CASH or Not Cash..

CASH – NEAR CASH – WORTHLESS
A commentary on the Canada Revenue Agency Cornerstone
classification of company and corporation shares as
Near Cash Items.
By Victor Drummond – January 2008

In the myriad of bulletins, User Guides and Information Texts -- produced by the Canada Revenue Agency , (CRA), – in an attempt to justify taxing Canadians on mythical taxable benefit “Income” --their rationale foundation cornerstone -- is to declare company stocks and corporation shares as a Near-Cash item.

From that ill-defined rationale the, (CRA), builds a castle-in-the-air argument that ends up with their claim to legally taxing an imaginary, Fair Markey Value, (FMV), for an equity that has no intrinsic or face value.

So what attributes define anything as:- “A NEAR CASH ITEM”?

Let us begin by listing the attributes of Government Minted Currency, GMC):-
(In all cases the holder may not use their name or personal credit rating to support an exchange.)

Logically anything that has – for example 51%, or more -- of the attributes of, (GMC), could reasonably be considered to be a Near Cash Item.
------------------------------------------------------------------------------------
General Attributes of GMC versus shares/stocks:-

(1) The holder may exchange GMC at an almost infinite number of places without providing a name,a credit card or any ID of any kind.
Not true of shares or stocks. (0% similarity)

(2) GMC can be fashioned into trinkets, jewellery and/or artefacts that can be exchanged for other goods or currency.
Not true of shares or stocks. (0% similarity)

(3) In addition to the near infinite number of places GMC can be exchanged for goods and services GMC can be utilized 24/7.
Not true of shares or stocks. (0% similarity)

(4) The holder of GMC can pre-determine the value of the GMC being exchanged and demand the face value be honoured.
Not true of shares or stocks. (0% similarity)

(5) GMC can be used to retire debts, PAY TAXES, and/or directly establish a universally recognized credit rating.
Not true of shares or stocks. (at best a 10% similarity)

Expanded commentary on the foregoing comparisons:-

(1) Although anyone with a brokers account may – with proper identification –
exchange stocks and/or corporation shares for GMC, or other equities, it can
only be done with the support of the persons credit standing with the broker.

Consequently even blue rated shares can not be exchanged -- just anywhere --
by just anybody.
No one can take their latest portfolio statement into a bank and obtain any
exchange what-so-ever without having an account, or credit rating with the
bank.
Consequently any GMC issued by the bank -- for shares presented -- is based on
the person’s credit rating – not the zero intrinsic value of the shares/stocks
perse.

(2) Although I have seen clear acrylic toilet seats with GMC imbedded in the
castings I have never seen -- or ever will see -- a stock certificate – or
portfolio statement fashioned like that and offered in exchange for GMC or
other goods or services.

(3) Stocks and shares can only be exchanged at one place – the stock exchange --
and then only during regular business days and hours and then only if the
holder is a client of the broker and then only if the client has a credit
rating equal to – or greater than the gross value of the shares offered for
sale.

(4) The holder of stocks and/or shares has absolutely no control over the exchange
value of their holdings -- or over the quantity of their holdings that can be
exchanged at any time of the holder’s choosing. Stocks/shares have no
intrinsic value and no face value that can be enforced.

Both of these IMPORTANT aspects -- of a share/stock trade -- are entirely under
the control of the bidder.

Shares/stocks can – and do – trade from low to high GMC value or to zero GMC
value without advanced notice.
Bad news -- or shares consolidation -- can alter the GMC value of person’s
holdings with little -- or no -- advance warning.

It is a stretch of logic to assume that because a particular company shares
traded at high volume and at high GMC value for any period of time that the
holder of said shares could have sold their holdings, at the hi-lo- or closing
price, of the same shares – on any given day -- and in the volume they wanted to
sell. Any claim otherwise is pure wishful, or deceitful, thinking.

The only certain thing is the bottom line when the share holdings are:-
ACTUALLY SOLD and the seller has the exchange GMC in hand, or, in the bank.

That is REAL INCOME and may support REAL TAXES.

(5) No one will accept a share certificate, (if you can find one), or a portfolio
statement, issued by even the most prestigious brokerage house, in exchange for
GMC -- or goods -- from an unidentified person.

So where is the NEAR CASH VALUE of stocks/shares – Essentially non-existent that’s where.

The government – by it’s very own actions -- has shown they do not actually believe that shares/stocks are a near-cash item, e.g.:-

I have on file a copy of a taxable benefit victim’s letter – to Paul Martin -- while he was still prime minister – offering to give the CRA the unsold -- very same JDSU -- shares that shortly before had been taxed at a percent of their assigned FMV – creating a tax of tens of thousands of dollars or more -- as a taxable benefit.

THE OFFER WAS DECLINED.

If those shares are a NEAR CASH ITEM why wouldn’t the government accept them in payment for the tax they had just generated? If a fraction of the assumed FMV was a solid enough basis to levy a real huge tax THEN why wouldn’t 100% of those same shares be accepted by the government in payment of the tax they generated? Shouldn’t the original assumed FMV still apply?

WHY? BECAUSE THEY ARE NOW COMPARITIVLEY WORTHLESS – and therefore by the governments own actions they have shown:- SHARES/STOCKS ARE NOT A NEAR CASH ITEM.

But the HORRENDOUS tax they generated still stands. Much of it in the form of a deferred tax per form T1212 -- hanging like the sword of Damocles -- over the head of the victims.

The author of that letter was obliged to borrow money and mortgage their home to pay this unwarranted fine.

How is that for “Fair Taxation” for all Canadians? Non-existent that’s how.

When stocks/shares are removed from the taxable benefit classification and those Canadians who have already been levied taxes on the mythical taxable benefit “Income” are refunded -- with interest -- every cent they were obliged to pay -- for “Income” that never existed – THEN -- Canadians will be receiving the service and protection of those they elected to represent them. And not before.

If no candidates for election -- in the coming federal elections – will commit to correcting this atrocity then please register your protest by using my name -- as a write-in candidate -- on your election ballots.

Victor Drummond ©