A Leader ?

NOT A LEADER?
A commentary on a Job Half Done
Fix the Taxable Benefits problem.
Written by Victor Drummond ©
June 2007

During a recent Liberal Leadership debate a statement made by leadership contender, Michael Ignatieff, i.e. “Stephane we didn’t get it done.”, has been taken by the Conservative Party to be a damming indicator of Stephane Dion’s lack of Leadership aptitude.

Micheal’s words have been taken at face value and utilized over and over again in a premature federal election campaign video titled:- “Not a Leader.” Ostensibly to win over Canadian voters to support the Conservative party in the next federal election.

As the saying goes:- “Things that go around – come around.”

I can just see it now – during the next Conservative Leadership debate(s) one of the leadership contenders will almost certainly bring up the issue of the half finished “Taxable Benefits” debacle and say to Stephen Harper:- “Stephen we didn’t get it done.”

Among the myriad of wise sayings is a very valid bit of advice, i.e.

“Never start something you can not finish.”

Gary Lunn, conservative MP. For the riding of Saanich, Gulf Islands, in British Columbia, with the support of our Prime Minister, the Right Hon. Stephen Harper, made a good start, in November 2006, towards fixing the Unfair, Unjust, and Unequal tax treatment the Employees of the former JDS Uniphase Corporation in British Columbia.
Reference the newspaper report:- “Tories Kill Tax on Profits Never Made”

http://www.canada.com/vancouversun/voices/story.html?id=457f01fa-2bc1-4589-b744-2eb682d961bf%20

There is only one real fix for this problem, and the creation of a federal (Fair Tax) Ombudsman is not the answer.
See posting “ IF I WERE THE NEW FEDERAL FAIR TAX OMBUDSMAN FOR CANADA
for the proper fix to this problem

Fix the cause of the problem – do not apply remedies to the symptoms.

Victims of:- “The tax on profits never made.” Should not have to appeal their cases individually to an advisor to the government, or pay a lawyer to plead their case to the “Tax Court of Canada.”, or fight their way through the courts to the Supreme Court of Canada for a ruling on the violation of article 15(1) of the Canadian Charter of Rights and Freedoms.

The Right Honourable Stephen Harper and Hon Gary Lunn – you made a good start – now finish the job and do not face the prospect of watching and hearing the Opposition run their version of:- “NOT A LEADER.”

New Federal Fair Tax Ombudsman

IF I WERE THE NEW FEDERAL
FAIR TAX OMBUDSMAN FOR CANADA
By Victor Drummond ©
June 2007


On May 28 2007 the Hon. Jim Flaherty, Minister of Finance and Hon. Carol Skelton, Minister of Revenue, made the grand announcement that:- Canadian Taxpayers will have a new Federal Ombudsman, and a modernized Bill of Taxpayers Rights.

The Ombudsman will have no real power to grant Canadian taxpayers relief of unfair taxation but will operate as an independent adviser to the Government on
taxpayers complaints.

Although the money to finance the Ombudsman’s operation is supplied from the existing Revenue Canada’s budget – let’s assume the Ombudsman will perform properly on the basis of a keen sense of Fairness and Justice.

The initial taxpayers organization, to welcome the announcement, was:-

“The Canadian Federation of Independent Business. Garth Whyte, executive vice-president of the federation was quoted as saying:-

“People are upset with outrageous penalties and they should be able to get some relief, for the first time, ” adding he hopes the ability of willingness of the department to be forthright with information will also improve.”

So if I were the new:- Canadian Federal Tax Ombudsman here is how I would
Work to bring Fair, Just, and Equal Taxation to Canadians.

(1) -- I would recommend to the government that the major cause of:-
“Unfair” Taxation. i.e. Items wrongly classified “Taxable Benefits”, such as
Corporation Shares Options, be correctly classified as “Capital Equities” and
taxed only on realized gains – Not on "potential Gains" -- that are seldom
realized.”

(2) – I would recommend to the government that all Canadians taxed on

shares as:- "Taxable Benefits”-- be granted a retroactive amnesty decade within which they may resubmit all income tax returns that resulted in denial of tax refunds they would be entitled to if taxed on “Capital Gains.”

(3) – I would recommend to the Government they extend the “tax remission order” -- (granted to the JDS victims of “Unjust/Unfair” Income Taxes in British
Columbia, Canada) -- to all Canadians similarly taxed.

(No distinction to be made between Employee Stock Options Plans, (ESPP),
victims and Employer Profit Sharing/Incentive Options Plans (ESO) victims.)

(This miserable indistinction was used as an excuse’ for denying the ESO victims the same tax relief as was given to the JDS employees in British Columbia’ in correspondence between a victim to at least one Government MP)

(4) -- I would recommend to the Government that the unfair tax discrimination,
currently contained in Revenue Canada’s “Taxable Benefits” regulations, be
removed and all shares acquired by employees be treated as “Capital
Equities”.

i.e. Shares of a “Canadian Controlled Private Corporation, (CCPC) being
treated as “Capital Equities” whereas shares of a non-CCPC are treated
as a “Taxable Benefit” is inherently discriminatory and grossly unfair.

If -- after the Government implemented the above four recommendations – there
were any valid appeals submitted for “Fair", “Equal”, and/or “Just” taxation
I would address the root cause of those appeals and recommend the government take appropriate corrective action in each case.

Within two years of operation I can guarantee there would be no valid basis left in The Income Tax Laws and Regulations for corrective action appeals and I could then make recommendation No. 5.

(5) -- I would recommend to the Government that the office of the Federal Tax
Fairness Ombudsman be closed on the grounds that there would no longer be
a basis for Unfair, Unjust and/or “Unequal” Income Taxation in the Canadian Income Tax System..

Victor Drummond ©

Author’s Comments:-

It must be apparent to everyone with any sense of “Fairness” that taxing
Phantom Profits as “Income” to the extent that the Taxpayer Cannot pay the taxes levied out of their realized income – is Unjust, and Grossly Unfair.

If further evidence that this form of Taxation Amounts to “Extortion” one need only try to rationalize justification for the $100,000 per year “Income Tax” deferment option provided by the Revenue Canada Income Tax regulations. (Form T1212)

If the taxpayer cannot meet the taxes levied out of their actual income then something is TERRIBLY WRONG.

If the taxpayer must borrow money, sell their Possessions and/or mortgage their homes to pay taxes levied on phantom Gains then again
Something is “TERRIBLY WRONG.

If some victims of the GROSSLY WRONG tax system are given tax relief that others in the same situation are denied:-

SOMETHING ELSE IS TERRIBLY WRONG.

These wrongs will not be RIGHTED

AS LONG AS THOSE VICTIMIZED REMAIN SILENT

and those who should do something about this situation

also remain dormant.

(A victims of “Unfair Taxation” Association may be in the offing) – contact me for more information:- vic.drummond@sympatico.ca

Get Involved

THE SILENT MAJORITY
A critical Commentary of Unfair Taxes in Canada
By Victor Drummond ©
June 2007

What is the harm in minding your own business? If someone abuses their spouse, or their chikdren, or their animals, pets, livestock etc., or a bully intimidates fellow students, and/or their teacher(s) -- what is that to you?

Is it any of your concern when these things happen? Can you be blamed, or harmed in any way by keeping quiet?

The following is an excerpt from an E-mail that came my way recently -- when you have read it -- judge for yourself.


This is a story about a man whose family was German aristocracy prior to World War.

He owned a number of large industries and estates. When asked how many German people were true Nazis, the answer he gave can guide our attitude toward fanaticism.

"Very few people were true Nazis "he said," but many enjoyed the return of German pride, and many more were too busy to care. I was one of those who just thought the Nazis were a bunch of fools. So, the majority just sat back and let it all happen. Then, before we knew it, they owned us, and we had lost control, and the end of the world had come.

My family lost everything. I ended up in a concentration camp and the Allies destroyed my factories."


There is more to that message that I do not feel is relevant to this posting. It is presented as a True story – but without names, dates and places – it may be merely an object lesson.

The consequences of keeping quiet when injustice is rampant are well illustrated in the above
message. Public demonstrations, protest rallies, and the like may be relatively
harmless – and if the cause is for fair treatment, and justice, the result could actually be positive – but when radicals, such as the:- “National Socialist German Workers Party”, (Nazi’s) began to campaign in Germany – the average German individual looked upon them as harmless kooks – a mistake that many Germans briefly lived to regret.

What difference might it have made if the average German Citizen had spoken out against the very first unjust act that Hitler and his supporters did – even before they succeeded in hijacking the existing government.

The world might have been spared the most devastating war that has ever taken place.

By remaining silent they guaranteed that war would happen.

So what does all that have to do with one of the worlds best places to live – Canada?

In Canada there are laws, and agencies to take action against bullies, abusers, and/or
persons who neglect their family and/or livestock. So what is the problem?

The problem left behind by the previous administration is unfair, and unjust taxation of
a Canadian Taxpayer minority – employees who participated in their employers:- Shares
options Plans. They likely represent less than 10% of the total taxpayers in Canada, just like the abused spouses, children, livestock etc. likely represent much less than 10% of their respective populations.

Does the average Canadian wait patiently for those abused to raise an alarm – before
the related protective agency is notified?

Not in most cases – as soon as a neighbour, or passer-by, notices signs of such unacceptable behaviour the police are notified and corrective action is automatically initiated.

And in the rare case where an abused spouse does report the abuser the protective agencies swing into action post haste.

Not so when the abused is a taxpayer. Like the abused spouse, most taxpayers, who have been treated unfairly, are intimidated by their abuser. They feel if they report their treatment to the authorities – they will in essence be sent home with nothing, more than a note of sympathy and the abuse will continue – perhaps worse than before.

There is no established agency to guarantee the Canadian Taxpayer Just and Fair Taxation.

The recent creation of a:- "Taxpayers Bill of Rights" and a federal ombudsman -- without power to direct other agencies -- does not fill the bill.

Again like the abused spouse a few abused taxpayers have raised the alarm – and well
intended politicians have made token efforts to correct the problem. Their individual
efforts have only made the situation worse and it appears they lack the confidence and/or
power to fix this problem alone.

Tough you say – what’s it to me – and even if I wanted to help – what can I do about it?

YOU CAN DO PLENTY – Speak up. Tell your local Member of Parliament you want This issue resolved fairly – in the following way:-

(1) Extend the deferred tax relief granted to the JDS Corporation employees’ in British Columbia to provide the same relief to all Canadains who have been taxed on fictitious Gains in tha same way.

(2) Remove the source of such unjust taxation by reclassifying all equities of, variable value, such as corporation shares – those now classified as a:- “Taxable Benefit” and have them correctly classified as a “Capital Equity”, (Capital Investment.) The government will still get the tax on real gains – which is all they are entitled to.

(3) Create a decade of amnesty (last 10 years) in which all those who paid taxes on fictitious Gains may resubmit tax returns reporting their share trades as “Capital Gains” NOT as a “Taxable Benefit” tax on a phantom profit.

By speaking up on this issue you will do yourself and your fellow Canadians a real good turn by helping the government live up to its promise of:- “Fair, Just and Equal taxation”


Victor Drummond. ©

(Everyone who supports Fair and Just tax treatment for a all Canadians is invited to send me An E-mail to declare their support – whether an actual victim of the:- “Taxable Benefits” Tax or not. :- vic.drummond@sympatico.ca )

Unless requested to do so – no one will contact you – or post your identity, and/or remarks on any web page. You will not be asked to contribute funds or financial support to this cause – it would be helpful however if you said you had notified your candidate, for federal election, of your support to correct this unfair taxation.

If you are as outraged as I am about this fiasco you can contact your Member of Parliament via the following URL and/or write to your member of Parliament postage free at the address accessible from this same URL :-

http://webinfo.parl.gc.ca/MembersOfParliament/MainMPsAddressList.aspx?TimePeriod=Current&Language=E

To obtain your MP’s E-mail address click on his or her Name Link at the foregoing URL and let them know how you feel about this “Taxable Benefits” problem.

Take a Number

TAKE A NUMBER
Victor Drummond ©

A Critical look at the Latest Unfair Income Tax Fix.


According to the news release at the following URL :- Jim Flaherty, Minister of Finance, and
Carol Skelton, Minister of National Revenue made an announcement that should warm
the hearts of every Canadian Taxpayer. Check this out:-

http://cnews.canoe.ca/CNEWS/Canada/2007/05/28/pf-4214667.html

Canadian Taxpayers no longer need suffer the insults, neglect, threats of penalties etc. that has been
the bane of Canadian Taxpayers in the past. From now on if you feel mistreated by Revenue
Canada, in any way, you need only fill out a copy of the form:- "Request for Taxpayers Relief"
which can be found at the government web page:-
www.cra-arc.gc.ca./E/pbg/tf/rc4288/rc4288-e.pdf
and be sure to read the applicable regulations on page 4.

Not only may the dissatisfied taxpayer make a request for Tax Relief once – he or she may make the same request a second time if the prior request is not resolved to the taxpayers satisfaction.

Unfortunately for victims of the “Taxable Benefits” rip-off those 40 new Federal Ombudsmen
have no real power or authority – they can only make recommendations – which -- those that do have the power, to implement proper corrective action, may ignore just as they have all appeals, to date, for fair and equal rules, of taxation.

Here is a clip from the news release above:- “The ombudsman will deal only with service issues not tax policy, programs, or any proceedings before the courts - and will only conduct reviews and make recommendations, with no "directive powers" or disciplinary authority”

Another clip implies a classic case of financial irresponsibility by a government member with a portfolio specifically finance oriented:- “The minister could not say what the new bureaucracy would cost, other than to say its expenses would be absorbed by the current budget of the Canada Revenue Agency.”
(The “minister quoted here is the Hon. Jim Flaherty, Minister of Finance.)

The Hon. Mr. Flaherty didn’t elaborate on just why he couldn’t tell how much this new agency would cost.

Giving him the benefit of doubt it could be assumed he knew the answer but for reasons known
only to himself he preferred not to reveal this cost. In any case he feels the cost is irrelevant as it will come out of the existing budget of Revenue Canada.
(Not a Taxpayers concern apparently.)

Beneficiary’s of this new federal agency and Charter of Taxpayers rights should cheer loudly and perhaps hold a victory parade around the parliament buildings in Ottawa,
But who are these lucky taxpayers?

Another clip from the news release provides the answer:-
“The Canadian Federation of Independent Business, which has often been critical of the revenue agency, praised Monday's announcement.” “Any move to increase transparency, accountability and fairness within the Canada Revenue Agency is positive for the small business community," said Garth Whyte, executive vice-president of the federation, which represents more than 105,000 small businesses across Canada.” "Too often taxpayers feel that the deck is stacked against them in any dealings with the tax authorities."
Whyte said the new bill of rights is an improvement over the last one, since it "modernizes" it. He said he hopes the ombudsman will provide immediate help to frustrated business owners, particularly in the area of penalities.
"People are upset with outrageous penalties and they should be able to get some relief, for the first time," Whyte said, adding he hopes the ability of willingness of the department to be forthright with information will also improve.
"The elements outlined in the taxpayer bill of rights such as the right to complete, accurate, clear and timely information and a commitment to applying tax laws consistently should go a long way to improving those measures, as will having recourse to an ombudsman's office," Whyte said. “The Canadian Federation of Independent Business” apparently see a great improvement in the dealings of their 105,000 members with Revenue Canada!

Does the word “consistently” used in the above statement mean “Fairly”, and/or “Justly” in Mr. Whytes mind? If so he is likely in for a big disappointment.

To date victims of the Unjust and Unfair Taxable Benefits boon-doggle have been treated consistently the same by Revenue Canada and by those who just made this grand, gesture.

All the hype and verbage contained in the “Taxpayers Bill of Rights”, and in the mandate given to the new federal taxpayers ombudsman add up to a real commitment of zero – so far as correcting the source of the “Taxable Benefits” problem is concerned.

The root cause of the unjust and unequal taxation, of persons who participated in their employers Profit Sharing or Incentive (shares) options plans is directly due to classifying an equity, of indeterminate value, as a “Taxable Benefit”.

Using the last or current market trades to fix a value is ludicrous. The next trade could be vastly different – and in fact when the market correction began in July 2000 one could not determine with any degree of accuracy just what price a corporate share might trade for from one trade to the next.

If, in addition to the taxation of non-existent gains, there is further proof required that these equities are wrongly classified one need look no further than the volume of rules and exceptions resulting from Revenue Canada endeavouring to maximize taxes imposed on these shares.

What do you imagine Is the percentage of deferred Capital Gains Income, applied for, via form T1212, due to Shares as compared to all other forms of “Taxable Benefits” .

Do you suppose 99.9% would be out of line? It would actually surprise me if the percentage isn’t actually much closer to 100%

For example is there another item, in the summary of “Taxable Benefits”, that can automatically change from a “Taxable Benefit” to a Capital Equity? (I doubt it.)

All that a victim, of the shares’ as “Taxable Benefits” ‘ rip-off needs to do, to work this magic, is to hold on to their shares past their delivery (exercise) date.

This could happen for a variety of reasons ranging from:- “No Trade, (black-out) Intervals” pending release of company performance reports, -- to a person being away from home, (on vacation), when the shares delivery date arrived

In order for a victim, who was prevented, by circumstances, from selling their shares on their delivery date, to get any form of tax relief, they must appeal to Revenue Canada and pray for a favourable decision.

When a “Taxable Benefit” can arbitrarily become a “Capital Equity” there is no further evidence needed to prove mis-classification.

All that is required to correct this problem is:-

(1) Remove items of variable value, such as company shares, from the “Taxable Benefits” classification and reclassify them for what they really are:- “Capital Equity’s”

Just making this change, now, would prevent any further incidents of this kind of Unfair Taxation.

AND

(2) A truly “Fair and Just” correction, in addition to the shares reclassification, would include cancellation of all outstanding deferred “Taxable Benefits” Income that is based on assumed income from employers shares plans.

This would at least level the playing field for those excluded from the November 2006 cancellation of identical deferred taxable income for JDS employees in British Columbia.

AND

(3) Grant a period of equality adjustment in taxation by allowing person’s who have already paid taxes on imaginary gains to re-submit their tax returns, for all the years in the past decade, where they should have been taxed on “Capital Gains” not phantom profits.
Off hand, (like our Minister of Finance), I can not say just how many billions of dollars this fully corrective, “Fair” and “Just” action would cost – but – it would be a one time cost not an on-going cost – such as the “Federal Ombudsman” fix -- which can go on forever – or until a government takes over in Canada with a true definition of the words
“Fairness” “Justice”, “Honesty”, “Integrity. and “Equality”

Until that Happens:- My advice is:- File your “Request for Taxpayers Relief”
(twice if necessary)

“Take a Number”, then find a comfortable seat.


Victor Drummond ©

Authors comment:- The purpose of this blog page is to raise victim awarenes of how and when they were unfairly taxed -- in the hope they will respond to this injustice and contact like victims via this media. There will be no request made for financial support -- all we are looking for is a greater voice from those unfairly taxed. We all win -- or we all lose by remaining silent.

E-mail:- vic.drummond@sympatico.ca