Fiscalité & immobilier – les autorités fiscales vérifient minutieusement les transactions immobilières

Suite aux annonces du Budget 2019, l’Agence du Revenu du Canada (« l’ARC ») a lancé un Groupe de travail sur l’immobilier dont la mission est de dissuader le non-respect des règles fiscales dans le marché immobilier. Le gouvernement fédéral a alloué des fonds et des ressources considérables pour examiner les transactions immobilières dans lesquelles les parties n’ont pas respecté les règles de l’art. 

Voici le questionnaire (disponible en anglais seulement) de l’ARC envoyé à des personnes et des sociétés sélectionnées dans le cadre du processus de vérification. Le questionnaire est vaste, contient plus de 35 questions et demande au contribuable de fournir une documentation importante.

Ce programme de vérification des transactions immobilières est spécifiquement ciblé et peut avoir un impact sur :

  • Les promoteurs et développeurs immobiliers en ce qui concerne le respect des taxes de ventes;
  • Les contribuables impliqués dans des activités de flips immobiliers;
  • Les contribuables percevant des commissions dans le secteur immobilier; et
  • Les contribuables qui déclarent la vente d’une résidence principale.

Compte tenu de ce qui précède, il est primordial de structurer et de planifier vos transactions immobilières en conformité avec la législation fiscale en vigueur. Si vous avez reçu une demande d’information similaire, il est recommandé de demander des conseils et des avis juridiques avant de répondre au questionnaire.

Nicolas Simard possède une vaste expérience en litige fiscal de toute nature concernant l’impôt sur le revenu, les taxes à la consommation ainsi que les divulgations volontaires. Il peut être joint au 514-397-5288.

David H. Benarroch est spécialisé dans de nombreux domaines de la fiscalité, notamment le contentieux fiscal, la conformité fiscale et la planification fiscale.


Tax and Real Estate – Tax Authorities Scrutinizing Real Estate Transactions

Following the Budget 2019 announcements, the Canada Revenue Agency (“CRA”) launched a Real Estate Task Force whose mission is to deter tax non-compliance in the real estate market.

 The federal government has allocated significant funds and resources to scrutinize real estate transactions in which parties have failed to comply with the appropriate regulations.

Here you will find a CRA questionnaire sent to selected individuals and corporations as part of the audit process. The questionnaire is broad, contains over 35 questions and requests significant documentation.

This real estate audit program is specifically aimed and can impact:

  • Promoters and developers for sales tax compliance;
  • Taxpayers involved in property flipping activities;
  • Taxpayers earning commissions in the real estate sector; and
  • Taxpayers reporting the sale of a principal residence.

In light of the foregoing, structuring and planning real estate transactions while ensuring tax compliance is of primary importance. If you have received a similar information requests, seeking legal guidance and advice is recommended before answering the questionnaire.

Nicolas Simard has extensive experience in every kind of tax litigation concerning income tax, consumption taxes and voluntary disclosure. He may be reached at 514-397-5288.

David H. Benarroch specializes in many areas of tax, including tax litigation, tax compliance and tax planning.


Award Winning FASKEN TAX

Kathryn Walker a tax associate in Fasken’s Toronto office has received the Canadian Tax Foundation the “Young Practitioner Award” for her 2018 article “Making or Accepting Payment in Crypto: A GST/HST Risk?”.

The award is granted annually to three tax practitioners with less than ten years of tax experience. The award is given for the best newsletter article which appeared in any of the three Canadian Tax Foundation newsletters in a calendar year and was written solely by author(s) who were young practitioners at the time of publication. 

You can read more about the award and find a link to the article on the Canadian Tax Foundation website.


As Vaping Replaces Tobacco BC Proposes New Legislation

This month, the British Columbia Health Minister announced plans to introduce legislation that will increase the BC’s provincial tax on vaping products from 7% to 20%. In doing so, BC will become the first province to tax e-cigarettes and vaping.

In all other provinces, vaping demonstrates an interesting inconsistency in some provincial legislation: under some provincial public health legislation vaping is regulated like other tobacco use yet under provincial tax legislation vaping is not treated like tobacco and is only subject to either the provincial HST component or provincial sales tax. Thus, vaping actually provides a much more tax-effective way for a user to get a nicotine fix. Put otherwise, vaping is essentially subsidized nicotine consumption.

Vaping involves the use of a handheld electronic device that heats an “e-liquid”—sometimes called e-substance, e-oil, or e-juice—to a point where it becomes an inhalable vapour.

The e-liquid is typically composed of nicotine, a carrier substance such as glycerine, and flavouring. E-cigarettes and e-liquid are tobacco-free. Most Canadian provinces (Alberta and Saskatchewan are exceptions) have public health legislation that regulates the use of e-cigarettes in a manner that parallels the regulation of cigarettes and other tobacco products.

For example, Ontario’s Smoke-Free Ontario Act, 2017 regulates the sale, advertisement, packaging, and consumption of e-cigarettes, in some ways reproducing restrictions on tobacco use.

In Canada, both federal and provincial governments exercise jurisdiction over health. This dual jurisdiction explains why there are two layers of tobacco legislation: the provincial laws noted above and the federal Tobacco and Vaping Products Act (SC 1997, c. 13), which governs public health aspects of tobacco and vape consumption in Canada.

Although provincial public health legislation regulates e-cigarettes as it does tobacco cigarettes, provincial tax legislation does not. In all 10 provinces, tobacco sales are taxed under special tobacco tax legislation, and in most provinces tobacco sales are also subject to GST/HST. For example, in Ontario a pack of 20 cigarettes is subject to a tobacco tax of $3.30 and an additional 13 percent HST. However, vaping liquid, or e-liquid, does not come within the scope of tobacco tax legislation, which is limited to tobacco products.  As a result without new legislation, vape products escape the additional taxed levied on tobacco products.

As explained above, e-cigarettes and e-liquid are tobacco-free, and while the nicotine in e-liquid may give smokers a sensation similar to that of a traditional cigarette, the nicotine is not a tobacco product. As a result, while sales of e-cigarettes and e-liquid are subject to GST/HST, they are not subject to a special tobacco tax.

This means that now as more Canadians have shifted from traditional smoking to vaping, they are escaping the financial burden of tobacco taxation.  In turn, this means that provinces are losing their tobacco tax base. However, it is estimated that BC’s new legislation will generate roughly $10 million a year in new tax revenue.  We won’t be surprised to see other provinces follow BC’s lead.


Tax Treatment of Cryptocurrency Mining

On August 8, 2019, the Canada Revenue Agency (the “CRA”) released an Income Tax Ruling, 2018-0776661I7, clarifying its view on the taxation of cryptocurrency miners.

The ruling responded to a taxpayer inquiry, asking whether a bitcoin miner should include the value of mined bitcoin in income at the time it is received.

Bitcoin miners have an essential role in both the creation and the maintenance of the block-chain technology, which is the foundation of bitcoin itself. When miners, using their computers, solve computation-intensive math problems on the bitcoin network, they produce or create new bitcoin. In addition, in solving the math problems, bitcoin miners verify the network’s transaction information, securing the bitcoin payment network.

One might say that miners create bitcoin, in which case mining bitcoin would not be a taxable event. Some in the cryptocurrency sector have analogized bitcoin mining with mining for gold. However, in the ruling the CRA takes the position that miners earn bitcoin, or receive bitcoin as consideration for their work in validating transactions on the block-chain, with the result that miners must include any bitcoin they mine in their income at the time it is received. In other words, the CRA ignores the “creation” element of mining.

The CRA further advises that the value of the bitcoin for tax purposes is determined by the barter rules, which in this case would require that a miner bring into income the value of the mining services rendered or the value of the bitcoin received. Since in most cases the value of the bitcoin will be more readily valued, this is the amount to be brought into income.

While many will find the CRA’s position to be obvious given the miners play a key role in servicing the blockchain, those who have relied on the gold mining analogy should note the tax consequences of the CRA position. Another interesting issue is the extent to which “miners” of other cryptocurrencies that may use other methods of creation, can rely on this ruling. In either case, the additional clarity providing by the ruling is useful to everyone working in the cryptocurrency space.