Chess Tax Credit

[Jack Maguire]

This chess news item is out of Arizona. CFC and CMA officials might want to take note.

http://azdailysun.com/news/opinion/m...b76c32feb.html

[Jack Maguire]

Re : Chess Tax Credit

We do have something similar here in Canada, the Canadian Children's Art Tax Credit.

http://canadaonline.about.com/od/per...tax-credit.htm

[Jack Maguire]

Re : Chess Tax Credit

The CMA chess-in-the-school programmes all qualify for the Canadian Children's Arts Tax Credit since they all meet the minimum 8 weeks duration requirement.

It would be my opinion that annual membership fees for young juniors (under 16 years of age) in the sundry chess clubs around the country should also qualify.

[Jordan S. Berson]

Re: Re : Chess Tax Credit

It would be my opinion that annual membership fees for young juniors (under 16 years of age) in the sundry chess clubs around the country should also qualify.

Jack,

Simply being a member of a club does not satisfy enough of the qualifying criteria. Based on what I have learned, there would have to be some form of organised instruction or training in order to satisfy at least one of the bolded lines below:

An eligible arts expense must be for the cost of registration or membership of an eligible child in a prescribed program of artistic activity. Generally, such a program must:

• be ongoing (either a minimum of eight consecutive weeks duration or, in the case of children's camps, five consecutive days long);
• be supervised;
• be suitable for children; and
• must meet at least one of the following:
  • it contributes to the development of creative skills or expertise in an artistic or cultural discipline including:
    • literary arts
    • visual arts
    • performing arts
    • music
    • media
    • languages
    • customs
    • heritage;
    it provides a substantial focus on wilderness and the natural environment;
  • it helps children develop and use particular intellectual skills;
  • it includes structured interaction among children where supervisors teach or help children develop interpersonal skills; or
  • it provides enrichment or tutoring in academic subjects.

For more information, the following CRA links may prove helpful:

Information for organizations providing prescribed programs of artistic, cultural, recreational, or developmental activity
Prescribed Program

[Jack Maguire]

Re : Re: Re : Chess Tax Credit

Jack,

Simply being a member of a club does not satisfy enough of the qualifying criteria. Based on what I have learned, there would have to be some form of organised instruction or training in order to satisfy at least one of the bolded lines below:

An eligible arts expense must be for the cost of registration or membership of an eligible child in a prescribed program of artistic activity. Generally, such a program must:

• be ongoing (either a minimum of eight consecutive weeks duration or, in the case of children's camps, five consecutive days long);
• be supervised;
• be suitable for children; and
• must meet at least one of the following:
  • it contributes to the development of creative skills or expertise in an artistic or cultural discipline including:
    • literary arts
    • visual arts
    • performing arts
    • music
    • media
    • languages
    • customs
    • heritage;
    it provides a substantial focus on wilderness and the natural environment;
  • it helps children develop and use particular intellectual skills;
  • it includes structured interaction among children where supervisors teach or help children develop interpersonal skills; or
  • it provides enrichment or tutoring in academic subjects.

For more information, the following CRA links may prove helpful:

Information for organizations providing prescribed programs of artistic, cultural, recreational, or developmental activity
Prescribed Program

I would beg to differ, Jordan. Of course, the membership would have to be for a minimum of 8 weeks. I would suggest that most clubs are "supervised" and certainly suitable for children. Then one only has to meet one of the listed activities and chess certainly meets the development/use of intellectual skills criterion.

I'll admit that I've been out of the tax business for more than a decade now (back in the early 80's I took over from Price Waterhouse the administration of the Investment Funds Institute tax course, one of their 6 courses at the time for CFP designation). I've taken a number of very aggressive tax positions in the past (e.g. my 'Zero Tax Report', which many tax lawyers and tax accountants subscribed to, was the first to promote the idea that gratuitous CSB interest should not be taxed as interest) and generally been right far more often than wrong (as I was on the CSB bonus interest which was ultimately taxed as a capital gain and cost the gov't untold millions of lost tax revenues).

If I was still in the tax business - which I'm not - I would probably advise my clients to claim chess club fees for their U16 children. Moreover, it's a relatively minor fiscal issue and not likely to lead to any kind of dispute. Quite frankly, hardly worth a CRA auditor's time. One would probably stand better than a 90% probability of never having the CRA even question the item. And even those unlucky enough to have to deal directly with the CRA would stand an excellent chance of success. This is precisely the kind of item the CRA would not want to ever proceed to the courts. Rather like Pascal's Wager in reverse. Way too little to gain (for the CRA) and much too much to lose.

[Jordan S. Berson]

Chess Tax Credit

I would beg to differ, Jordan. Of course, the membership would have to be for a minimum of 8 weeks. I would suggest that most clubs are "supervised" and certainly suitable for children. Then one only has to meet one of the listed activities and chess certainly meets the development/use of intellectual skills criterion.

I'll admit that I've been out of the tax business for more than a decade now (back in the early 80's I took over from Price Waterhouse the administration of the Investment Funds Institute tax course, one of their 6 courses at the time for CFP designation). I've taken a number of very aggressive tax positions in the past (e.g. my 'Zero Tax Report', which many tax lawyers and tax accountants subscribed to, was the first to promote the idea that gratuitous CSB interest should not be taxed as interest) and generally been right far more often than wrong (as I was on the CSB bonus interest which was ultimately taxed as a capital gain and cost the gov't untold millions of lost tax revenues).

If I was still in the tax business - which I'm not - I would probably advise my clients to claim chess club fees for their U16 children. Moreover, it's a relatively minor fiscal issue and not likely to lead to any kind of dispute. Quite frankly, hardly worth a CRA auditor's time. One would probably stand better than a 90% probability of never having the CRA even question the item. And even those unlucky enough to have to deal directly with the CRA would stand an excellent chance of success. This is precisely the kind of item the CRA would not want to ever proceed to the courts. Rather like Pascal's Wager in reverse. Way too little to gain (for the CRA) and much too much to lose.

Jack,

Sadly, you're wrong.

Call 1-800-959-8281 and press * to speak with an agent. Oh, and while you're on the phone with a CRA call centre agent, tell them Jordan says 'hi'... some of them may know me because I used to work there and I have been trained on Individual Taxation Enquiries.

Trust me when I say that I'm speaking from experience. A simple membership to a chess club (which is usually good for a year, not just 8 weeks) is not enough to qualify... and it's up to the Taxpayer to prove that the program qualifies. It's not just as simple as claiming a number on a line and off you go. Each qualifying program has a CRA identity.

There's also a huge difference between Individual Taxation and Investment Taxation (I've done both for many years). A person with only Investment Taxation experience should not give advice on Individual Taxation enquiries... and the last paragraph of your response is proof as to why (wrong on all accounts).

Take care, Jordan

[Jack Maguire]

Re : Chess Tax Credit

Jack,

Sadly, you're wrong.

Call 1-800-959-8281 and press * to speak with an agent. Oh, and while you're on the phone with a CRA call centre agent, tell them Jordan says 'hi'... some of them may know me because I used to work there and I have been trained on Individual Taxation Enquiries.

Trust me when I say that I'm speaking from experience. A simple membership to a chess club (which is usually good for a year, not just 8 weeks) is not enough to qualify... and it's up to the Taxpayer to prove that the program qualifies. It's not just as simple as claiming a number on a line and off you go. Each qualifying program has a CRA identity.

There's also a huge difference between Individual Taxation and Investment Taxation (I've done both for many years). A person with only Investment Taxation experience should not give advice on Individual Taxation enquiries... and the last paragraph of your response is proof as to why (wrong on all accounts).

Take care, Jordan

I'm sure you and I could share some great tax stories, Jordan. I was tax manager at Eaton-Bay Financial Services for 5 years before running my own tax/investment business for 18 years, catering almost exclusively to individuals.

I can assure you I never called the CRA (or Revenue Canada as they were known in my day) for tax advice (:

I wonder how many tens of thousands of people called your number and got the wrong answer on CSB bonus interest (:

If push ever came to shove, I'd be happy to argue before any Tax Court of Canada judge that fees paid to my particular chess club (on behalf of U16 children), the Annex Chess Club, meet all the requirements for the Canadian Children's Art Tax Credit. Then again, the ACC is rather special. They do (on occasion) offer tax lectures before the games begin and there's clearly ample "supervision".

But we can agree to disagree and leave it at that.

[Jordan S. Berson]

Re: Re : Chess Tax Credit

Jack,

You can agree to disagree, but since I know the tax system 1000 times better than you think you do, then I'll just agree that you're wrong.

1-800-959-8281. Inform yourself before you make yourself look like more of a fool and cost people money and time fixing mistakes that you advised them to make.

Over and out.

Jordan

[Jack Maguire]

Re : Re: Re : Chess Tax Credit

Jack,

You can agree to disagree, but since I know the tax system 1000 times better than you think you do, then I'll just agree that you're wrong.

1-800-959-8281. Inform yourself before you make yourself look like more of a fool and cost people money and time fixing mistakes that you advised them to make.

Over and out.

Jordan

I really should abide by your antepenultimate maxim ("never argue with an idiot"), Jordan, and let this thread die, but it irks me to see you keep presenting your beloved 1-800 # as the be all and end all on the matter.

In my days in the tax business, that number would clearly have got an F grade. I do note that the CFIB recently assigned them a C- so I'm glad to see things have improved (:

Nonetheless, I'm sure I could still provide you with a few simple tax questions concerning losses in the securities markets that you could spend the rest of your life calling that number and NEVER getting a correct answer. Anything to do with short selling might well do the trick (:

As to the matter at hand, the Canadian Children's Arts Tax Credit, I'll be the first to admit that you could quite possibly be right, Jordan. Which would, of course, make me wrong. The truth of the matter, however, is we'll likely never know with any degree of certainty. The governing tax legislation (http://www.taxwiki.ca/ITA+Section+118.031) - and I do hope you've read same if you're offering such definitive tax opinions - is of course quite new and may well never find its way into tax courts given the very limited amount of tax dollars at stake.

To put those "limited amount of dollars" in perspective, a $100 fee to a chess club for a child under the age of 16 would save the taxpayer roughly $25 when you factor in both the federal and provincial tax credits. Suffice it to say we're not talking major tax dollars here.

Correct me if I'm wrong, but it would be your advice to any ten individuals who asked for your advice, NOT to claim said $100. They'd pass on the potential tax savings of $25 and never here boo from the CRA.

I, on the other hand, would advise the same ten people to make the claim, providing they were willing to accept the risk of getting a letter from the CRA later in the year (no more than a 10 to 20% probability) and having the claim rejected. Assumng they didn't wish to pursue the matter further, they'd likely be out of pocket maybe a dollar in interest charges.

In short, 8 or 9 or those hypothetical 10 people would be $25 to the good and the other 1 or 2 would be a buck to the bad. Call me a fool (and I know you will), but that rather strikes me as a good bet. But I'll be the first to admit that some of us don't like to 'bet' (and they would be well advised to listen to you, not me).

[Kerry Liles]

Re: Re : Re: Re : Chess Tax Credit

I really should abide by your antepenultimate maxim ("never argue with an idiot"), Jordan, and let this thread die, but it irks me to see you keep presenting your beloved 1-800 # as the be all and end all on the matter.

In my days in the tax business, that number would clearly have got an F grade. I do note that the CFIB recently assigned them a C- so I'm glad to see things have improved (:

Nonetheless, I'm sure I could still provide you with a few simple tax questions concerning losses in the securities markets that you could spend the rest of your life calling that number and NEVER getting a correct answer. Anything to do with short selling might well do the trick (:

As to the matter at hand, the Canadian Children's Arts Tax Credit, I'll be the first to admit that you could quite possibly be right, Jordan. Which would, of course, make me wrong. The truth of the matter, however, is we'll likely never know with any degree of certainty. The governing tax legislation (http://www.taxwiki.ca/ITA+Section+118.031) - and I do hope you've read same if you're offering such definitive tax opinions - is of course quite new and may well never find its way into tax courts given the very limited amount of tax dollars at stake.

To put those "limited amount of dollars" in perspective, a $100 fee to a chess club for a child under the age of 16 would save the taxpayer roughly $25 when you factor in both the federal and provincial tax credits. Suffice it to say we're not talking major tax dollars here.

Correct me if I'm wrong, but it would be your advice to any ten individuals who asked for your advice, NOT to claim said $100. They'd pass on the potential tax savings of $25 and never here boo from the CRA.

I, on the other hand, would advise the same ten people to make the claim, providing they were willing to accept the risk of getting a letter from the CRA later in the year (no more than a 10 to 20% probability) and having the claim rejected. Assumng they didn't wish to pursue the matter further, they'd likely be out of pocket maybe a dollar in interest charges.

In short, 8 or 9 or those hypothetical 10 people would be $25 to the good and the other 1 or 2 would be a buck to the bad. Call me a fool (and I know you will), but that rather strikes me as a good bet. But I'll be the first to admit that some of us don't like to 'bet' (and they would be well advised to listen to you, not me).

Jack, perhaps you might want to call the 800 number and report on what advice they give you?

Otherwise, you and Jordan will have to get a room.

[Jack Maguire]

Re : Re: Re : Re: Re : Chess Tax Credit

Jack, perhaps you might want to call the 800 number and report on what advice they give you?

Otherwise, you and Jordan will have to get a room.

Kerry, I'll go to my grave (speaking figuratively since I don't believe in taking up space after death) never having called that number. Moreover, I have no reason to doubt that they'll echo the same sentiments cited by Jordan. That's not the point. Apodictically so.

[Jordan S. Berson]

Re: Re : Re: Re : Chess Tax Credit

Correct me if I'm wrong, but it would be your advice to any ten individuals who asked for your advice, NOT to claim said $100.

You're wrong. I would advise them to INFORM THEMSELVES before claiming such amounts.

I, on the other hand, would advise the same ten people to make the claim, providing they were willing to accept the risk of getting a letter from the CRA later in the year (no more than a 10 to 20% probability) and having the claim rejected. Assumng they didn't wish to pursue the matter further, they'd likely be out of pocket maybe a dollar in interest charges.

Which is tantamount to saying "It's ok to cut corners and possible file false tax credits, which is better than INFORMING YOURSELF first".

In short, 8 or 9 or those hypothetical 10 people would be $25 to the good and the other 1 or 2 would be a buck to the bad. Call me a fool (and I know you will), but that rather strikes me as a good bet. But I'll be the first to admit that some of us don't like to 'bet' (and they would be well advised to listen to you, not me).

I'm glad that you're happy to take the lazy and underhanded route by advising people to just blindly claim something just in case it's correct, and moreover because they likely won't get caught even if it's incorrect, and the penalty will be small anyway.

I, on the other hand, would rather do things correctly the first time as is my responsibility as a Canadian tax filer. I don't take risks that my tax returns are correct, I INFORM MYSELF before I file.

That's the last you'll hear from me on this subject. I don't need any further proof that your advice is wrong and borderline illegal.

Jordan

[Egidijus Zeromskis]

Re: Chess Tax Credit

while two taxmen still there:
Do parents pay (or coaches collect) the HST for chess lessons?

http://www.cra-arc.gc.ca/tx/bsnss/tp...ptgds-eng.html
exempts only music lessons.

[Jordan S. Berson]

Re: Chess Tax Credit

while two taxmen still there:
Do parents pay (or coaches collect) the HST for chess lessons?

http://www.cra-arc.gc.ca/tx/bsnss/tp...ptgds-eng.html
exempts only music lessons.

Only if: The chess coach voluntarily registers to collect HST, or ; the chess coach grosses $30,000 over any 12-month period, then it's mandatory.

[Paul Bonham]

Re: Chess Tax Credit

while two taxmen still there:
Do parents pay (or coaches collect) the HST for chess lessons?

http://www.cra-arc.gc.ca/tx/bsnss/tp...ptgds-eng.html
exempts only music lessons.

Only if: The chess coach voluntarily registers to collect HST, or ; the chess coach grosses $30,000 over any 12-month period, then it's mandatory.

Whoa there, big fella. You just publicly tarred and feathered Jack Maguire for his interpretation of a tax law. Now someone else asks you to interpret another tax law, and lo and hold, the answer you give is about as ambigious as can be. AND on top of that, you didn't obey your own cardinal rule: you didn't tell Egidijus to INFORM HIMSELF. You didn't even mention the magic number!

Let's break it down: you're telling chess coaches that they can volunteer to collect HST, and upon doing so, they must collect HST on all chess lesson fees. Now I know you didn't write the law, but if indeed that is a provision of the law, pray tell: what chess coach in his or her right mind is going to volunteer, knowing that it's going to discourage their business by forcing people to pay more? The sheer idiocy of even having such a provision makes one think that perhaps you aren't totally correct in at least that interpretation, but with politicians, who knows; even that level of idiocy can manifest itself and often does. Maybe they'll rewrite all the tax code to make any and all taxes "voluntary"?

Then you add an apparant corallary, but your wording leaves things clear as mud. First of all, you say if the chess coach grosses $30,000 over any 12-month period. Do you mean EXACTLY $30,000? What about $30,001, or $29,999? Obviously you meant "over $30,000" but you think with having just critiqued Jack Maguire over his lack of precision, you could at least TRY to have a little yourself.

And even if we assume you meant "over $30,000", you still leave something else unclear. Once the coach has grossed over $30,000 in let's say an 8-month period, does that make all his or her customers for the past 8 months suddenly liable to pay HST? Does the coach have to call them all up and say, "You have to pay me another $X for HST because I've made so much money on lessons. If you don't pay, I'll report you to the tax authorities"? Or alternatively, do the past customers get off from having to pay, and only the subsequent customers (once the $30,000 level has been reached) have to pay? Again, I know you don't write the laws, but such a law is actually discouraging coaches from making $30,000 or more, and would encourage under-the-table payments.

And what about this "any 12 month period" business? Does that mean that if today is November 16th the coach has to figure out what s/he grossed on lessons from last November 16th to today, and if it happens to go over $30,000, then tonight's customer has to pay HST? And then tomorrow, the coach has to figure it all out again from last November 17th, and maybe the gross income went under $30,000, so tomorrow night's customer doesn't have to pay GST?

And by the way, when you write "the chess coach grosses $30,000 over any 12 month period", does that include income from other sources? The way you wrote it, Egidijus could easily think "yes", but I doubt that's the way it really is.

Come on, dude, you're supposed to think of these things! Mr. Technical Precision! You're supposed to know everything about taxes! 1000 times as much as Jack Maguire thinks you know! (Which could be nothing, and 1000 times nothing is... well, you can figure it out... maybe...)

If I were Egidijus, I'd call that magic number and I'd mention your name, Jordan, and tell the agent that you failed to provide clear and unambigious information. Huh, for all we know maybe that's why you're an EX-employee. Your stock answer to callers with questions was probably "INFORM YOURSELF".

Meanwhile, Jack Maguire, if you are reading this, I wouldn't lose any sleep over Jordan's trolling of your thread. He puffed out his chest and made himself seem like Mr. Tax Expert, and look at him now! At least, Jack, you were very diplomatic and gentlemanly in your replies to Jordan, but as you saw, a troll is a troll and diplomacy doesn't get you anywhere, they still respond with extreme viewpoints and insults (Jordan calling your practices "borderline illegal" is borderline libel; I wonder if he'd have the gall to write that here if you were still in the tax business?)

I'm not so diplomatic when it comes to trollsters like Jordan. I have no qualms making them look the fool. They fill this forum with vitriolic nonsense, calling things "absurd" on no basis or argument whatsoever, inflating their fragile egos. Anyone who comes to this forum with a possible interest in chess has to read their trolling rants and wonder if they should just stay away from chess altogether.