WHAT DO YOU BELIEVE...

WHAT DO YOU BELIEVE?

There are still a few adult people who believe the world is flat.
And there are a lot of mature Canadians who believe the Honourable James M. Flaherty,Canada’s Minister of Finance,when he reiterates the taxing of Honest, Hard-Working Canadians,out of their lifetime savings, and/or homes, based upon fictitious income -- is “fair”.

Following is a summary of the real facts inherent in the taxing of “phantom income”
By Victor Drummond ©
November 2009

Our Honourable James M. Flaherty, Canada’s Minister of Finance, has declared on several occasions that Canada’s on-going policy of taxing phantom income is “fair” because:

(1) “The legislation has been on the Law-books for a long time which makes it a good law.” and
(2) “Taxpayers who hold their ESPP/ESO acquired equities past the date of exercise are treated the same as all other Canadian stock market investor/speculators.”

So let us examine those arguments:

(1) How many laws do you suppose -- that have been on the Canadian Law-Books a lot longer that our defective “taxable benefit” legislation -- that are now considered bad laws?

Laws pertaining to “Capital Punishment” are now in question – original laws have been amended.
Laws pertaining to “Abortion on demand” are now in question -- (as above)
Laws pertaining to “Same Sex Relationships” are now in question – (as above)
Laws pertaining to “Young Offenders” are now in question – with many already amended.
And these examples barely scratch the surface.

So if there is any relevance between the length of time a law has been on Canadian Law books it is: “The longer a law has been in use the more likely it is to be outdated and in need of updating.”

Argument (1) is “BUSTED”

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(2) At what point -- in the tax process -- does the tax treatment of taxpayers who hold their ESPP/ESO acquired equities, past the date of exercise, become the same as the tax treatment of all other Canadian investor/speculators?

We will begin by listing the tax treatment of: “All other Canadian investor/speculators.”

Honest, hard-working citizens of civilized democracies such as Canada and: The United States of America: are able to buy and sell equities on a variety of established stock, commodity, and financial exchanges.

Using common shares and shares options contracts -- to make my point(s) – the following facts and comments apply.

Anyone who can meet the age and financial requirements of a stock broker may open an account that allows them to buy, sell, and/or short-sell the above named equities.

Buy/sell, and/or short-sell, orders can be placed with your broker in person, or by phone, or via, an on-line computer.

Once an investor has established a broker account and has equities, and/or cash, deposited in their account they may then be extended the option of trading additional equities on “margin”.

Margin buying/selling of equities carries additional risks along with the advantage of providing leverage to increase potential gain.

Fact (a) No matter how many shares you buy, from your broker, or what price you pay for those shares there is no “income tax” implication so long as you do not sell, trade or liquidate any of your holdings or collect interest or dividends from them.

Purchased equities remain in your account -- which is also known as your “portfolio”-- tax free indefinitely.

Regardless of whether the value of your portfolio increases, or decreases, or stays the same – as long as you are merely holding equities in it -- there are no tax implications.

Fact (b) It makes absolutely no difference if you happen to be an employee of the broker you are buying and selling these equities through -- so long as the equities are not shares in your employers organization offered to you via an Employee Shares Purchase Plan, (ESPP) or an Incentive Shares Options (ISO/ESO) agreement.

Fact (c) It makes absolutely no difference if your broker-employer sold you the equities you purchased at the market high, or the market low, for the day. Any difference between the actual cost to you and the deemed Fair Market Value (FMV) of those same shares does not generate any tax implications. The price you pay for your equity buy(s) only relate to your Adjusted Cost Base (ACB) of each specific purchased equity.

Fact (d)At tax time, each year, your broker will provide the Canada Revenue Agency (CRA) a summary of your equity trades during the previous year -- complete with the type/class of each equity traded, the trade volume, the price received/paid per equity unit -- the gross value of the trade and any commission or foreign exchange paid/received.

Fact (e)When you prepare your “Income” Tax Return you report the details of all CLOSING equity trades on the S3 --S3-Supplement form of your Income Tax Return.

A CLOSING trade is the combination of the buy and sell transactions involving the same equity.

Equity’s that expire or consolidate/split shares, and/or change their name are tracked in order to accurately report the ACB and final loss/gain on the closing trade.

On your S3 – S3 Supplement you identify the type/class of equity, i.e. Common or Preferred Shares, or Put or Call Option, the volume of the equities traded, the ACB, the gross value of the trade – other costs or expenses and finally the years net Loss or Gain.

Fact (f)If you have a loss to report – then you may apply this loss against any Capital gain on which you paid tax -- at the Capital Gains inclusion rate -- in the last three years. Or you may carry the loss forward indefinitely -- to be applied against any future capital gain.

Conversely if you have a net gain to report, and no offsetting Loss, then this gain is added to your “income” – at the current Capital Gains Inclusion rate – and you pay tax on this profit.

Fact (g)Only closing trades are reported on the S3 -- S3-Supplemnt Tax form and all other equities still held by you, the investor/speculator, remain in your portfolio indefinitely with zero tax implications as per Fact (a).

There is no issue with the “income tax” regulations as stated in the foregoing investment tax policy facts (a to g). Where no monetary gain has been received -- no tax is levied.

Up to this point Canadians have a “fair” and “equitable” income tax system and tax policy.

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The CRA has a different rationale they apply to tax “fictional earned income”, i.e. when you buy equities from your employer via an ESPP and/or an ESO/ISO.

Then the CRA levies a tax on any "theoretical" gain you might have realized -- at the moment your ESPP/ESO purchased equities are delivered to your account -- even though these equities are still in your portfolio -- and no closing trade has yet taken place. You have not yet realized one red cent of actual income.

Is this change of tax policy justified?
Has it been, or can it ever be, applied fairly and equitably?

Here are the facts – and you be the judge.

Fact (h) Equities offered employees per an ESPP and/or an ESO are “purchased” by the employee with their own after tax dollars.
No gift or award has been bestowed on the employee by the employer.

Fact (i)Equities offered by an employer, per an ESPP/ESO agreement, may be offered at a discount below the deemed FMV of those shares as traded on a conventional stock
exchange.

Where the buyer acquires ESPP/ESO equities at a discount (typically 15%)the CRA deems this 15% difference may become a component of a taxable benefit.
(Fact (c) is applicable to “All other Canadian investor/speculators” -- but not to the holders of ESPP/ESO equities.)

Fact (j)There is normally a significant delay between the time an employee agrees to purchase shares under an ESPP/ESO agreement and the beginning of the delivery date(s)(exercise dates). This time delay may range from months to years during which time the buyer (employee) has no control over the equities being purchased.

By comparison equities purchased by way of a conventional broker are delivered immediately and the buyer has full control over these equities until they are liquidated.

Fact (k)Although you have not received so much as one red cent, in hard cash, you are taxed on any theoretical gain your ESPP/ESO purchased shares might have produced had you sold them at the moment you received them from your employer.
i.e. The “exercise” date. (This treatment is unique to ESPP/ESO taxpayers.)

When a theoretical profit is possible, at the moment of “exercise”, it is “deemed” by the CRA to be a “taxable benefit”. Even though no tangible money has actually changed hands. (This treatment is unique to ESPP/ESO taxpayers.)

Note:(1)During the stock market boom years – 1985 to 2000 – this tax policy caused no problem for you as your ESPP/ESO equities went up in value almost daily. Victims of taxes levied on “deemed” earned income could easily duplicate the dollar value that fictitious income by selling sufficient shares to pay the tax.

When the stock market boom went bust in mid year 2000 victims of taxes levied on phantom income could no longer actually realize the deemed “earned income” as the value of the shares held had fallen below the level of the taxes levied on them.

Note (2)During those same boom years the government of Canada encouraged Canadian Hi-Tech Corporations to offer their key employees Incentive Shares/Options purchase plans as a means of increasing employee loyalty. and productivity and as a method to reduce the level of technical people being enticed to switch employers and leave Canada. i.e. Fighting the so-called “Brain Drain”.

Government and Corporate ESPP/ESO brochures during those years encouraged employees to participate in these incentive plans as investors in Canada’s future.

There was no mention that these “investments” could be classed as a taxable benefit that could end up leaving you -- the employee -- financially devastated.

Fact (l)Although the ESPP/ESO acquired equities, (with a theoretical gain), are “deemed” to be a “taxable benefit” at the moment they are exercised. they somehow morph into Capital equities if these same items are later sold at a loss.
(This treatment is unique to ESPP/ESO taxpayers.)

Now regarding James M. Flaherty’s argument (2) “Taxpayers who hold their ESPP/ESO acquired equities past the date of exercise are treated the same as all other Canadian stock market investor/speculators.”

The point at which this argument becomes true is after the ESPP/ESO tax victims have been processed per Facts (h through l). At that point they have already been financially exploited.

Therefore argument (2) is also BUSTED. Taxing anyone on money that never existed is NOT FAIR OR JUSTIFIABLE Mr. Flaherty – and you know it.

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The U.S.A. congress also knows that taxing phantom income is unfair and that is why the amended their comparable “Alternative Minimum Tax” (AMT) legislation to put and end to this tax policy.
Ref. www.reformamt.org

Over 400 Canadians who have signed the CFET petition do not believe taxing phantom income is “Fair” Ref. www.cfet.ca (petition).

Our Right Honourable Stephen Harper, Prime Minister of Canada, doesn’t believe taxing Canadians on phantom income is “fair” or he would never have approved the Gary Lunn Tax Remission Order (TRO) revoking this tax and related penalties for a paltry 37 victims in Saanich – Gulf Islands British Columbia.

Her Excellency, The Right Honourable Micheal Jean, Governor General for Canada doesn’t believe the taxing of Canadians on phantom income is “fair” as evidenced by her signing the Gary Lunn TRO and saying: “ I do so in the best interest of All Canadians”.

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Fact (m)The recourse open to you, as a victim of this taxable benefit tax trap, consist of the following:

(1) You can apply to your local Canada Revenue Office – Chief of Appeals Officer for a reassessment of your “Income Taxes”. These direct appeals are typically denied.

According to a report by the Federal Auditor General, in 2008, the prospect of you receiving a favourable decision using this approach depends as much, or more, upon the location where you submit your appeal as it does upon the merits of your case.

(2) You can hire a lawyer and appeal to the “Tax Court of Canada” (TCC) to have your case decided by a judge’s decision.

The greater majority of phantom income tax victims who have tried this avenue have ended up having their appeal denied – on the grounds that no laws have been broken -- and those victims who tried this avenue have usually found they have only sent good money after bad.

(3) You may apply to have your taxes reduced, or revoked, on the basis of being in financial distress and you are eligible to be treated as a “hardship case”.

Do you believe allowing financial hardship situations to be a factor in the reduction, or cancellation, of “Income taxes” is fair to all Canadians?

Or does this avenue of tax remission merely reward the spendthrift and penalize the thrifty?

Fact (n)Both the Right Honourable Paul Martin, former Prime Minister of Canada, and the Right Honourable Stephen Harper, Canada’s current Prime Minister made public commitments to correct the phantom tax problem. Paul Martin is reported in the Victoria Times Colonist Newspaper as saying: “We’ll fix it” when asked what he intended to do about the taxing of Canadians on money never seen?

Then following the Gary Lunn “Tax Remission Order” (TRO) Stephen Harper is quoted as saying: “We’ll get it resolved - it will take a change of code.” when asked if the same tax relief would be provided to all Canadians caught in the same tax trap.

As of November 2009 the problem has not been “fixed” or “resolved” and the “code” remains unchanged.

Did either Prime Minister ever say they failed to take the promised corrective action because they believe the taxing of phantom income to be “fair”?

The answer is “No.”
Why? Because they know it is unfair and unjust.

The foregoing bogus arguments put forward by our government authorities are deliberately slanted to deceive the average Canadian into believing something they do not believe themselves. i.e. “that the Canadian policy of taxing honest, hard-working Canadians on “income” money that never existed – is “fair” and justified.”

I do not believe it is “fair” and neither should you.

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The means to make the taxation of ESPP/ESO/ISO acquired equities truly “fair” and “justified” is very simple and straightforward.

Simply remove ESPP/ESO/ISO acquired equities from the “taxable benefit” classification and place them in the “Capital Equity” classification where they rightfully belong.

Compensate those victims who have already paid, or deferred, taxes on phantom income as the U.S.A. government is doing.

Then all Canadian investor/speculators will really be provided the same tax treatment making Minister Flaherty’s argument No. (2) TRUE and Canada’s “income” tax legislation “fair” at last.

See you at the voting polls in the next federal election O’Grady.

Victor Drummond ©

WHY AMERICANS HAVE MORE..

WHY AMERICANS HAVE MORE TO BE THANKFUL FOR
A commentary on reasons to be “Thankful” in 2009 for Canadians
as compared to our U.S.A. cousins.
by Victor Drummond ©
November 2009

United States citizens collectively speaking have a lot more to be thankful for this thanksgiving than do Canadians.

They have a government that has finally recognized the truth, regarding taxing phantom income, and has taken costly corrective action -- in spite of facing the largest budget deficit of all G20 countries.

It took nearly a decade for the U.S. grass-roots lobby groups “Reform AMT” and “The Coalition for Fair Taxation” (CFT) to finally achieve true representation from their elected congressmen but once that recognition was achieved the U.S. Congress passed the required bills to amend their flawed “Alternative Minimum Tax” (AMT) thereby putting an end to the outrageous taxing of income that only existed in a corrupt rationale, i.e. a rationale that provided an excuse to tax phantom income.

Furthermore the U.S. government passed additional legislation to provide reasonable compensation to those American taxpayers that had already been victimized by this outrageous tax policy.

There may be a few Americans – with a vested interest in keeping the phantom income tax policy as it was – that will still argue in favour of extorting a taxpayers lifetime savings and even expelling them from their homes is justified in order to pay this tax. They also believe they are justified in operating ponzi schemes and swindling as many honest, trusting, fellow Americans as they can – because they can.

The United States and Canadian Societies can get along just fine without these self-serving swindlers.

We all know those who have had their tax levy and related penalties on phantom income revoked – have much more to be thankful for this year -- and so do all U.S. Citizens – especially the unemployed.

The right to be free of taxation of phantom income has been restored for all U.S. taxpayers.
And the billions of tax dollars that are being refunded to victimized taxpayers under the reformed AMT legislation are just as effective in fighting the economic downturn as are all the bail-out billions being given to the automotive giants and major financial institutions.

Instead of being left financially destitute and/or homeless these former victims of outrageous, unjustified taxation now have discretionary funds to apply to buying a subsidized new car or paying down the mortgage on their home. These are essential factors in the recovery of the U.S. and world economy.

Keep these factors in mind Americans when summarizing things to give thanks for in 2009.

By comparison the Canadian government has adopted a deny and hide policy when it comes to dealing with Canadian victims of our equally defective taxable benefit legislation.

Canadian victims of taxation -- on money never seen -- began appealing to their government for fair taxation as soon as the downturn in the Hi-Tech market in mid July of the year 2000 triggered the defect in the taxable benefit legislation.

The government of the day – under the Right Honourable Paul Martin – Prime Minister struggled with this issue and might have acknowledged the policy of taxing fictitious income was wrong had it not been for the fact the government needed all the money it could lay it’s hands on to buy off the Quebec Separatists and pay-off the government Ad-Scam commitments, the gun registry and the sports fiasco.

The fact the U.S. government was still applying their flawed AMT legislation and taxing U.S. citizens on phantom income, at that time, was likely another factor in the decision the Canadian government made when they decided to keep taxing Canadians on money never seen.

So instead of correcting the problem the Paul Martin Government quickly altered their support of the Canadian Employee Incentive Shares Purchase Plans and began to describe these plans as “Income Supplements” which could generate taxable income at the time of delivery.

Prior to the year 2000 these employee incentive plans were described as government approved schemes to help increase employee, loyalty and productivity, by providing key employees an opportunity to “invest” in their employer’s organization.

I even have a copy of a document provided to an employee of the Nortel Networks -- by the Corporation ESO Plan administrator – that assures the employee: “he will only be taxed on the gain (if any) they realize at the time they sell their ESO Shares.”

So at that point in time (2001) the Canadian government SET A TAX TRAP for thousands of ordinary Canadian citizens that had never been warned they could lose their life savings, and possibly their homes as well, if they did not sell their ESPP/ESO equities at the very moment they received control over them.

No doubt a few of the victimized Canadians appealed their plight to MP’s in the House of Commons (HOC) that were members of the Conservative Party.

This possibility is supported by the fact the federal Conservative Party constructed a whole series of “Action plans” which they assembled into a pre-election campaign brochure titled: “STAND UP FOR CANADA”.

There are dozens of “Action plan” topics in the 2006 “STAND UP FOR CANADA” brochure – not the least of which is the promise to provide a system of “fair” taxation for “All Canadians” if elected.

So in February 2006 the federal Conservative Party was elected to form Canada’s government with a minority of seats in the HOC.

The Right Honourable Stephen Harper wasted no time in taking action to keep the party commitment to provide fair taxation for: “All Canadians”.

That may have been his initial intent when Harper approved a Tax Remission Order (TRO) for 37 Canadians victimized by the “phantom income” tax fiasco but it seems the road to HELL is really paved with same.

Although Harper was quoted as saying: “We’ll get it resolved” and “it will take a change of code.” when asked by a reporter from the Victoria Times Colonist Newspaper if this TRO would be applied to all similar victims of phantom income taxation – so far all he has done, since making those commitments, is stonewall the issue.

Harper’s about face on his commitment to implement the “Action plan” to provide fair taxation for All Canadians” has left thousands of honest, hard-working Canadians to face financial ruin, loss of homes and
peace of mind.

There have been a myriad of important international as well as domestic issues the government can use, and has used to push the issue of taxing Canadians into poverty status -- off the media radar screen.

Of course it is far more important to make good-will tours to potential trade countries such as India and China than it is to protect your own citizens from financial ruin.

Even the U.S. President, Barak Obama, has arranged such trips to improve trade relations. The big difference being his trips come after the relief of American taxpayers from the distress of taxation on money never seen.

On the other hand the Harper regime has slipped from the pedestal many Canadians had placed them on.

By reneging on the promise to implement fair taxation for all Canadians, they have shown themselves to be short on honesty and decency.

By introducing a sham Taxpayers Ombudsman together with a hollow updated Bill of Taxpayers Rights they have shown themselves to be deceitful.

By not upholding the provisions of the government document: “Serving Canadians – Canada’s System of Justice” and allowing the assumption of guilty until proven innocent to replace the “fair laws” and assumption of innocent until proven guilty as declared in that document our present government has shown itself to be weak and ineffective.

Although both country’s have been struck by severe natural disasters in 2009 such as floods, tornado’s, and devastating fires, the average American has much more to be thankful for than does the average Canadian.

At least those elected to serve, and protect the best interests of their constituents, in the U.S.A. , are earning their taxpayer based salaries and perks.

Have a great Thanksgiving cousins.

See you at the next federal election voting polls O’Grady

Victor Drummond ©

IT COULDNT HAPPEN TO ..

IT COULDN’T HAPPEN TO A NICER GUY
A commentary on the belief that people get what they give
i.e. What goes around comes around.
By Victor Drummond ©
November 2009


Doesn’t it seem odd that the big publicity moments our Right Honourable Stephen Harper, Prime Minister of Canada participates in seem to often include a blooper or two?

Remember the two group photo’s of the world Financial leaders our PM was supposed to be present when the pictures were taken. Missing one may be understandable – it could happen to anyone who wasn’t paying attention to their surroundings BUT twice! That’s stretching co-incidence to the limit.

What about the recent grand entrance to the Mumbia, India Bollywood dance studio when Harper failed to see a step and almost did a pratfall on camera. This might happen to anyone – right?

Then there was the big moment when Harper is on camera negotiating with high level Indian government officials on the sale of Canadian Uranium to India for peaceful use in nuclear power plants.

Just at the climax of this momentous occasion an Indian official declared there is a high level security alert in effect to protect India’s nuclear power plants from perceived mass attacks by terrorists.

How is that for taking the wind out of Harper’s sails.

The grand finally to this public relations disaster is the revelation that earlier terrorist attacks in Mumbia might have been planned and executed by a person holding Canadian citizenship.

Could all these screw-ups and miscues be payback for something our Right Honourable Prime Minister did, or didn’t do, that offended the higher powers?

What about making a commitment to relieve the stress and financial devastation of taxes on phantom income, i.e. money never seen by the victimized Canadian Taxpayer and then turning his back on those same victimized citizens.

Is it possible the curses levelled at our PM for that treacherous act are having this negative effect on his: “get more and better publicity efforts”?

If I were the least bit superstitious – I would be inclined to believe so.

One or two screw-ups in a series of publicity schemes might be considered average but the things that have been going wrong for our PM are far above average.

If I were the Right Honourable Stephen Harper I would try keeping my word to correct Canada’s defective taxable benefit legislation, as promised, and see if future publicity attempts do not go as planned.

I am sure things that have messed up Harpers big moments so far -- Couldn’t happen to a nicer guy.

See you at the voting polls during the next federal election O’Grady.

Victor Drummond ©

WHERE WOULD THE MONEY BE..

WHERE DO YOU SUPPOSE THE MONEY WOULD BE NOW
A commentary on the attempted robbery of the Legion Poppy Fund on November 12 2009 – at Legion Branch No. 73.

By Victor Drummond ©
November 2009

On November 12 2009 – the day after veterans day – volunteer veterans were busy counting the money -- collected through the Veterans Poppy drive -- in the board room of the Oak Ridge Legion, Branch No. 73.

A stranger, who had entered by way of a side door, walked into the board room and stood momentarily in front of the members counting the money.

Navy veteran, 84 year old, John Dietsch, asked the man what was he doing here? At that point the stranger brandished a gun and said: “give me all your bills.”

Without a moments hesitation John lunged at the man and attempted to seize his gun arm. The stranger pushed John back and began to back away. At that point 64 year old volunteer, Earl Gray, took after the stranger, caught him momentarily but the stranger managed to break free and took off.

Earl followed the stranger up to the point where the would be robber disappeared down a street where Earl could no longer follow or see him.

It is impossible to imagine that when John Dietsch saw the stranger holding a gun that warning bells didn’t go off in his head telling him that any action – other than that demanded by the gunman -- was setting an extremely dangerous string of events in motion.

If John had followed the example set by the Right Honourable Stephen Harper -- when Harper was warned by Senior Bureaucrats in the Department of Finance and the Canada Revenue Agency (CRA) that his approval of the Gary Lunn Tax Remission Order (TRO) was setting a dangerous precedent – where do you suppose the poppy fund money would be today? Gone – that’s where.

When Harper decided to do an about face and break his word to “get it resolved” his life was not in danger.

The only risk he faced -- by keeping his word -- being that his reputation as a fair minded and self assured, decent, trustworthy, capable leader would become more creditable.

By reneging on his commitment to "resolve" the tax on phantom income Harper showed himself to be uncertain of his convictions and lacking confidence in his ability to give and keep his word.

Consequently thousands of honest, hard-working Canadians are still being financially ruined and spend anxious days and nights burdened with taxes levied on money never seen.

As Legion volunteer Earl Gray remarked when the Poppy fund robbery was foiled: “If the robbery had of succeeded a lot of people who are receiving this money would have been out of luck.”

Just like the thousands of honest, hard-working Canadians who depended on the Right Honourable Stephen Harper to keep his word to: “get it resolved are still "out of luck."

The time has come for Canadians to Stand up for their victimized fellow Canadians. The action plan is simple.

Every Canadian of voting age should contact their local Member of Parliament, either in person, by letter , by telephone and/or by e-mail demanding the defective Canadian taxable benefit legislation be amended to put an end to taxing honest, hard-working Canadians on money never seen.

The U.S. Government have already amended their defective tax legislation putting an end to taxing phantom income and have also put a system of victim compensation in place.

And as the U.S. Government has done when they amended their flawed “Alternative Minimum Tax” (AMT) legislation the Canadian government should include fair compensating to those Canadians who have already paid those unfair, unwarrented taxes and/or penalties.

Now: in view of the U.S. government action there is no excuse for Canada's government not doing the same for our victimized Canadians.

See you at the voting polls in the next Federal election O’Grady.

Victor Drummond ©

A VETERANS THOUGHTS...

A VETERANS THOUGHTS ON VETERANS DAY
November 11 2009-11-09

By Victor Drummond ©

On Monday November 9, 2009 the Toronto Globe and Mail Newspaper featured a political article with the title: “Harper marks communism’s point of no return.”

He is referring to the day the Berlin Wall came down and Germany was re-established as a unified nation – November 9 1989. On that day freedom and equality were greatly improved for all Germans living in East and West Germany.

And I am willing to bet Harper can recall the day, to the very minute, the Canadian “STONEWALL” went up blocking all further official response to appeals -- by Canadian victims of Canada’s defective taxable benefit legislation and it's application policy -- for treatment equal to that given 37 similar victims in Saanich British Columbia.

Even appeals sent -- to all levels of Canada’s government -- by the non-profit group: “Canadians for Fair and Equitable Taxation” (CFET), pleading for equal treatment under the law and fair taxation by our government – have been stonewalled all through the years 2008 and 2009.

Prior to the 2006 Federal Election – while the federal conservative party was the official opposition – the party slogan was: “STAND UP FOR CANADA” with a whole series of “Action Plans” which they said were going to provide “Fair” and “Equitable Taxation” for all Canadians.

Then after the Conservatives were elected to power they wasted no time in seeming to fulfill that promise by the speedy passing of a Tax Remission Order (TRO) that revoked the tax on “earned income” that was neither “earned” nor “income” of any kind.

It was money never seen by those victimized by Canada’s defective taxable benefit legislation and application policy. It was a tax levied on a deemed gain as of an arbitrary moment in time. i.e. phantom income.

When the Gary Lunn TRO was announced thousands of Canadians, victimized by the same tax fiasco, cheered and rightfully expected the Right Honourable Stephen Harper to fulfill his commitment to “resolve the problem” as he was quoted per an article published in the Victoria Times Colonist Newspaper at that time.

Unfortunately our Prime Minister is not as good as his word.

On, or about, December 7th 2007 The Victoria times Colonist published another article under the title: “JDS deal dangerous precedent, Ottawa told.”

The text of the article relates how the Gary Lunn TRO was approved by cabinet despite OBJECTIONS from officials at Finance and Canada Revenue Agency (CRA).

“Senior bureaucrats warned such a decision was unfair to other taxpayers and set a dangerous precedent for employees of other high-tech who watched their fortunes rise and fall during the dot-com boom and subsequent crash.”

Very apparently senior bureaucrats in the office of the Minister of Finance and in the CRA are not the least bit interested in the level of fairness of their tax policies. It is obvious that all they care about is getting their hands on every tax dollar the law will allow.

So Mr. Harper did an abrupt about face and the Canadian “Stonewall” went up suddenly on, or about, December 7 2007.

Canada’s Stonewall is every bit as insidious, as was the Berlin Wall, when it comes to disrupting citizens rights, and freedoms.

If, as Mr. Harper was quoted in the Globe and Mail Article regarding the Berlin Wall coming down: “It will honour the men and women of the Canadian Forces who served during that confrontation.”

Then what does the raising of a rights and freedoms “STONEWALL” in Canada say about the dishonor imposed on every Canadian military person who thought they were fighting for a fair and honourable government?

As a veteran of WWII I can tell you I feel betrayed and I believe so would every WWII veteran who becomes fully apprised of the tax -- on phantom income -- events from the year 2000 to date.

Every Canadian is entitled to equal treatment under Canadian Law, as declared in the recently updated "Taxpayers Bill of Rights".

Appeals from victims, of taxes levied on money never seen, have been -- and still are being -- denied this right by the very person who loudly proclaimed the introduction of that bill in Toronto’s historic Dominion Public Building in mid May 2007. None other than "The Hon" James Flaherty, Minister of Finance.

I have no use for hypocrites. Especially those who display such a low opinion of other Canadians as to attempt mass deception.

The updated “Taxpayers Bill of Rights” co-announced with the creation of a new government officer with the title: “Taxpayers Ombudsman” was nothing more than a publicity stunt intended to create the impression the Taxpayers Ombudsman has the authority to enforce the terms contained in the Taxpayers Bill of Rights.

Nothing could be further from the truth. The office of the Taxpayers Ombudsman is a sub-division of the Canada Revenue Agency (CRA) and the ombudsman has absolutely no power of enforcement of any kind. (An expensive farce on the Canadian Taxpayer)

If Canadians -- who felt called upon to participate in Canada’s Military Forces – back in the 1940’s had reacted like our Right Honourable Prime Minister -- to warnings their decision to defend Canada is a dangerous act -- I wonder what Canada’s contribution to the war effort would have looked like?

After a few convoy ships were sunk would Canada have had a viable merchant marine force?

After a few aircraft were shot down would we have had a Canadian Air force?

After a few armoured cars and/or tanks were blown up would we have had an armoured Corps.

Canadians had an alternative to risking their lives by not going General Service (Active Service) during the call to arms in the 1940’s. They could have opted to join Canada’s Home Guard Military Forces and been relatively safe from enemy action. Safe, that is, until the enemy arrived on North American shores.

I see the Home Guard option as being the equivalent of our Right Honourable Prime Minister doing an about face and failing to fulfill his commitment “to resolve the problem” and provide “Fair” and “Equitable Taxation” for all Canadians as promised in the 2006 conservative “STAND UP FOR CANADA” Action Plans.

Today I will wear my Poppy proudly and thank those who risked their lives in all our conflicts, to preserve Canadian social values, integrity, honesty, courage, dignity and above all fairness.

But I won’t watch spineless hypocrites, on TV, paying lip-service to real Canadians while maintaining Canada’s STONEWALL policy on the issue of fair taxation -- all the while ignoring the financial distress this policy has, and still is, wreaking on honest, hard-working Canadians.

See you at the voting polls in the next federal election O’Grady.

Victor Drummond ©

WHAT WILL IT..

WHAT WILL IT TAKE ?
What level of incompetence, indifference, lack of integrity, honesty, decency,
and/or lack of voter representation will it take before the average Canadian voter says: “No-more.”? “Deliver what you’re being paid to do – or you’re gone.”

When will the average Canadian voter stand up and say: “I demand at least an acceptable level of representation and performance for the billions of tax dollars obviously wasted on a gang of bungling incompetents.”

A commentary on the dismal performance of Canada’s government since the year 2000.
by Victor Drummond ©
November 2009 – during Veteran’s Week.

Back in the year 2003 when I first discovered that thousands of honest, hard-working, Canadians were being taxed into financial ruin -- on the pretext their employer had bestowed upon them a tangible taxable benefit – I was initially mildly disappointed.

My initial thoughts being that Canadians had the best government in the world and as soon as this very un-Canadian abuse of taxpayers could be brought to the attention of our tax administrators the problem would be history.

Then I discovered that not only had the problem been drawn to the attention of federal government authorities -- all the way up to the Prime Minister – ( The Right Honourable Paul Martin) not once, or twice but at least a dozen times – with the same bafflegab response each time. “Not my problem will refer to someone else…”

Mild disappointment progressed to absolute disdain for those who would deliberately misuse their power to enforce a tax policy that was so obviously nothing more than an extortionist type money-grab based upon a defective, self-serving, tax rationale.

It doesn’t take a rocket scientist to reach the conclusion that applying a devastating tax against an unrealized, intangible, income does not compute, is not justified, and amounts to nothing more or less than legal extortion.

There is no excuse, or justification, for pretending there is a difference in the transactions when one person buys shares in corporation AB from a broker, and another buys the same type and quantity of shares from their employer? The key word is “BUYS”. A purchase is NEITHER A GIFT NOR AN AWARD.

It makes no tangible difference if the purchase cost to the buyer is at the market high of the day or the market low of the day, or at a discount from the deemed FMV, at the time the shares are purchased. Until an item PURCHASED is sold, or traded, for something of greater value there is no tangible (taxable) gain.

All the buyer has to show for their spent, after tax, dollars is a block of shares in corporation AB and there is no material difference if the shares are purchased directly from a broker or from an employer.

The Canadian Taxable Benefit Legislation, as presented in the document “Employer’s Guide To Taxable Benefits” (T4130 Rev 8 (E)), presents some bafflegab intended to lead the reader to believe an employee has received some form of gift or award when they are given an opportunity to participate in their employer’s “Employee Shares Purchase Plans” (ESPP’s) or “Employee Share Option” (ESO) agreement(s).

There are also some remarks, in T4130, that imply the ESPP/ESO participating employees receive a benefit, of sorts, when the cost price to the employee is below the “Fair Market Value” (FMV) of the same shares trading on a conventional stock exchange.

This a deliberately misleading implication. The employer has sold the employee shares with no guarantee the shares will have any dollar value when delivered (exercised), or at any time in the future.
It is a straight investment gamble on the part of the employee the same as though the shares were purchased from a conventional stock market broker.

Stock market shares are not a “near-cash” item. The have no face value, they have no assured dollar value – not even by the issuing corporation. All anyone need do to prove that even former blue chip shares are nothing near a cash equivalent is to try and sell their Nortel Network shares – if they have any.

The pattern of taxing fictitious income, set by the federal Liberal government during the years 2000 to 2005, may have inspired the federal conservative party to include tax reform and fair taxation for all Canadians in their “STAND UP FOR CANADA” 2005 -6 pre-election campaign.

In any event the federal liberal party deservedly lost that election due to gross mismanagement of Canadian Financial affairs.

Once the Federal Conservative Party was elected, even with a minority government, The Hon Gary Lunn, CP. MP for the riding of Saanich, Gulf-Islands, British Columbia went right to work to have the devastating taxes levied the fictitious taxable benefit incomes of 37 former employees of the SDL Optics (JDS Uniphase) revoked via a Tax Remission Order (TRO)

This event was widely publicized and comments were attributed to both the Hon Gary Lunn and the Right Honourable Stephen Harper, Prime Minister of Canada to the effect this kind of corrective tax reform would be applied across Canada and all similar victims of taxation on income never seen would be provided similar tax relief.

Obviously the integrity of our Right Honourable Prime Minister has it’s dollar value as Mr Harper has remained tight lipped on this issue ever since.

Canada’s government spends a lot of money on advisors and consultants relating to every aspect of government activity – especially social services such as Health and Welfare and Finance.

Even with the best expert counselling -- that money can buy-- things do jump the track once in a while and the government ends up with egg on their face. When the public can see that their elected representatives have taken reasonable measures to assure a desired outcome they are usually understanding and leave it to the opposition leaders, critics etc. to blow the whistle on the goof-up.

What excuse is their for a Minister of Finance to ignore the advice of the House of Commons (HOC) Standing Committee on finance (FINA) which passed a motion, last August, recommending the appeals of the Canadian Grass-Roots Group, “Canadians for Fair and Equitable Taxation” (CFET) be heard by the MOF?

Recently a member of CFET, who had made several written requests to meet with the MOF as proposed by James Rajotte – chairman of FINA – received a written reply from the office of the MOF stating in no uncertain terms the MOF does not have time to meet with members of CFET – now and at no time in the foreseeable future.

This is the same MOF who declares Canada’s taxable benefit legislation is being applied “fairly” while he is staring the Gary Lunn TRO event right in the eye. He also blithely ignores the fact the U.S. government has declared the taxing of phantom income is definitely unfair and totally unjustified.

This glaring contradiction indicates our MOF has little, or no, concept of “equal treatment under the law” and has no concept of the conventional meaning of the word “fair” and/or no regard for telling the truth.

There is, however much more damming evidence that indicates our MOF is not the competent minister Canadians have a right to expect for the tax dollars he is receiving in salary and perks.

An astute financial person should have recognized the signs of a coming major economic event when the Hi-Tech stock market went in a steep decline in the middle of the year 2000.

Paul Martin, MOF at that time, apparently didn’t see it coming, and neither did his successor the Hon Ralph Goodale.

All they saw was an opportunity to extort after tax dollars from thousands of honest, hard-working employees who had been duped into speculating in the stock market by both their employers and Canada’s federal government.

When Incentive Shares Options (ISO) plans were introduced -- as a means of fighting the loss of key people through the actions of Head-Hunter organizations – both employers and the government made no mention that flash paper gains --whether realized or not – would be taxed at the potential profit the taxpayer might have received IF they had sold their shares at the moment in time they actually received them.

In fact there is evidence some ISO Plan administrators actually assured their co-workers they would only be taxed on the gain, if any, realized at the time they actually sold their shares. That is the tax treatment provided to any other Canadian who invests in conventional stock market equities and IT IS THE ONLY “FAIR” SYSTEM OF TAXING EQUITIES.

How can the Hon James M. Flaherty keep a straight face when he declares: “the policy of taxing phantom income is “fair” because people who hold their ESPP/ESO equities past the date of “exercise” are treated the same as all other investors.”

After they have been levied horrendous taxes on money that never actually existed THEN they are treated the same as all other investors – not before. There is a world of difference in the so-called “fair” and equal treatment under the law Mr. Flaherty – and you know it -- so stop the BS.

Getting back to the astute MOF who failed to see economic disaster looming in the Canadian Corporate Pension laws with the possible bankruptcy of Corporate giants such as Nortel Networks. Apparently there is a myriad of inter-locking laws, rules and policies effecting the priorities of various creditors at the federal, provincial and international levels.

Was our MOF totally ignorant of the risk to Canadian pensioners when corporate giants were allowed to under-fund their employees pensions with the fund administrators? Did he realize the risk but preferred to declare all is well – as with the phantom tax issue – while former employees were being denied pension and separation benefits?

Last but not least – how about the H1N1 performance of our Public Health Agency of Canada? With 30 million, or so, Canadians and nearly a year to prepare what justification is there for the colossal boon-doggle in the supply and delivery of the anti-virus vaccine?

Can there be any justification for depending upon a single source supplier for all of Canada?

Where was our Right Honourable Stephen Harper during this debacle – the PM who said: “we’ll get it resolved”, when questioned about the inequality of the Gary Lunn TRO as compared to all other victims of taxes levied on fictitious income and who then failed to raise a finger to take any further corrective action.

This is exactly the kind of government Canadians deserve, and will get, as long as they do nothing to demand performance from their local candidates seeking election/re-election to Canada’s House of Commons.

My local MP is fully aware he will not have my support in the next federal election unless he commits to supporting the CFET appeals for fair and Equitable Taxation.

If you do not demand performance you will get poor performance – now and for your children as well.

As far as veterans week is concerned – when I see our Right Honourable PM along with our Honourable MOF standing before Canada’s Veterans, with the poppy pinned to their lapel – I feel nothing but disgust and betrayal and I wonder what it will take to get a decent slate of politicians in office to run Canada’s affairs?

See you at the voting polls in Canada’s next federal election – O’Grady.

Victor Drummond ©