objection. This process is complex and involves extensive paperwork and strict deadlines. A tax lawyer will assist in preparing the necessary documentation, ensuring that your actual income and deductions are properly considered.

Complying with CRA Requirements

Even if you’re disputing an assessment, you must still file your tax returns. This is where a tax lawyer can be invaluable, ensuring your returns are filed accurately and on time. Properly filed returns can help reduce penalties and interest, and if you’re facing potential prosecution, professional guidance is crucial.

Contact Experienced Tax Lawyers Now!

Facing unfiled tax returns or an arbitrary tax assessment doesn’t have to be overwhelming. At Taxpayer Law, our tax lawyers are here to support you through every step of the process, helping you resolve your tax issues with confidence.

If you need legal support or simply want to avoid dealing with the Tax Court of Canada on your own, contact us today! Our experienced team is ready to help you stay compliant and avoid the worst-case scenarios.

Subsection 15(1) of the Income Tax Act (Canada) is designed to prevent shareholders from extracting assets from a corporation tax-free. A shareholder benefit may arise when a corporation provides a benefit to a shareholder (or a person related to them) that is not considered part of their employment income.

How Does Subsection 15(1) Work?

If a corporation provides a benefit to a shareholder, the Canada Revenue Agency (CRA) treats the value of that benefit as income to the shareholder. The shareholder must then report this amount on their personal tax return and pay tax on it.

Common Examples of Shareholder Benefits Under Subsection 15(1)

1. Personal Use of Corporate Assets

If a corporation owns a vehicle, cottage, boat, or condo and a shareholder uses it for personal purposes without paying fair market rent, the CRA considers this to be a shareholder benefit.

2. Loans to Shareholders

If a corporation lends money to a shareholder and the loan is not repaid within a reasonable time (or does not meet certain exceptions), it may be taxed as income under subsection 15(2).

3. Undervalued Transfers of Property

If a corporation sells an asset (e.g., real estate, equipment) to a shareholder for less than fair market value (FMV), the CRA considers the difference to be a taxable benefit.

4. Payments for Personal Expenses

If a corporation pays for a shareholder’s personal expenses (e.g., home renovations, vacations, groceries) and does not charge them back, that amount is a taxable benefit.

How Is the Benefit Calculated?

The taxable benefit is generally equal to the fair market value (FMV) of the benefit received. If the shareholder partially pays for the benefit, only the unpaid portion is taxable.

Why Does This Rule Exist?

This rule ensures that corporations do not distribute tax-free benefits to shareholders instead of paying taxable salaries or dividends.

Is a Subsection 15(1) Benefit Punitive?

Although a shareholder benefit under subsection 15(1) is considered a taxable income inclusion (not a penalty), its practical effect can be punitive because the corporation cannot deduct a subsection 15(1) benefit from its income.

Avoiding Subsection 15(1) Issues

To prevent unintended tax consequences:

• If using corporate assets personally, pay fair market rent to the company.
• If borrowing from the company, ensure the loan meets bona fide loan conditions under subsection 15(2).
• If the corporation sells an asset to a shareholder, ensure the sale is at fair market value.
• Avoid mixing personal and corporate expenses—keep clear records and reimburse personal costs.
• Carefully record and track shareholder loan balances.

Does the CRA Misuse Subsection 15(1)?

Subsection 15(1) reassessments are often incorrectly imposed. The CRA frequently assumes that any journal entry or transaction record showing a credit to a taxpayer should be categorized as a subsection 15(1) benefit. However, the CRA often fails to recognize that it must first demonstrate that the corporation actually transferred something of value to the shareholder. A journal entry alone is insufficient to substantiate such a claim.

Subsection 160(1) of the Income Tax Act (Canada) addresses situations where a tax debtor transfers property to a non-arm’s length party—such as a family member or related corporation—without receiving fair market value in return. In such cases, the Canada Revenue Agency (CRA) can hold the recipient of the transferred property liable for the transferor’s unpaid tax debts, up to the fair market value of the property at the time of the transfer.

The Excise Tax Act (Canada) contains a parallel provision under Subsection 325(1), which functions similarly to Subsection 160(1) but applies to situations where the tax debtor owes GST/HST debt.

Key Points

Purpose

Subsection 160(1) prevents taxpayers from evading tax debts by transferring assets to related parties—often as gifts or undervalued transactions—without settling outstanding tax obligations.

Who It Applies To

• Transferor: The person who owes (or will owe) taxes and transfers the property.
• Transferee: A non-arm’s length party, including family members, corporations, trusts, or partnerships.

Conditions for Subsection 160(1) to Apply

• A property (e.g., cash, real estate, shares) is transferred.
• The transfer occurs between non-arm’s length parties.
• The transferor has a tax debt at the time of transfer—or is subsequently assessed by the CRA for a period that includes the transfer date.
• The transferee did not pay fair market value (FMV) for the property.

Liability of the Transferee

The transferee can be assessed for the transferor’s tax debt, but only up to the fair market value of the property transferred, minus any amount actually paid.

Example:

If a house worth $1,000,000 is transferred as a gift and the transferor owes $400,000 in taxes, the CRA can assess up to $400,000 against the recipient of the house (assuming no consideration was paid).

No Time Limit

Unlike standard tax assessments, there is no statute of limitations for the CRA to initiate a Subsection 160(1) assessment.

How to Avoid Subsection 160(1) Issues

Transfer Assets at Fair Market Value

Conduct transactions with related parties at fair market value to minimize the risk of reassessment under Subsection 160(1).

Keep Thorough Documentation

Maintain clear records—such as appraisals, invoices, and receipts—especially for transactions involving family members and related entities. If you are repaying an old debt to a family member, that may be considered valid consideration and grounds to reduce or eliminate a Subsection 160(1) assessment.

Clear Your Tax Debt First

Before transferring valuable property, ensure all outstanding taxes are settled.

Seek Professional Advice

Subsection 160(1) can be complex. If you are concerned about a potential assessment or need guidance on a property transfer, consult an experienced tax lawyer. Our team offers confidential consultations and has extensive experience handling Subsection 160(1) assessments.