The Job Offer

THE JOB OFFER
A Truth in Fiction to Illustrate
Unfair Taxation in Canada
By Victor Drummond © July 2007

Henry Morgan is employed by Widgets Incorporated of Smalltown Ontario. He earns a comfortable annual salary of $65,500.00 which is barely adequate to comfortably maintain his wife Emily and family of four children.

Their children are Annette:15 years old, Marilyn:12 years old, George: 8 years old and Theodore: 4 years old.

Henry is a bit concerned that his employment income may not increase fast enough to allow him to finance the children’s University education. Annette will be graduating from High school in another year and while she is still in University Marilyn will be ready to begin University as well. This will mean tuition, books, accommodation and meals in a distant University town -- for two of his children at the same time. His present level of income would not support that kind of expense.

Widgets Incorporated has been a stable corporation, without notable growth, over the past decade.
Henry hasn’t much prospect of his salary being upgraded in the near future so after discussing the situation with Emily he decides to attend the next job fair in Toronto.

While at the job fair, Henry submits his curriculum vitae to several head hunters and also attended half a dozen job interviews. At the close of the job fair Henry felt rather confident that he had scored well with several potential employers.

One week later Henry received a registered letter – enclosed was a job offer with signatures of the Chief Executive Officer, (CEO) and Chief Financial Officer, (CFO), of Behemoth Enterprises Incorporated. There was a cc reference of a copy sent to The Canada Revenue Agency.

Details of their offer were as follows:-

(1) - A position of Manager Research and Development at their Mining Headquarters 40
kilometers from Inuvik NT, Canada .
(2) – A Guaranteed annual salary of $250,000 ,per year, for a minimum of two years.

(3) - Guaranteed accommodations for Henry and his family – with free bus service to the town of Inuvik for shopping, entertainment and educational purposes – 10 round trips per day –
7 days per week.

(4) – A company car fully maintained, fuel and oil changes etc. for both personal and business use – at company expense.

(5) – Family membership in the Company Health Spa, swimming pool and games room.

(6) – One months vacation, per year, at full salary – starting in the first year of employment.

Henry was overjoyed – he talked the job offer over with his wife first – Emily wasn’t too thrilled at the prospect of living so far from the nearest town and even less enthusiastic about sending the children to school so far from home.

George and Theodore thought it would be a great place to live – with moose and polar bears coming right up to their back-yard.

Marilyn and Annette were dead set against the idea – they didn’t want to move away from their friends and the more they thought about it the more determined they became to stay where they now lived.

After all parties were heard from Henry and Emily decided they would not accept that job offer – and wait for something more suitable to come along.

Things settled down and Henry kept on working for Widgets Inc. When Income Tax time rolled around Henry filed the same type of Income Tax return that he had done for years.

Eventually he received his Tax Return Assessment Notice -- which contained a few surprises:-

Instead of confirming his “Employment Income”, for the previous year, at the amount reported on his T4 slip i.e. $65,500.00 Henry was assessed to have received an “Employment Income” of $300,000.00 He was advised he had underpaid his Income Tax by. $83,000 which was in fact $17,700 more than his total real income.

Henry was thunderstruck – he got in his car and drove straight to Revenue Canada Headquarters in Ottawa. After the usual hurry-up and wait routines Henry finally was interviewed by a Tax Consultant of Canada Revenue Agency.

When Henry asked how in-the-world he could be assessed to have received an “Employment Income” of $300,000 when his real Employment Income was a bare $65,500. Henry was then informed:-

“You had an offer, of a guaranteed income, of:- $250,000, plus a Company Car which we estimated to be a benefit of $5,000, plus family membership in a health spa which we estimated to be a benefit of:- $3,000 plus a free house which we estimated to be a benefit of :- $12,000 ($1,000 per month) plus your real income of:- $65,500 for a gross “Employment Income” of:- $335,500”

“Allowing for generous personal and family Tax reductions Canada Revenue Agency has assessed your “Employment Income” to be: $300,000 as per the assessment notice you received.

Henry couldn’t believe his ears – He said to the Revenue Canada Counsellor: “How can you assess me for an income I never received?” The counsellor replied:- “You had every opportunity to receive the assessed Income -- and benefits -- and it is not Revenue Canada’s fault that you missed the boat on this opportunity – so “Pay Up” -- “Also expect the same assessment next year – the employment offer was for two years minmum”


Victor Drummond ©

Author’s Comment:- Does the above scenario sound far fetched and unreasonable?

Would you believe such a thing could happen in Canada. So far the Canada Revenue Agency hasn’t actually gotten around, to taxing potential income from declined job offers but equally unreasonable happenings have been going on in Canada for more than the past seven years.

It is no more reasonable to tax non-existent profits on employer’s shares -- intended to be an incentive award and/or a performance reward – than it is to tax other declined employment opportunities to make a gain.

Henry’s case, per the above fable, is no more outrageous than the real Taxable Benefits assessments levied by The Canada Revenue Agency that inflated taxpayers “Employment Incomes” well beyond their actual annual incomes and resulted in real taxes that exceeded the person’s total actual income for the entire year.

The inflated “Earned Income” being the result of an opportunity to make a profit – not on any real gain.” Much like the job opportunity in the fable that Henry made a conscious decision to pass over in this fable.

To add insult to injury some Canadian Victims of the “Taxable Benefits” Rip-off have been granted tax concessions (in British Columbia – JDS Uniphase Employee’s only), while all other, identical tax victims, in BC and across Canada have been denied the same Tax break. What a travesty of justice.

Victor Drummond ©


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

http://www.canada.com/nationalpost/story.html?id=fcae05b1-9f28-4e2d-89b6-f7cf8fc33217&k=17428