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It was one of the more simple problems of running a small business, and we made it even simpler by simply easing off at the end of our fiscal year, like Tom. The benefit for me was that by the time we factored in all the asset and property costs, we generally showed a small loss over the year, which helped my overall tax liability at that time. A common strategy, perfectly legal Jordan, set up by our accountant! Never questioned by Revenue Canada.
Dan,
Yes, it is a perfectly legal and common strategy, however the question is: Is it worth it? How much revenue would you be willing to do without just to avoid HST/GST reporting? Yeah, it's a pain in the butt, but I would gladly do it rather than lose out on potential business.
Jordan
No matter how big and bad you are, when a two-year-old hands you a toy phone, you answer it.
Just for the record, Jordan, I asked my daughter, who is a lawyer - but admittedly NOT a tax lawyer - to take a quick look at the legislation and she just e-mailed me back:
I think it would depend on the organization - but it certainly sounds as if you have a good argument for the credit to apply to chess memberships. You certainly would have a reasonable basis for taking the position, which is what you need going up against the CRA.
The apple it seems hasn't fallen far from the tree.
Most non-tax lawyers do not like tax and find it too technical.
The apple it seems hasn't fallen far from the tree.
Most non-tax lawyers do not like tax and find it too technical.
Zeljko,
The problem that lawyers have with tax laws is that tax laws leave very little room for interpretation and opinion. Lawyers make their money by interpreting laws, rules, and contracts differently than the people or organizations that their clients hire them to challenge.
Just about every tax law is definitive, therefore tax lawyers don't have as much room to opine than lawyers do in other areas.
Jordan
No matter how big and bad you are, when a two-year-old hands you a toy phone, you answer it.
The problem that lawyers have with tax laws is that tax laws leave very little room for interpretation and opinion. Lawyers make their money by interpreting laws, rules, and contracts differently than the people or organizations that their clients hire them to challenge.
Just about every tax law is definitive, therefore tax lawyers don't have as much room to opine than lawyers do in other areas.
Jordan
Thanks Jordan. I just find it amazing that there are members of the chess community still willing to play fast and loose with CRA tax receipts. Has the lesson of the CFC loosing it's charitable status been lost so soon?
Thanks Jordan. I just find it amazing that there are members of the chess community still willing to play fast and loose with CRA tax receipts. Has the lesson of the CFC loosing it's charitable status been lost so soon?
Hi Zeljko:
To set the record straight, CFC did not lose its charitable status because of wrongly issued tax receipts. That issue was more or less resolved and CFC was trucking on.
What happened is that the federal CPC had ordered a review of all Canadian charities with a view to identifying those that were wrongly given charitable status originally - ones that did not in fact come under one of the heads of activities qualifying for charitable status. The CRA determined that the CFC should never have gotten charitable status in the first place, because its activities of promoting chess in and of itself was not " charitable ", nor was its " educational " activity fundamental to the operation of the CFC. This can all be confirmed by the CFC pro bono lawyer, Les Bunning, who handled the whole CRA file for the CFC, dealing with both issues.
To set the record straight, CFC did not lose its charitable status because of wrongly issued tax receipts. That issue was more or less resolved and CFC was trucking on.
What happened is that the federal CPC had ordered a review of all Canadian charities with a view to identifying those that were wrongly given charitable status originally - ones that did not in fact come under one of the heads of activities qualifying for charitable status. The CRA determined that the CFC should never have gotten charitable status in the first place, because its activities of promoting chess in and of itself was not " charitable ", nor was its " educational " activity fundamental to the operation of the CFC. This can all be confirmed by the CFC pro bono lawyer, Les Bunning, who handled the whole CRA file for the CFC, dealing with both issues.
Bob A, CFC Public Relations Coordinator
The issue under discussion Bob is whether chess clubs should issue tax receipts for this credit for juniors that are simply members of their club. Interesting that as soon as I write tax receipts and CFC in the same paragraph that you jump to the CFC's defense. Have I touched a nerve?
Now that you bring it up, I have heard this explanation before and I am not convinced. I have read on this board that parents of particpants (at least one) were given tax receipts for their expenses of sending their children to events.
In my opinion an official, full and frank and satisfactory statement has never been made by the CFC as to why that status was lost. Only bits and pieces and self-serving statements along the lines of what you have repeated have been made. There was for example no mention of the loss of status in the financial statements for the year in question.
Thanks for repeating the party line. However, to my knowledge you have no direct knowledge of this matter. If I have the time some day when I am in Canada I may ask the CRA for an explanation. Filing an FOI request if necessary.
Odd that the CRA considers chess educational enough to qualify for this tax credit under discussion. Odd too that it also considers other Canadian organizations to be worthy of charitable status when engaged in chess activities. I see nothing in these two facts to support your assertion that the CRA decided chess is not educational or worthy of charitable status.
Last edited by Zeljko Kitich; Saturday, 17th November, 2012, 10:28 AM.
Thanks Jordan. I just find it amazing that there are members of the chess community still willing to play fast and loose with CRA tax receipts. Has the lesson of the CFC loosing it's charitable status been lost so soon?
Zeljko,
I finally got my return and my wife's return done at the end of October. We both knew that we were getting a refund, so the delay was not going to cost us anything. I had many receipts to review for the business, and several complicated calculations to make in order to claim business-use-of-home credits (we moved part way through last year, so I had to do one calculation for the old house, and one for the new house).
Finally I got everything done, submitted our returns online, and received a hefty refund a few days later. Now if the CRA decides to audit us, then I can provide everything in a nice neat envelope.
Quite a few years ago I got audited. I mailed in my receipts, and about a month later I received a letter along with a return of my receipts thanking me for my co-operation.
It pays to be organized and prepared... Sadly, far too few people agree.
Jordan
No matter how big and bad you are, when a two-year-old hands you a toy phone, you answer it.
I see nothing in these two facts to support your assertion that the CRA decided chess is not educational or worthy of charitable status.
Hi Zeljko:
I have the knowledge of this issue that was given to all governors when the executive dealt with it with us. So to that extent, I have relevant information.
Secondly, I did not say that chess as an educational activity was not " charitable ". What I said was that CFC could not show that it was fundamentally and solely dedicated to chess education. There is a fundamental difference from the tax charitable status point of view. Chess education was just " part " of what CFC did - hence no charitable status. Other Canadian organizations focussed on scholastic chess education have however, satisfied CRA that their fundamental objective is chess education.
And if there is some truth to your statement that CFC has not provided enough public explanation in the past, I am so doing now ( but in fact, as you note, CFC did give this full explanation in the past , but I'll repeat it for those not familiar with it ).
Bob A, CFC Public Relations Coordinator
Last edited by Bob Armstrong; Saturday, 17th November, 2012, 10:39 AM.
I have the knowledge of this issue that was given to all governors when the executive dealt with it with us. So to that extent, I have relevant information.
Secondly, I did not say that chess as an educational activity was not " charitable ". What I said was that CFC could not show that it was fundamentally and solely dedicated to chess education. There is a fundamental difference from the tax charitable status point of view. Chess education was just " part " of what CFC did - hence no charitable status. Other Canadian organizations focussed on scholastic chess education have however, satisfied CRA that their fundamental objective is chess education.
And if there is some truth to your statement that CFC has not provided enough public explanation in the past, I am so doing now ( but in fact, as you note, CFC did give this full explanation in the past , but I'll repeat it for those not familiar with it ).
Bob A, CFC Public Relations Coordinator
Which still means you were not directly involved.
The CFC has never to my mind issued an official statement on this. I only refer to bits and pieces of what has been said on this board. This board is not an official vehicle of the CFC. The matter was ignored in the financial statements which are official CFC documents.
In any case tax receipts are the actual item under discussion on this string. I don't doubt your motivation to put the CFC's best foot forward as their PR flack.
The problem that lawyers have with tax laws is that tax laws leave very little room for interpretation and opinion. Lawyers make their money by interpreting laws, rules, and contracts differently than the people or organizations that their clients hire them to challenge.
Just about every tax law is definitive, therefore tax lawyers don't have as much room to opine than lawyers do in other areas.
Jordan
You continue to amuse me, Jordan. Your tax nescience is truly awe inspiring.
There is probably no piece of legislation in this country more arcane and complex, and forever protean, than the Income Tax Act of Canada. As to why most lawyers shy away from tax law, check out this link:
Praytell, just how much tax training did the CRA give you before they had you manning the phones? In my day, that was generally the job of the newbies. Which is why the 1-800# was such a complete and utter joke.
I remember having my firm's first tax lawyer call that number upon joining us with one 'simple' tax question, whose answer was clearly spelled out in the govt's very own IT-479 (now It-479R), just to get a feel for the calibre of the 'opposition'. She gave up after something like 79 consecutive wrong answers (:
An adventure in the nature of trade for a stock loss? You are a very brave man and so is your client. The only way this would make sense is if he was a stock broker or dealer. Just as a question does this mean he is going to report any future stock trading gains as adventures in the nature of trade and be taxed at 100%. Or is he suddenly going to revert to calling them capital gains again and be taxed at 50%. In other words is he going to try to have his cake and eat it? If I make money one a stock tax it favourably as a gain but if I have a loss tax it favourably to me as business income. Once he has indicated that stock trading is business income for him and not capital gains how were you planning on convincing CRA that he is suddenly not? Or does your whole strategy depend on CRA not noticing this ever in future? Hoping no one will notice? Who does that remind me of? Oh, yes Conrad Black.
If memory serves me right it was this kind of attitude that lead the CRA to treat stock options unfavourably because a few people complained about some losses. So now stock option gains are taxed when exercised not when sold.
You might want to take a gander at IT-479R, Zeljko. I once titled one of my 'Zero Tax Reports' "IT-479: Your Licence To Steal". Forgive me the poetic licence at the time if you will (:
It is not at all difficult to report speculative (i.e. non-dividend paying) securities transactions on account of income. Very nicely spelled out in the gov'ts own IT479 (:
Moreover, it is entirely possible to have one's proverbial cake and eat it too.
Let me first interject a little Tal math, to give this a tax flavour. I'm sure you're familiar with his famous 2 + 2 = 5 quote. Moving from a chess board to a T1 (i.e. individual tax return), I can show anyone how it's entirely possible to prove that, say:
50K - 50K = -25K
A rather simple procedure actually. All one would have to do is close out the losing side of the equation in one year and claim said loss on account of income (i.e. fully deductible against all other income).
The next year, when they close out and claim the winning side, they proceed to file a s.39(4) election. This election (only applicacle to Canadain securities so Tal's math breaks down with foreign securities) guarantees the taxpayer capital treatment (i.e. only 1/2 the gain included in income) for that taxataion year and forever more. Now ain't that a sweet cake!
50K - 50K = -25K Q.E.D.
Last edited by Jack Maguire; Saturday, 17th November, 2012, 11:35 AM.
The CFC has never to my mind issued an official statement on this. I only refer to bits and pieces of what has been said on this board. This board is not an official vehicle of the CFC. The matter was ignored in the financial statements which are official CFC documents.
The Governors Letter in 2010/11 several times discussed about charitable status: a problem, proceedings, and a final result - an annulment.
This was discussed a year ago:http://www.chesstalk.info/forum/arch...hp?t-4580.html with a quote "Bob Gillanders wrote in the January Newsletter: "We received a registered letter [from CRA] just before Christmas telling us that our tax status as a charity has now been annulled."
The matter was not ignored in the Financial report. It was not emphasized as a disaster you paint. In 2011 the CFC become pure non-profit :p
From 2010: "The Chess Federation of Canada / La Fédération Canadienne des Échecs was incorporated as a not-for-profit organization under the Canada Corporations Act and is a registered charity under the Income Tax Act."
From 2011: "The Chess Federation of Canada / La Fédération Canadienne des Échecs was incorporated as a not-for-profit organization under the Canada Corporations Act."
imho, all interested parts knew that the CFC became not a charitable organization and why the status was annulled.
The $30,000 refers to business-related revenues only. If a self-employed person earns $25,000 per year from self-employment revenues and another $10,000 a year in pension income, then the revenue threshold has not been exceeded since the pension income is not related to the business.
In principle the coach should be somehow a registered person (a business), isn't?
---Disclaimer - my questions are just get better understanding of a coach's legal life. I don't coach. Maybe in far future :D
The Governors Letter in 2010/11 several times discussed about charitable status: a problem, proceedings, and a final result - an annulment.
This was discussed a year ago:http://www.chesstalk.info/forum/arch...hp?t-4580.html with a quote "Bob Gillanders wrote in the January Newsletter: "We received a registered letter [from CRA] just before Christmas telling us that our tax status as a charity has now been annulled."
The matter was not ignored in the Financial report. It was not emphasized as a disaster you paint. In 2011 the CFC become pure non-profit :p
From 2010: "The Chess Federation of Canada / La Fédération Canadienne des Échecs was incorporated as a not-for-profit organization under the Canada Corporations Act and is a registered charity under the Income Tax Act."
From 2011: "The Chess Federation of Canada / La Fédération Canadienne des Échecs was incorporated as a not-for-profit organization under the Canada Corporations Act."
imho, all interested parts knew that the CFC became not a charitable organization and why the status was annulled.
There was no mention of it in the financial report. No note disclosure, nothing. What do you call that if not it being totally ignored. And please don't try to tell me it has no impact on the financial situation of an already financially troubled organization. Although according to you it is not a 'disaster'. The financial statements would have been an excellent opportunity to disclose and discuss the change in financial status. That's what financial statements are for.
Please don't belittle it with that cavalier attitude. My point seems to ahve been proven. With the same cavalier attitude members of the chess community now are suggesting clubs issue tax receipts even when there is no structured educational component. You're just making me more likely to put in a FOI request to CRA to access the entire file to get the total picture. As an interested member of the public. I don't think you really want to do that, when I get onto something I don't stop until all avenues are totally exhausted.
Where in all that you have quoted is a satisfactory explanation given by the CFC? Nowhere in my humble opinion. The link from the CRA is a statement by the CRA not the CFC, chesstalk is not a CFC official forum. The CRA link does not give a reason. The line from Bob G is not an explanation as to why.
Last edited by Zeljko Kitich; Monday, 19th November, 2012, 11:15 AM.
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