What kinds of cases are you looking for?    < Previous Case Collections — holding off on collecting on incorrect GST/HST assessmentGST/HST — Advertising servicesGST — air travel commissionsGST — builder built home for personal useGST — builder of new home was not who CRA thought it wasGST/HST — Cancelling interest on "wash transaction"GST — cleaning up years of failure to charge GST on management feesGST — community centre constructionGST/HST — convincing CRA that it was too late to assessGST — corporation providing health care servicesGST/HST — credit for net tax wrongly remittedGST — dental clinicGST — directors' liability (car dealership)GST — directors' liability (company dissolved)GST — director's liability (construction contractor)GST — director's liability (corporate lawyer)GST — directors' liability (person never agreed to be a director)GST — directors' liability (public company)GST — director's liability (restaurant owner)GST — directors' liability assessment — individual was 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tax — another refund where return filed lateIncome tax — assessment for transfer by tax debtorIncome tax — auditor demanding too muchIncome tax — builder built home as personal residenceIncome tax — cancelling source deductions assessmentIncome tax — capital gains vs. incomeIncome tax — charitable donation of kidney beansIncome tax — charitable donation to US religious schoolIncome tax — child support deductionIncome tax — claiming business losses from past yearsIncome tax — companies were not carrying on Personal Services BusinessIncome tax — corporation was bare trusteeIncome tax — costs of mother's Notice of Objection deductibleIncome tax — CRA chasing widow for deceased's RRSPIncome tax — deduction for Power of Attorney feesIncome tax — donations to suspect charity allowedIncome tax — expenses against unreported incomeIncome tax — expenses of setting up a film shelterIncome tax — general anti-avoidance ruleIncome tax — getting the $500,000 capital gains exemptionIncome tax — getting Third Level Fairness reviewIncome tax — income from UN agency was tax-freeIncome tax — income not earned personallyIncome tax — intercompany charges deductibleIncome tax — liability of deceased's estate for UK pension incomeIncome tax — no tax on litigation settlementIncome tax — officers of company were acting as outside sales reps, not employeesIncome tax — over-intrusive auditIncome tax — professional fees deduction allowedIncome tax — refunds where returns filed lateIncome tax — "reserve" was not a reserveIncome tax — RRSP on deathIncome tax — sale of condo was not a "flip" for profitIncome tax — tax savings on selling homeIncome tax — taxpayer did not realize she was non-resident and exempt from Canadian taxIncome tax — trust for disabled childIncome tax — voluntary disclosureIncome tax — wages of family members were deductibleIncome tax — waiver of TFSA penalty taxIncome tax — withholding tax on deemed dividendIncome tax and GST — real estate agent's business expensesCollections — execution preventing sale of propertyPayroll withholdings — directors' liability (company dissolved)Payroll withholdings — directors' liability (public company)Payroll withholdings — penalty for late remittanceYour problem goes here Next Case > Income tax — charitable donation of kidney beans I cannot eliminate every tax assessment. If the CRA is right, or if the cost of proving the CRA wrong will be prohibitive, I say so. Then I do what I can to reduce the assessment. This is one such tale. My client was a physician who had made a large charitable donation of two containers (63 metric tons) of kidney beans. The beans became available at a low price when their owner went bankrupt, and the owner of the containers wanted to get rid of them. My client bought them for $40,000, intending to donate them for food relief in his native country. When this proved impractical, he donated them to a Canadian charity involved in food banks. My client did not request a charitable donation receipt for any particular value. The charity had the beans valued by a reputable valuator, and issued a tax receipt to my client for $110,000, the amount determined by the valuator. The CRA is on the lookout for "buy low donate high" tax schemes, as many such schemes (especially involving art) were marketed as tax shelters until they were shut down in December 2003. A CRA auditor came across this transaction, and reassessed my client on the basis that the beans were worth only $55,000. (The valuation of $110,000 was based on the retail value of the beans, and they were still in bulk, not packaged for retail sale.) The auditor also taxed my client on $15,000 of income (the "profit" from his cost of $40,000 to the actual value of $55,000), and assessed a 50% "gross negligence" penalty. The client was referred to me for help. I quickly identified that there was no point fighting the CRA's valuation. Objecting to the valuation of $55,000 was pointless unless the client was willing to pay for the cost of a professional valuator to prepare a detailed report and to testify, if necessary, in Court. Furthermore, the CRA was likely right in concluding that the valuation was overstated because the beans were not packaged for retail sale. The cost of contesting this issue, including my fees, would likely outweigh the possible saving, and there might well be no saving. Instead, I focused on two points we could win. First, I noted that it was wrong for the CRA to include the full $15,000 "profit" in income. There was clear case law from the Federal Court of Appeal, ruling that a person who acquires property intending to donate it to charity is not engaged in an "adventure in the nature of trade". Rather, the gain was a capital gain — and capital gains are only half-taxed. Thus, the income inclusion should have been only $7,500 instead of $15,000. Second, the penalty was not justified. My client had not prearranged the amount of the receipt. This was not a promoted "tax scheme", but rather a one-off deal where my client happened to be able to buy goods at much less than the value for which they were appraised. The appraisal letter was legitimate. I therefore prepared a Notice of Objection for my client, not contesting the CRA's valuation, but arguing the above two points. I obtained documentary support in the form of an Affidavit from my client and letters from the charity and from the valuator, confirming that this was not a prearranged "tax deal" and that my description of the facts was correct. I argued forcefully that, in light of the case law on the gross-negligence penalty, my client should not be liable for the penalty. The CRA Appeals Officer who reviewed the file agreed with me, reduced the income inclusion to $7,500 and cancelled the penalty. An excellent result under the circumstances, and no money wasted on arguing a point that would be very difficult to win! (2004)