APPEALS TO REASON ..

APPEALS TO REASON – Part 6
A series of letters and E-mail messages from Canadian victims
of taxes on phantom income to Canadian Government Authorities, at all levels,
appealing for fair treatment and the, often idiotic, replies they received.

Read: Appeals To Reason Part – 1 (preamble) & Parts – 2, 3,4,5 for more background information.
By Victor Drummond ©
April 2009

Synopsis of the events to the present

In November 2006 I discovered a member of my family had been levied horrendous taxes, in the year 2000, on money he never received, e.g. phantom income.

When asked did he know of any other people that had been taxed on money they hadn’t received he told me, yes, quite a few. So I obtained the name of a co-worker, Mabel D. Lamb who had also fallen victim of Canada’s insidious taxable benefit legislation. (Not the victim’s real name)

After contacting Mabel, via e-mail, I received an e-mail reply from Mabel’s husband, Arthur, who gave me the beginning of the events leading up to Mabel’s phantom tax and promised to send me copies of some of the correspondence that had taken place between Mabel and members of Canada’s federal government.

Mabel’s Letter to the CRA and members of Canada’s Government is presented in Part 3 of the APPEALS TO REASON series.

Part 4 begins with examples of the incorrect, and incomplete information given to ESPP participating employees of the JDS Optics Inc. Company as it evolved to become the JDSU Corporation in 1999.

Part 5 continues with the replies Mabel received from the office of the Hon Paul Martin Minister of Finance and the Minister of National Revenue et al.

Part 6: In the federal election of 2006 the Conservative Party was elected on the promise of fair and reduced taxation and their slogan “STAND UP FOR CANADA” Read below to see how this promise was perverted.

====================================
Shortly after Canada’s most corrupt government in history was defeated in the federal election of the year 2006, and a minority Conservative government took office, a well intended Member of Canada’s 39th Parliament – (perhaps actually believing those, if elected, promises to restore fair taxation in Canada) -- applied for a “Tax Remission Order” (TRO), to revoke phantom taxes levied on some 37 of his victimized constituents.

The Honourable Gary Lunn, Member of Parliament, for the riding of Saanich Gulf-Islands, British Columbia, applied for a TRO to revoke unfair taxation of 37 former employees of the, then defunct, SDL Optics/JDSU corporation plant in his riding.

Carol Skelton, Minister of National Revenue, was assigned the task of preparing the TRO document for approval and necessary signatures.

The Right Honourable, Stephen Harper, perhaps naively, signed the TRO request and passed it along to Her Excellency Micheal Jean, the Governor General for Canada, for her approval.

According to the November 14th, 2007 issue of the Canada Gazette, Vol. 141, No. 23.

“Certain Employees of SDL Optics, Inc. Remission Order” P.C. 2007-1635 October 25 2007: Her Excellency the Governor General in Council, considering that it is in the best interest, of all Canadian’s to do so, on the recommendation of the Minister of National Revenue, pursuant to subsection 23(2) (see footnote a) of the Financial Administration Act, hereby makes the annexed Certain Former Employees of SDL Optics Inc. Remission Order.

(skipping article 1: “Interpretation”)

2. Remission is granted to the taxpayers set out in column 1 of the schedule for the amount set out in column 2, in respect of the 1999 or 2000 taxation years as the case may be which represents:

(a) for those taxpayers set out in items 1 to 21 of the schedule, all or a portion of tax paid, or payable under Part 1 of the Income Tax Act in respect of an employment benefit; or

(b) for those taxpayers set out in items 22 to 42 of the schedule, all or a portion of interest paid, or payable under Part 1 of the Act, on tax paid or payable under that Part in respect of an employment benefit.

==================================
There are 34 people named in column 1, of the first issue of this TRO, with taxes in amounts ranging from $3.30 plus $2,641.04 for Sandra Woodward to $183,371.94 plus $179,260.64 for Christine Mollerud.

Presumably the separate dollar amounts, for the same victims, are based on taxable benefits reported as “Earned Income” for the two years, 1999 and 2000.

As it turned out there were three additional victimized SDL Optics employees who were not covered by the November 14, 2007 TRO so a second issue of the TRO was announced in the Canada Gazette of June 11 2008, Vol. 142, No. 12.

Issue 2 of the TRO brought the total number of victimized Canadian taxpayers, to be granted anything like the promised “Fair Taxation” to 37.

That left a huge majority of identically victimized honest, hard-working Canadians legally robbed via Canada’s defective income tax legislation, and application policy, to be treated likewise.

Until that happens the pre-election promise of fair taxation has not been kept and the outrageously unfair taxation of phantom income has only been compounded by discriminatory and selective favouritism.

This half-assed manoeuvre while attempting to deliver fair taxation actually makes the situation much worse. A job done by halves is never done right.

Of course some newspaper journalists recognized the boondoggle the government had committed and a few of them actually had the moxie, and support of their editors, to have their negative comments on the issue published in some widely read newspapers.

One of the first newspaper commentaries to appear was written by columnist Jamie Golombek, which
carried the title:- “What about the rest of us?”

Jamie’s article appeared in the January 13 2007 issue of the National Post Newspaper.
=======================
What about the rest of us?

By National Post January 13, 2007
Former employees of JDS Uniphase got a special Christmas present when MP Gary Lunn, Minister of Natural Resources, revealed his government would forgive all taxes and interest for a group of workers who were forced to pay taxes on stock-options gains -- profits they never actually realized.
"It took a change in government to get someone to listen, but the Prime Minister has come through and delivered tax relief on this issue," says Mr. Lunn, who is the MP for Saanich-Gulf Islands in B.C., where the now defunct JDS plant was located.
The issue, which affects many employees who exercise stock options only to see the price of the shares plummet afterward, can best be illustrated with an example.
Let's say Jay, an employee of Hi Tech Inc., was given the option to purchase 1,000 shares of Hi Tech at $2 per share through the company's stock option plan.
Two years later, Jay exercises his options with the share price at $402. Under Canadian tax law, Jay has received an employment benefit equal to the difference between what he paid and what the stock was worth, or $400,000.
After the tech crash, the shares of Hi Tech drop back down to $2, and Jay sells his shares, realizing a capital loss of $400,000 ($2,000 minus $402,000). The tax problem stems from the fact that this loss is considered to be a capital loss and as such, can only be offset against other capital gains, not against the employment benefit of $400,000 reported on his T4 slip.
It is this mismatch of employment income with a capital loss that has created a harsh economic reality for employees, such as those at the Saanich JDS plant, who face massive tax bills on money they never received.
The former JDS employees' pleas for tax relief fell on deaf ears and some of the affected employees were forced to take out second mortgages and lines of credit to be able to meet the demands of the Canada Revenue Agency's collections department.
From a policy perspective, the CRA has traditionally been unsympathetic, arguing that the tax system was fair and "reflects the result that, at the point of acquisition, those employees who hold their shares have chosen to accept a market risk as an investor in the expectation of a return on that investment, including the future appreciation in the value of those shares."
Thus, they are subject to the same general income tax rules respecting capital gains and losses on the underlying shares as other investors, the CRA notes.
It took political action to make a difference in the JDS case, but what about other affected employees in similar situations? Will the CRA be granting tax relief to all?
"It's only for those specific employees" says Colette Gentes-Hawn, a spokeswoman for Canada Revenue Agency.
This is clearly unfair and the government should amend the Income Tax Act to grant relief to all affected taxpayers.

===================================
The above article tells it the way it really is. The Conservative government has fallen far short of delivering the “fair taxation” promised when they were campaigning to be elected in 2006. Their election slogan was: “STAND UP FOR CANADA”. They won the election on this slogan, and the promise to restore “fair” taxation, so why don’t they now STAND UP FOR ALL CANADIANS and deliver on that promise?
There is much more to this on-going government rip-off so read the next: “APPEALS TO REASON – Part 7” when it is posted.

Victor Drummond ©