Trick or ....

TRICK OR TREAT?
A Commentary on calling the government’s hand
According to the 2007 Fair Tax Pledge and
The Taxpayers New Bill of Rights.
By Victor Drummond ©
October 31 2007



So Halloween has arrived once again and this time the Canadian Government has some very nice treats in store for those abused taxable benefits victims. You know – the ones that have been levied enormous taxes on a super inflated non-existent “Earned Incomes”.

A year ago a select group of similar victims, JDS Uniphase employees only, were granted some form of tax relief -- which was no doubt a practice run for this years great treat for “The Rest of Us?”

The Honourable Jim Flaherty, Canada’s Minister of Finance, has laid out the “Welcome” mat for all remaining such victims -- of the defective tax legislation – to come Knocking on the Canada Revenue Agency door and yell:- “SHELL OUT”.

How else could anyone interpret statements such as:-

(1) On January 30th 2007 the Honourable Jim Flaherty, Minister of Finance addressed the House of Commons and made the following statement:-

“Make no mistake, the decision that was taken on October 31st, (2006), is all about fairness—fairness in our tax system, fairness for hard-working Canadian taxpayers and their families, fairness for seniors, for business and other levels of government," said Minister Flaherty. "I am not prepared to sacrifice the interests of millions of hard-working Canadians who pay their taxes and play by the rules so that a select group of special interests can enjoy a tax holiday."

AND

(2) A bit later, June 4 2007, the Government updated their (Tax),“Fairness Pledge”, to all Canadians which reads in part:

Our Fairness Pledge
• Our fairness commitment is based on service that is responsive, consistent, and impartial.
• Our actions must reflect objective yet considerate application of the law.
• We recognize that taxpayers have specific needs and concerns.
Information
• We will give taxpayers information that is accurate and understandable. We will explain the laws in language that is plain and clear. We will provide all our services in English and French and, in some cases, other languages too.
There is no doubt about it – the current Conservative Government is planning a great surprise for all Canadians -- who have been unfairly taxed in the past decade or so.

At the very least they will all receive a clear – easy to understand -- explanation of the defective Legislation that gave the CRA the right to tax their non-existent “Income” in the first place.

Come to think about it – a clear, easy to understand, explanation of this flawed legislation -- in the language of our choice -- is not exactly the response we were looking for.

That response sounds more like a TRICK than a Treat.

How about honouring every Canadian’s RIGHT to TRULY “Fair Taxation” by correcting the defective taxable benefit legislation? Then you can explain the law to us in clear, easy to understand, language.

Say for example introducing another government Bill -- similar to Bill C-10 -- By the Hon. James Michael (Jim) Flaherty -- and this time make the Bill Summary to read:- “This enactment amends the Canada Income Tax Act to provide for exclusion of intangible equities, such as Corporation Shares and Company Stocks from the taxable benefit classification.” “Provision is also made for taxpayers who have been levied taxes on non-existent Earned Income to claim all related stock and/or share equity transactions as Capital transactions with their taxes adjusted accordingly.

And then publicizing the restoration of that RIGHT so that all victims are made aware of the opportunity they now have to a really honest and fair tax levy.

This would give substance to the above, 2007, Fair Taxation Pledge, and to the new Tax Ombudsman, and to the new Taxpayers Bill of Rights, and to your statements (1) and (2) above.

Also it would give all Canadians the (2007) Halloween Treat they deserve – and have been denied -- for so long a time.

With the dozens of billions of surplus taxes dollars you have been reporting recently you can not say the government can not afford to be “Fair” in this situation. Do the honourable thing this time.

See you at the voting polls for the next Federal Election. Then we can all play Trick or Treat.

Victor Drummond ©

Copyright Notice.. to all public media editors..

COPYRIGHT NOTICE
Issued September 7, 2007
Updated October 30, 2007
By Victor Drummond ©

Be advised hereby that as of this date --all bloggers, publishers of news media and/or business papers and/or magazines, including Readers Digest, are granted free copyright privileges to any article I post to this blog page, (buyerbeware—caveatemptor), both past and future.

As I am the only person with administrative access to this blog page a copy of this notice is the equivalent of a signed authorization.

While those who utilize this material may either support the intent of these articles – or voice opposing views I -- and those who have been victimized by our defective “Taxable Benefits” laws would greatly appreciate your support.

Victor Drummond ©

A Tax Fairness Pledge ...

WHEN IS FAIR FARE?
A Commentary on the Canadian Conservative
Government’s 2007 Fair Tax Policy and Pledge.
By Victor Drummond ©
October 2007

On January 30th 2007 the Honourable Jim Flaherty, Minister of Finance addressed the House of Commons and made the following statement:-

“Make no mistake, the decision that was taken on October 31st is all about fairness—fairness in our tax system, fairness for hard-working Canadian taxpayers and their families, fairness for seniors, for business and other levels of government," said Minister Flaherty. "I am not prepared to sacrifice the interests of millions of hard-working Canadians who pay their taxes and play by the rules so that a select group of special interests can enjoy a tax holiday."

A bit later, June 4 2007, the Government updated their (Tax),“Fairness Pledge”, to all Canadians which reads in part:

Our Fairness Pledge
• Our fairness commitment is based on service that is responsive, consistent, and impartial.
• Our actions must reflect objective yet considerate application of the law.
•We recognize that taxpayers have specific needs and concerns.

Information
• We will give taxpayers information that is accurate and understandable. We will explain the laws in language that is plain and clear. We will provide all our services in English and French and, in some cases, other languages too.

The problem with this set up being the reference to:- reflecting upon an: “objective yet considerate application of the law.”
What does this statement translate into?

Then in the following paragraph is the second ill defined statement:- “We will explain the laws in language that is plain and clear.”
What does this statement translate into?

If “Fair Taxation” -- according to the foregoing “Fairness Pledge” – translates into having the defective, unfair taxable benefit legislation -- explained in plain and clear terms – Fair becomes Fare -- NOT FAIR. In other words:- Pay up --- ---- --.

Then so far that appears to be about as “Fair” as this government is prepared to go.

As long as the defective taxable benefit legislation remains on the books there is NO POSSIBLE WAY TO APPLY THAT LAW FAIRLY.

If some victims receive extra CONSIDERATION -- and have their taxable benefit taxes reduced or dismissed entirely -- how does that become “Fair” to all the other similar victims?
OBVIOUSLY IT DOESN’T.

Until the taxable benefit legislation is amended to exclude corporation shares -- no matter how acquired -- from the taxable benefit classification -- any pretence of applying “Fair Taxation” to all Canadians is a mere charade and an absolute farce.

Honourable Jim Flaherty -- Give your taxation “Fairness Pledge” some substance.
Amend the taxable benefit legislation to exclude corporation shares and company stocks as “taxable benefits” and have these equities taxed according to the really fair “Capital Gains/Losses” legislation.
REAL TAX ON REAL INCOME. That legislation IS universally Fair Taxation for all Canadians.

Until that is done the taxable benefit victims have no rights and also can not be given a fair deal.

All the fairness they can beg for is:- SPECIAL CONSIDERATION – with hat in hand.

There is absolutely no justification for doing half a job – correct the legislation and allow it’s past victims to apply for genuine fairness in their “Income” taxes.

Then if past victims decide to forego their RIGHTS to fair taxation they may safely be assumed to have made a conscious decision not to reclaim their rightful tax adjustment and are therefore being taxed fairly.

See you at the Federal Election Polls.

Victor Drummond ©

Beggars can't be....

“PLEASE, SIR, I WANT SOME MORE”
A parallel between Oliver Twist and the status of Canada’s
victims of the defective Taxable Benefits Legislation.
By Victor Drummond ©
October 2007


Charles Dickens wrote about a child born in a parish workhouse -- to a vagrant woman – who died shortly after the child was born.

The child, a boy, was born with only the universal right to exist and not much more.

Anything the parish administrators provided to him was by way of a favour – so far as the administration was concerned.

The day eventually arrived when the boy, now known as Oliver Twist, realized he needed more nourishment in order to feel comfortable and go to bed at night without hunger pangs.

Oliver then dared to approach the gruel dispenser – with basin, and spoon, in hand – and politely beg for some more nourishment. He didn’t likely realize his lack of self esteem or the low level of self worth or lack of social status that he had been living with.

The gruel dispenser was absolutely shocked that a vagrant child would have the audacity to plead for more.

Even the parish administration felt that such a child would eventually come to a sad end.

Fortunately very few children born in Canada suffer such hardships and lack of rights.

Children born in Canada not only inherit the universal right to exist but also the right to honest, fair and equal treatment under the laws of Canada.
This right should also apply to ALL Canadian taxpayers – but it does not.

There are many Canadians currently faced with huge tax levies on money they never saw and likely never will see.

Canada’s current government has upgraded a series of “Fair Taxation” bulletins, form and pamphlets and a “Fair Taxation Pledge” which create the impression they are seriously offering the taxable benefit victims – a fair deal. NOT SO.

As long as the Canadian Income Tax Act contains legislation that empowers the Canada Revenue Agency to tax non-existent gains as “Earned Income” then the victims of this legislation have NO RIGHT to real fair taxation. The victims of this mode of taxation are reduced to begging for their unfair taxes to be dismissed.

Way-to-go Canada. You have created our own sizable population of Oliver Twist(s).

These victims, however, have experienced attributes of dignity, compassion, social status and fully realize when they have been lowered in the social system from kings of their own domain to nothing more or less than beggars.

To add insult to injury they must beg for their own money which should never have been extorted from them in the first place.

The defective taxable benefit legislation -- that created this social disaster -- generates victims at a wholesale rate – while the appeal process is deliberately designed to provide relief to a very few victims at a time.
This is passed off as: “Equal Treatment” under the law.

Many victims would rather suffer the loss of their money than stoop to begging for what is rightfully theirs.

Furthermore the granting of relief to the paltry few -- who can afford to utilize the system – and may obtain a favourable ruling -- merely compounds the felony by creating unequal treatment for a fortunate few while -- leaving the vast majority of identical victims to stew in their own juice. This is also passed off as: “Equal Treatment” under the law.

Appeal after appeal has been made to every level of government over the past six, or more, years. The only real corrective action taken so far is the granting of remission of this specific taxation to some 60+ employees of the JDS Uniphase plant in Saanich British Columbia. For an update on this situation see prior articles:- “Could anyone want for more?” and “Will Canada’s Real Leader Please Stand up.”

PLEASE SIR CAN WE HAVE SOME MORE? – Give us back our RIGHT to Fair Taxation – Introduce a members bill to exclude Corporation shares from the “Taxable Benefit” classification.

If this injustice is ever going to be rectified it appears the Canadian Voter is the last ditch factor. They alone seem to be able to provide relief and fair treatment for the “Oliver Twist” victims of this defective segment of our tax legislation.

As a voter you can tell those who solicit your vote – “Commit your party to implement corrective action on the “Taxable Benefit” legislation – or NO VOTE.”

See you at the polls.

Victor Drummond ©

The Tax Fairness Pledge...

COULD ANYONE WANT FOR MORE?
A commentary on the provisions made for Canadian
Taxpayers to appeal for Fair Taxation.
By Victor Drummond ©
October 2007

So you have a problem with the Income Tax Levied on you.
And you have been assessed to have received an assumed, (phantom), “Earned Income” substantially larger than your actual received income but you were taxed on the phantom amount anyway.
And/or your last tax assessment notice left you gasping for breath.


Well take heart – there is now a pamphlet issued by the Canada Revenue Agency, (CRA), number P148 – a document that is 23 pages in length -- with the encouraging title:-
“Resolving Your Dispute, Objections and Appeal Rights under the Income Tax Act.”
A sample letter of appeal is also provided with this pamphlet to make it easy to draft your own letter.

On the last few pages of P428 is a list of 43 Income Tax Offices where your appeal may be dropped off – or mailed. In addition there are phone numbers and for most offices also fax numbers. This list makes an appeal office within easy reach of all tax victims.

Or your first line of appeal could be via form T400A -- which bears the title:- “Objection to an assessment or determination.” This application for justice is to be sent to the:- Canada Revenue Agency -- Chief of Appeals -- when filled out.

Then again you may decide to use the Tax Ombudsman appeal form number:- RC193 which may be printed off the Internet -- via links from URL www.cra.gc.ca/fairness
Be sure to read the “Fairness Pledge” at this web page.

Or this same form comes with pamphlet RC4420 – an “Information or Service Related Complaint Pamphlet” -- which also provides details of how and when to use this document.

There are however a few hurdles to overcome in using any of the above forms, i.e. There may be a “Time Limit” restriction ranging from 90 days to a year – which may be waived, extended or applied at the whim of the appeals officer reviewing the case.

And/or there may be a filing fee charged ranging from zero $ to $550 depending upon the stage of appeal and the dollar amount of the claim.

And/or if the appellant’s claim is denied at the last level of appeal the taxpayer may be charged to pay part of the defendants legal costs to process the claim – plus their own legal and court costs – plus the initial tax levied.

The appellant has no less than 5 levels of appeal to consider. There is the first level appeal via letter of appeal to the first level CRA Appeals officer. No satisfaction -- then take the matter to the Chief of Appeals – still no satisfaction then take the issue to the Tax Court of Canada – still no satisfaction then bump the matter to the Federal Court of Appeal – still no satisfaction then take the issue to the Supreme Court of Canada – still no satisfaction – GAME OVER.

During this entire process the taxpayer will have spent possibly a year or so waiting for decisions and another huge amount of lost time and legal costs. (plus the original tax levy.)

Not a very attractive scenario or a system that offers much prospect of the appellant receiving a favourable outcome.

Question:- Why is the outcome of this elaborate tax appeal system tilted against the
appellant?

Answer:- Because at every level of the appeal system the taxpayer’s circumstances are being compared to existing – defective – taxable benefit legislation. The “Fairness Pledge repeatedly states the appeal will be treated “Fairly” according to the existing tax law.

Although the mandate of the Tax Court of Canada allows the court to take into consideration undue hardship imposed on the taxpayer by the application of the taxes levied – this very discretionary power increases the unequal treatment of taxpayers under the law – and leaves the courts decision up to the whim of the court.

Unless the appellant is given a prior “Means Test” they would have little prospect of getting a favourable decision.
NO DEAL

So the title question:- “Could anyone want for more?” The answer is a definite:- YES

MUCH MORE -- is an absolute requirement -- if the taxpayer has been levied taxes on a non-existent “Income”. The appellants case must be compared to a taxable benefit legislation. (LAW), that clears them of any tax liability on mere “POTENTIAL GAIN”

As a voter – notify your federal MP that they and their political party must commit to correcting this unfair, unjust, unequal tax fiasco – or they will not receive your support.

Victor Drummond ©

Missed Opportunity to..

WHY STOP THERE?
A logical comparison of the rationale
used by The Canadain Revenue Agency
to tax unrealized potential gain.
by Victor Drummond (c)
October 2007


A key element of The Canadian Revenue Agencies logic by which they attempt to justify taxing unrealized "Income" as a "taxable benefit" is the following "assumption".

"The employees who participated in their employer's Employee Share Purchase Plan(s), (ESPP/ESO etc.), had the opportunity to cash-in their shares at the time the shares were exercised, (came under the control of the employee).

And if they did not take their potential gain at that time it was a conscious decision on their part to take the risk of playing the stockmarket at their own risk.

A risk the CRA didn't want to participate in with their tax-on-profit rights.

Therefore the CRA logic being (that) they are fully justified in taxing the employee at the Fair Market Value, (FMV), of their ESPP/ESO shares -- at the time of exercise -- even though the taxpayer hasn't realized one cent of profit. Isn't that Fair?

The CRA claims it is fair -- so why stop there? There are several equally logical scenerios where the CRA could apply even more levies of taxes on potential but unrealized profits.

FOR EXAMPLE:-

The ESPP/ESO participating employee may have also made a conscientious decision not to purchase all the shares they were allowed, and could afford -- under the ESPP/ESO opportunity available to them and consequently denied the CRA even more legitimate? taxes.

Why not have the employer report the total ESPP/ESO shares available to the participating employees along with their credit rating so that the CRA can calculate the opportunity the employee consciously decided to forego and then the CRA can tax that opportunity as well.

Then there is the employee's opportunity to make a profit on selling shares short.

Allowing they already have shares to sell the broker would allow them to sell another block or two of identical shares short. This action could theoretically double or even triple the potential gains possible.

It is not the CRA's fault if the participating employee made a conscious decision not to avail themselves of the short sell opportunity. So why not tax this opportunity as well?

Therefore it is just as logical for the CRA to estimate the potential gain the employee could have made in this way and tax that unrealized, assumed, profit as well. Isn't it?

Yes all of the above rationales are equally logical -- and ridiculous.

Although the previous government demonstrated an amazing tolerance for unscrupulous and unfair taxation -- and money mis-management -- the time is long past for the present government to show they have a much higher level of:- honesty, integrity and credibility.

This could be easily done by introducing a bill to restore the unjustified taxation to it's rightful owners -- the original taxpayer -- and amend the taxable benefits legislation to exclude corporation shares from the taxable benefit classification to avoid future problems of this kind.

Failure to take this initiative puts the previous and current government organizations on the same credibility plane.


Victor Drummond (c)

Stone Cutting Course...

ETCHED IN STONE?
A commentary on the reluctance of
Canadian Political Leaders to initiate Essential Upgrades
To the Canadian Income Tax Act.
By Victor Drummond ©
October 2007

Of all the articles posted to this blog site – every one berating the taxation of unrealized “Income” not one comment has been returned that defends the government’s right to do so.

Everyone – including the government’s own Ministers – recognize the injustice of this flaw in the taxable benefit legislation.

Of the few acknowledgements -- returned to victims – in response to their letters of appeal for justice – not one has indicated any intention of correcting the defective legislation.

In fact – one such letter – shared with me recently by a victim – came from a high level minister and contained nothing more or less than a replay of the legislation that caused the improper taxation in the first place. But no mention of fixing the flawed legislation.

Members of our present government treat the existing Income Tax Legislation as though it came down from Mount Ararat with the Ten Commandments. Not so chaps.

Our present Income Tax Act – and it’s multitude of Interpretive Bulletins, and Tax Guidelines were written right here – in good ole Canada -- by people not one whit smarter than out present PM and supporting MP’s.

And when a legislation defect shows up – such as the improper inclusion of corporate shares (no matter how acquired) -- as an item that has been taxed as:- “Earned Income” when there was nothing “Earned” and no “Income” to tax.

Then it is long past time to get out the Mallets and chisels to cut a new stone tablet that corrects the flawed: “INCOME TAX – TAXABLE BENEFIT” legislation.

We have confidence in your ability to correct this injustice – so do not show us you are not up to the job.

Victor Drummond ©

Do not let others....

YOU DON’T SAY
A commentary on why Canadians should challenge
The Canadian Revenue Agency taxable benefit legislation.
By Victor Drummond © October 2007

Canadians have historically and typically been a very law abiding, complacent , compassionate and contented lot – much like the cows that give better milk.

In fact we do give better milk – the milk of human kindness – in our support of an infinite number of charities and worthy causes.

On average we are so charitable that we will happily contribute to many appeals that are far from legitimate charities. But then who has the time and resources to sift the real from the phoney.

Just put some contribution money on the plate and walk away with a clear conscience.

In this social environment then it is no wonder that rascals work all kinds of scams on us.

Such as the unscrupulous contractor(s) that take your money and do little or no work – or worse still -- rip your house apart and then totally disappear from the scene – with your cash.

Of course before you part with your money they will provide a logical view of the finished project and promise the work will be first class – will be finished on schedule – wont generate additional costs – etc. Little to none of which turns out to be factual.

These charlatans only appear on the street – there couldn’t be any in established organizations, e.g. the Canadian Government – or could there be?

No? The street scoundrels likely learned this technique by watching politicians on TV.

Well so what if there are a few scoundrels in government offices – what harm could they do to me?

I go to work every weekday and pay my bills on time – and pay my taxes as they come due – and generally mind my own business --so they can’t hurt me.

Don’t be so sure. What about those taxes?

Lets examine some tax situations and look at the facts.

(q) Have you ever been taxed on money you never received? (a) No.
Well thousands of Canadians have been. How do you suppose this came about?

(q) Have you ever purchased, or received, corporation shares? (a) Yes.
(q) Did you ever sell any at a profit? (a) Yes.
(q) Did you report your profit on you next tax return? (a) Yes.

(q) Did you pay tax on your gain? (a) Yes. (q)How much were you taxed?

(a) Well the inclusion rate that year was 50% and I was in the 38% taxable income range so I paid .38 x .5 = 19% tax on my realized gross profit.

(q) Did you feel the tax you were required to pay was “Fair”? (a) Yes.

So what if some scoundrel in government wrote up a series of tax bulletins that collectively said: “When you bought your shares you had made a theoretical gain because:-“

(1) the company shares you had purchased were those of a corporation that was not a
Canadian Controlled Private Corporation, (CCPC).
(For whatever difference that makes.)

AND

(2) the broker that sold you the shares was an agent of your employer and your purchase was made via an Employer Shares Purchase Plan, (ESPP).
(For whatever difference that makes.)

AND

(3) you paid less per share than the average closing price of the shares over the last 20 or so trading days – an average used to calculate the Fair Market Value (FMV), of the shares.

Therefore you must pay tax on the difference between what you actually paid for your shares and their calculated FMV.

(q) Have I sold my shares? (a) No.

(q) OK – So where is my gain? (a) You don’t have any gain.

(q) So what am I being taxed for?

(a) You are being taxed on a potential gain – one that you might realize if you can sell your shares at the calculated FMV or higher.

(q) Doesn’t that sound “Fair to you?” (a) NO WAY DOES IT SOUND FAIR.

(q) So what if I sell my shares at a profit later and really make a profit? Am I off the hook?

(a) No – not if you receive more money for your shares later than:-
“The Adjusted Cost Base”, (ACB) of the shares you had.

(q) So if I do sell my shares later for more than the ACB – am I taxed on more “Taxable Benefit” money?

(a) No – now you are taxed on a “Capital Gain” profit.

(q) You don’t mean to say that my “Taxable Benefit shares are now a “Capital Gain” item?

(a) Yes – that is exactly what I am telling you.

(q) So what happens if I can not sell my shares for anything like the money I paid for them?

(a) If after you paid your “taxable benefit” taxes on your initial shares purchase -- and you then have to sell your shares at a loss – you are just plain out-of-luck – you can not apply those “Capital Equity” losses against the “Taxable benefits” taxes you already paid on those same shares.

(q)Doesn’t that sound “Fair” to you? (a) NO WAY DOES IT SOUND FAIR.

(q) How can it be that shares I have been taxed on as a “taxable benefit” and which never produced one cent of gain for me to be taxed on -- in the first place -- can now become a non-recoverable Capital loss?

(a) Oh Revenue Canada is “Fair” about “Capital Gains/Losses” – you can report your loss on Schedule S3 of your tax return and if you ever make a Capital Gain in the future – then you can apply your Capital losses against those “Capital Gains.”

(q) Doesn’t that sound “Fair”?

(a) NO WAY IT IS FAIR – if I am taxed on something -- that didn’t produce a gain in the first place -- and then I can not recover any of the extorted tax money when those same shares result in a loss – (q) What is “Fair about that?”

(a) NOTHING

(q) What do I do if my “taxable benefits”, (tb), taxes are really huge? I have heard of cases where the unrealized tb tax is in the hundreds of thousands of dollars – exceeding even the real total annual income of the taxpayer? Is that a true situation? (a) Yes it is.

But Revenue Canada has made provision for that contingency – they have produced a document T1212 whereby you can defer up to $100,000 per year of tb “income”.

(q) Isn’t that “Fair”? (a) “Fair” NO WAY – you have a really warped sense of humour.

(q) Is it also true that many victims of the tb tax rip-off were obliged to borrow money and/or mortgage their homes in order to pay down those huge unjustified tb taxes?

(a) Yes that is also a fact. (q) But don’t you agree it is fair and proper taxation?

(a) DEFINITELY NOT. What’s fair about taxing money one never received and then allowing the tax to stand in abeyance for as long as the victim lives?
(q) What kind of crackpot dreamed up this scam?

(a) Well like I said in the beginning -- there are rascals and scoundrels – even
in government.

(q) So what is your opinion on this shares -- as a taxable benefit tax situation?

(a) NO WAY IS IT “FAIR” TAXATION – This whole set up of classing shares as a taxable benefit stinks to high heaven.

(A) YOU DON’T SAY.

Well in that case don’t go back to watching TV – and soothing your conscience by contributing to another “charitable” cause.

Get cracking and make sure everyone knows you are only going to vote for the political party that commits to implementing real and timely corrective action on this issue.

There are thousands of real Canadian tax victims waiting for justice.
And justice doesn’t appear to be coming from our government.

So -- If you -- the Canadian voter ignore their plight -- then your
total charitable contributions actually add up to a zero.

NO COMMITMENT – NO VOTE – AND I DO SAY.

Victor Drummond ©