CRA General Info

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Triple Threat Tax Fraud Targeted

Triple threat tax fraud targeted by the Canada Revenue Agency Minister Blackburn declares

Ottawa, Ontario, January 23, 2009 . . .

The Canada Revenue Agency (CRA) has launched a Web page dedicated to Project Trident, a nationwide enforcement and awareness project that targets three types of illegal activity: identity theft, charities-related fraud, and tax preparer fraud. This Web page will help Canadians recognize tax fraud and learn how to protect themselves against it.

“Project Trident is a hard-hitting CRA project that protects the tax base by prosecuting players in fraudulent tax schemes and reassessing tax returns,” said the Honourable Jean-Pierre Blackburn, Minister of National Revenue.
“We have had good results in prosecuting the people who perpetrate these activities, and have reassessed a significant number of returns,” added Minister Blackburn.

There are currently over 70 cases that make up Project Trident in various stages of investigation. In addition, there
have already been 13 convictions, resulting in over $1.8 million in fines and a total of 210 months in mandatory jail
time.

“The three types of illegal activity are often used in combination,” indicated Minister Blackburn. “Many of the cases
involving tax preparer fraud also involve charities-related fraud or identity theft. For example, some unscrupulous
tax preparers sell false receipts for charitable donations to their clients. Others commit identity theft by using
personal information from legitimate clients to file fraudulent tax returns.”

Charities-related fraud can be committed on its own, without involving identity theft or unscrupulous tax preparers.
For example, a charity could be set up to sell inflated tax receipts, but perform little to no charity work.

The CRA audits charities to put a stop to such fraudulent schemes and intends to prosecute tax preparers, directors
of charities, and donors who are found to be involved.

The CRA is on the lookout for identity theft. As soon as the CRA confirms that taxpayer information has been
compromised, we do everything necessary to prevent the fraudulent use of that information.

Visit www.cra.gc.ca/projecttrident to find out more about these types of fraud, to see a summary of convictions,
and to stay up to date on the fines, jail time, and reassessments in these cases.

For media information:

Noël Carisse                      Andrea Kent
Media Relations                 Director Of Communications
613-952-9184                    Office of the Minister of National Revenue
News release                     613-995-2960

Objection Nullified

A new Notice of Reassessment issued by the Canada Revenue Agency to the taxpayer will nullify all previous Reassessments for that year, so therefore the taxpayer would need to file a new Notice of Objection.

This new Notice of Objection filed to the Canada Revenue Agency will supersede all Notice of Objections filed in previous years.

CRA Service Centres

CANADA REVENUE AGENCY TAX SERVICE CENTRES

SUDBURY:

1050 Notre Dame Ave.

Sudbury, ON. P3A 5C1

SURREY:

9755 King George Blvd.

Surrey, BC V3T 5E1

WINNIPEG:

14000 PO Stn Main

Winnipeg, MB R3C 3M2

SUMMERSIDE:

103 – 275 Pope Rd.

Summerside, PE C1N 6A2

ST. JOHNS:

290 Empire Ave.

St. Johns, NL A1B 3Z1

OTTAWA:

2204 Walkley Rd. Suite 102A

Ottawa, ON K1A 1A8

SHAWINIGAN-SUD:

Post Office Box 3000

Station Bureau-Chef

Shawingan, QC G9N 7S6

The World According to GAAR

Canada’s general anti-avoidance rule has come under the spotlight in recent years: as the Canada Revenue Agency becomes more aggressive about challenging complex tax planning, more taxpayers are pushing back. But the litigation that’s bloomed as a result has done little to create more clarity around a section in the Income Tax Act that many view as far too vague.

Of course, tax planners thrive on certainty; a non-specific rule such as the GAAR is likely to be viewed with skepticism by tax professionals at the best of times.

A growing number of industry experts are calling for clarification of the law, as well as for specific guidelines on issues ranging from interest deductibility to the treatment of losses.

Peter Megoudis, senior manager in the Toronto office of Deloitte & Touche LLP, says that the GAAR is very difficult for tax practitioners to deal with. He argues that a
practitioner will assume the ITA means what it says, while the courts seem to follow a different set of criteria.

“The application of the GAAR is incoherent and does not fit within the Income Tax Act,” says Megoudis. “[The act] becomes irrelevant when analyzing GAAR cases.”

The GAAR states that three conditions must be satisfied before the rule is applied to disallow a transaction:

> there must be a tax benefit from one or more of the transactions implemented;

> the transaction must be an avoidance transaction — meaning that its only purpose is to obtain the tax benefit and that there is no other non-tax purpose for the transaction; and

> the transaction or series of transactions implemented must be abusive — meaning that the avoidance transaction is inconsistent with the object, spirit or purpose of the ITA.

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CRA General Info

Triple Threat Tax Fraud Targeted

Objection Nullified

CRA Service Centres

The World According to GAAR