MERRY CHRISTMAS ..

MERRY CHRISTMAS – HOUSE OF COMMONS
A commentary on the puppet performance of those elected to serve the best interests of their constituents and all Canadians and regardless of their failure to fulfill their duties I wish them each and every one a very Merry Christmas and an enlightening New Year.

by Victor Drummond ©
December 2009

December 2009 marks the third year anniversary of the exceptional early Christmas gift bestowed upon 37 Canadians victimized by Canada’s tax on money that never existed.

The Hon. Gary Lunn, CP, MP, for the riding of Saanich – Gulf Islands, British Columbia set an example of the kind of representation every Member of Canada’s House of Commons is expected to provide to their constituents.

Gary had the support of the recently elected Prime Minister – The Right Honourable Stephen Harper, CP, MP, PM who approved the Tax Remission Order (TRO), requested by Gary, to provide the “fair taxation” promised by the federal Conservative Party in their pre-election campaign: “STAND UP FOR CANADA”.

The Hon, Carol Skelton, CP, MP, Minister of Natural Resources, requested the Gary Lunn TRO be prepared but by the time the TRO was ready for signing Carol had been replaced by the Hon Gordon O’Connor, CP, MP, as Canada’s Minister of Natural Resources.

In spite of warnings -- issued by senior bureaucrats in the Department of Finance -- that granting “fair taxation” to a few Canadian taxpayers -- via the Gary Lunn TRO – is unfair to the thousands of other Canadian excluded taxpayers victimized in the same way and was setting a dangerous precedent – the Hon, Gordon O’Connor and the Right Hon, Stephen Harper both signed the Gary Lunn TRO.

Canada’s Governor General, Her Excellency Micheal Jean then signed the TRO, giving it the force of law while declaring she does so: “in the best interests of all Canadians.”

The December 20 edition of the Vancouver Sun Newspaper carried a report on this tax remission under the title: “Tories Kill Tax on profit never made.”

On Tuesday, December 19 2006, Gary Lunn announced: “his government is offering immediate tax relief to the employees of the defunct JDS Uniphase plant in Saanich, who had been taxed on the phantom profits.”

“It took a change of government to get someone to listen, but the Prime Minister has come through and delivered tax relief.” “It’s not in the interest of government to tax people on money they never saw.”

The Victoria Times Colonist Newspaper also carried a report of this momentous event and in addition the journalist, Cindy E. Harnett, interviewed the Right Honourable Stephen Harper and asked him if the tax relief granted the SDL Optics Inc./JDS Uniphase phantom income tax victims might be extended to all Canadian Taxpayers caught in the same tax trap? The Right Hon. Stephen Harper is quoted as replying to that question: “we’ll get it resolved – it will take a change of code.”

Apparently the means of getting this unjust, unfair, violation of item 8 of the updated “Taxpayers Bill of Rights” and a gross violation of the government document: “Serving Canadians – Canada’s System of Justice” “resolved” is to change the governments “code of ethics” and leave the defective income tax legislation -- that is used as an excuse to legally rob thousands of honest, hard-working Canadian taxpayers -- still in place.

Instead of extending the “fair” tax treatment -- provided a paltry 37 victimized Canadian Taxpayers via the Gary Lunn TRO – to all honest, hard-working Canadian taxpayers caught in the same tax trap the Harper Government has slammed the door shut and has implemented a policy of stonewalling all appeals for fair treatment by victims and by the grass-roots organization “Canadian for Fair and Equitable Taxation” (CFET).

Even the leaders of Canada’s federal Loyal Opposition party’s are close-mouthed on this issue.

Why? Are they not the watchdogs of the government just waiting to find a legitimate misdeed on the part of the party in power? Do the leaders and members of the opposition party in the House of Commons really believe the taxation of Canadians on phantom income is fair, justified and proper?

Even if they buy into the ridiculous claim by the Hon James M. Flaherty, Canada’s Minister of Finance, that the taxation of phantom income is “fair” because those taxed in this way are treated the same as all other Canadian stock market Investors/speculators – then reply to victims/CFET appeals and tell everyone what they believe to be true.

Silence on the other hand implies they can not convince themselves – let alone anyone else – that they believe the taxing of some and the revoking of this same tax for others – is fair, justified or ethical
and so our watchdogs are muzzled.

When you can not trust those who seek our support to be elected as our servants and representatives in government then it is time to “demand any candidate soliciting your vote – earn it by committing to support correction of Canada’s defective income tax act to provide the same tax treatment for all victimized Canadian Taxpayers.”

In closing I wish every member of Canada’s House of Commons the best Christmas ever and may they each receive the reward they so richly deserve.

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

Victor Drummond ©

KEEPING THEIR EYE ON THE BALL..

KEEPING THEIR EYE ON THE BALL – BALL? -- WHAT BALL?
A commentary on the conservative government’s lack of concern for truth and their lack of concern for their abuse of their own citizens –
never mind any concern regarding the torture of Afghans by Afghans.

By Victor Drummond ©
December 2009

Don’t shoot the messenger.

But that is exactly what the conservative government did when Richard Colvin reported multiple times, in 2006 through 2007, there was reason to believe Afghans detained by the Canadian military as suspected dissidents, or possibly even terrorists, were being tortured after being turned over to Afghan authorities.

Although it is well known that interrogation methods, in countries such as Afghanistan, are far different than in Canada, or the United States, it apparently was not politically correct for the Canadian military or the Canadian government to officially, and publicly investigate Colvin’s reports.

Instead it was much less likely to offend our Afghanistan allies to deny any knowledge or suspicion what Richard Colvin was reporting had any validity what-so-ever and if the Canadian Military in Afghanistan was in fact delivering suspected terrorists to the Afghanistan prisons to be tortured then so be it. We don’t want to know about it. In fact we are more than willing to throw our own citizens and public servants under the bus to maintain our official stance of ignorance of the issue.

After all is said and done who knows better than the Afghan prison guards, and prison officials, how to deal with their own citizens. A forced confession is apparently as good as any other confession when it comes to obtaining an acceptable conviction record in places like Afghanistan.

And what about failing to supply the international Red Cross with accurate details of the detainees turned over to the Afghan authorities? Who dropped the ball on that important function? Was it a duty the military should perform? It would seem it should be as they are the first level people involved in the prisoner transfer process. If it was left for this important function to be performed by Canada’s Minister of Defence then it is no wonder the Red Cross was left out of the loop. He claims he never heard of Canadian detainees being tortured after being turned over to the Afghan authorities.

Then what about the high ranking Canadian Military Officers who initially testified they had no knowledge of any Afghans held by the Canadian Military that were tortured after being turned over to the Afghan Prison authorities? Three of those high ranking Canadian Military Officers testified they had no knowledge of such events taking place and there was no evidence – to their knowledge – that any such events had ever taken place.

Was it a burning conscience or the threat of exposure that inspired one of those high level officers to do an about face and admit there was evidence of at least one Afghan citizen detained by the Canadian military being tortured after the Canadians turned this detainee over to the Afghan authorities and the Canadian Military then took the prisoner back into Canadian custody?

What in hell is going on in the Canadian government? If in fact the Minster of Defence didn’t receive Richard Colvin’s reports then there is a serious breakdown in Canada’s internal system of communication.

Not many Canadians believe the Hon. Peter MacKay when he says he did not know of the warnings issued by Richard Colvin.

Even fewer Canadians believe our Right Honourable Stephen Harper was unaware of Colvin’s reports and that our PM really believed there were no incidents of prisoners -- delivered to the Afghanistan prisons by the Canadian Military -- being tortured.

There was a time when I would have defended the title of “Honourable” and “Right Honourable” that precedes the names of our Members of Parliament that hold a portfolio – but unfortunately I am overwhelmed by evidence to the contrary.

When our government leader made a promise to implement an “Action Plan” -- to provide “Fair Taxation” for “All Canadians” and at the time of the Gary Lunn “Tax Remission Order” (TRO)was quoted as saying “We’ll get it resolved” and “it will take a change of code.” in response to the question: “Will the fair tax deal granted by the Gary Lunn TRO be applied to all similar victims of taxes on money never seen?” – and then turned his back on the rest of the victimized Canadians – his credibility went down the tubes. From now on I take everything Stephen Harper says with more than a grain of salt.

When the Hon. James Flaherty, Minister of Finance declared publicly: “the taxing of honest, hard-working Canadians on phantom income is “fair” because they are treated the same as all other Canadian investors and stock market speculators” -- then his credibility also went down the tubes.

No other Canadian stock market investor and/or speculator are taxed on money that never existed and the Hon? Mr Flaherty should be fully aware of that fact.

It may not be a case of deliberate treachery, however, when the Right Hon Stephen Harper turned his back on those he had promised to provide fair taxation. It may be a case of defective comprehension.

If Harper really believes he has kept his promise of “fair taxation for all Canadians” then he is not deliberately telling a falsehood – he is merely stating something he believes to be the truth but is factually incorrect.

If that is the case then it leaves a person to wonder what other hallucinations does our PM hold to be true?

He may have just lost sight of the ball he was supposed to score with.

And what about the seemingly perfidious Minister of finance. He may have also merely taken his eyes off the ball he was expected to play and then in his mind his promise of “fair taxation for all Canadians” was now a reality.

How else can you explain his outrageous claim that victims of taxation on phantom income are treated the same as all other Canadian investors? You couldn’t get further from the truth if you tried.

When our government leaders can not even find the ball -- they are supposed to be watching --then they may not be competent to make decisions that could, and often do, impact negatively on the country as a whole and upon Canadians collectively or individually.

It is time for Canadians to inform their riding MP’s, including opposition MP’s, that they demand the representation our citizens have a right to expect by the person they elected to the House of Commons.

For starters inform them you demand the Canadian government fulfill their promises of: “fair taxation for all Canadians” and that our defective taxable benefit legislation be amended to put an end to taxing honest, hard-working, Canadians on “Earned Income” money that never existed..

Remind them the U.S.A. government has already corrected their comparable “Alternative Minimum Tax” (AMT) legislation and put in place a program to fairly compensate those U.S. taxpayers who had already been victimized under the old legislation.

Canada has no excuse for continuing this abuse of our taxpayers so demand a commitment to correct this problem in Canada -- or no support in the next Federal Election.

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

Victor Drummond ©

JUST WHAT WOULD YOU DO...

JUST WHAT WOULD YOU EXPECT
When you find yourself facing an income tax levy
that is 200% larger than your gross income that year:
(1) what would you do? And (2) what would you expect?

A commentary by Victor Drummond ©
December 2009

Gainfully employed Canadians soon become familiar with the Income Tax System used in this country. The process is simple. As the deadline to pay your income tax approaches your employer provides you with a statement of your previous year’s gross income – on a T4 slip – which also contains a list of payroll deductions and your net income for the year.

Employees who receive taxable gifts or awards from their employer will find their T4 slip also contains dollar values, in additional panels, which the employee is instructed to report on specified lines of their T1 General Tax Return. Depending upon the nature of the taxable benefit the employee receives -- the tax levied and deductions applied will vary.

For example the use of company car for both business and personal use will generate a taxable benefit that is based on the percent split of personal versus business of the total distance travelled during the year. The operating and maintenance cost would be split along the same percentage.

Regardless -- of the personal percent use of the car -- the tax generated would never equal or exceed the employees real earned income.

The first time your income tax levy exceeds your gross income you might think there has been an error made somewhere so you visit your nearest Canada Revenue Agency (CRA) tax office to speak with an appeals officer.

After checking your employment records the appeals officer explains your reported “earned” income for the previous year includes a “DEEMED” taxable benefit derived when the shares you received from your employer -- per an Employee Shares Purchase Plan (ESPP) -- were delivered to you.

“What about those shares you ask?” I signed up to purchase 2000 shares a year ago at an employee cost of $2.50 per share.” “I paid for those shares, in cash, out of my savings account.” “In July last year my employer notified me that my shares had been delivered and would be held in my employee account until I decided what to do with them.” “So what’s the problem?”

The appeals officer explains that on the day your shares were transferred to your account they were trading at $250.00 per share which gave you a DEEMED gain of: ((250x2000) – (2.50x2000)) = (500,000 – 5,000) = $450,000.00

This $450,000 gain is “DEEMED”, by the CRA, to be a “taxable benefit” and is added to your “earned” income at the “Capital Gains” inclusion rate of 50% for last year. i.e. $225,000.00 plus your normal $40,500.00 annual salary.

This brought your gross earned income for the year to $265,500 which after the usual exemptions and deductions left you a taxable income of $238,200.00 Your bottom line tax rate, provincial and federal works out to 36% which produced a tax of $85,752.00

You are shocked. You say to the appeals officer: “I never received one red cent – so far – from those shares – they are still sitting in the account with my employer.” “And for your information I would be lucky to be able to sell them today for the money I paid for them.”

The appeals officer informs you of the good news: “As you paid less than a total of $100,000 for your ESPP shares you don’t have to pay the tax immediately.” “You may apply for a tax deferment now, and every year, until you sell your shares, or you move out of Canada, or your employer corporation goes out of business.”

That is good news you say! “So I won’t pay tax on the deemed gain of $450,000 I will only pay tax on the money I receive when I sell my shares.” “That’s fair enough.”

The tax appeals officer replies: “That is not quite the way it works – You pay tax on the deemed gain as of the date of exercise regardless of whether or not you lose or gain at the time of sale.”

You think this over for a moment then say: “What’s good about that arrangement?” “As long as I have that tax hanging over my head I won’t have a worry free moment.”

“So what happens if I sell my shares now for the $5,000.00 I paid for them and declare a zero taxable benefit?”

Again the appeals officer informs you: “that is not the way it works.” “The taxable benefit legislation “ASSUMES” you have received a taxable benefit at the moment you take possession of equities acquired via an ESPP or ESO. If you sell your ESPP shares now it will generate an immediate payment demand of the taxes levied even though you have actually have a zero gain situation.

“That is outrageous”, you reply, “How can anyone in their right mind expect people to pay “income tax” on money that never existed?” “I’m going straight to my Member of Parliament about this ridiculous tax and we will see about this tax on zero income.”

So you make an appointment to meet with your MP and when you arrive you are treated with courtesy and made welcome. After explaining your phantom income tax situation and your discussion with the CRA Tax Appeals Officer you MP appears shocked.

Your MP assures you he will send a letter immediately to the Hon Minister of Finance (MOF) informing him of this ridiculous tax situation and he also assures you the Minister of Finance will take prompt action to address the problem.

Now that is the kind of representation you have a right to expect from your MP.

A few months pass by and you begin to receive notice letters from the CRA reminding you your tax return has not been received and that penalties are pending if you do not submit your tax return promptly.

Confident your MP will take care of this problem you wait to hear that your tax assessment has been amended at the request of the MOF.

A month or so later you receive the following reply directly from the office of the MOF.

It reads as follows:- “Thank you for bringing your tax concerns to my attention.” “Your income tax assessment for the year 2001 has been carefully reviewed and found to be in full compliance with the terms of Canada’s income tax legislation.” “Therefore you are advised to submit taxes levied in accordance with your present tax assessment to avoid incurring additional penalty.”
“You may apply for deferment of taxes levied on the taxable benefit portion of your tax assessment by completing form T1212 and submitting the form with your tax return.”

“Should you have other concerns in this regard I would welcome your further communication.”

Sincerely

(signed) John Bull, No. 1 Executive Assistant to the Minister of Finance.

So you bite the bullet, clean out your savings account and pay the taxes demanded.

A few years later you begin to see pre-election brochures and TV ads proclaiming: “STAND UP FOR CANADA” and that if elected the federal Conservative Party will introduce legislation to provide “Fair Taxation for All Canadians.”

So you “STAND UP FOR CANADA” and vote for the Conservative party in the 2006 federal election.

True to their pre-election promise the Conservatives delivered “Fair” taxation for 37 Canadians victimized by taxes -- levied on phantom income -- just the way you were.

Furthermore when asked by a journalist from the Victoria Times Colonist Newspaper if this “fair tax” action would be extended to other victimized taxpayers the Right Honourable Stephen Harper is quoted as saying: “We’ll get it resolved – it will take a change of code.”

When nothing happened by the year 2008 you decide to take your appeal -- for the promised “fair taxation” and justice -- to the “Tax Court of Canada” (TCC). And -- as advised in the TCC client information pages –- you hire a tax lawyer to present your appeal to the court.

In due course your case comes up and your lawyer does an outstanding job of describing the details of your past efforts to obtain fair taxation and he highlights the case of the 37 similar victims who had their taxes on phantom income, penalties and all cancelled by way of a Tax Remission Order (TRO).

The TCC justice hearing your appeal defers issuing his ruling for a few weeks and sets a future date at which time he will render his decision.

You have every right to expect your taxes levied on phantom income will also be cancelled and your money refunded in view of the fact the Conservative party has made a promise of “Fair” taxation for All Canadians and has set a precedent by already delivering on this promise to 37 victimized, honest, hard-working Canadains.

Finally the day of decision arrives. Accompanied by your lawyer you return to the Tax Court of Canada to receive the courts decision. You have already purchased a bottle of vintage Champaign to celebrate the end of your tax nightmare. Your lawyer assures you a favourable decision is almost a guaranteed certainty. The bottle of champagne may be all you have left to show for your efforts, after paying your legal fees, but you feel it is worth it to finally obtain justice and fair treatment.

The court justice begins handing down his decision with the words: “After careful review of the details of your appeal and consultation of similar rulings in similar cases I find that the Canada Revenue Agency has acted in full conformance of the law and therefore your appeal is denied.” “Case Closed.”

You and your lawyer stare in disbelief. How can you lose this appeal in view of the promises made by your elected government and the tax relief they have already delivered to other similar victims?

The answer is provided in the following report by Taxation Law@Gowlings, which can be viewed at:

http://www.gowlings.com/resources/enewsletters/taxationlaw/Htmfiles/V1N97_20070208.en.html

The following statements were made by TCC Chief Justice The Hon. Donald Bowman.

"In the wake of political pressure, the CRA has apparently relented from its initial refusal to grant relief to the affected JDS workers, and agreed to refund all taxes and interest paid. The natural reaction to this is, of course, "what about the rest of us?". A spokesperson for CRA has indicated that the CRA will not be granting such relief to other taxpayers who may find themselves in similar circumstances.
Most taxpayers would consider the CRA's stance on this issue to be patently unfair. However, absent further political pressure, or legislative amendment, taxpayers would probably be surprised to learn that Canadian courts have generally refused to recognize a duty of consistency on the part of the CRA in the course of administering and enforcing the Income Tax Act, and have expressly held that the CRA has no positive legal obligation to treat similarly situated taxpayers consistently.1 As stated by now Chief Justice Bowman of the Tax Court in Harvey v. The Queen:
The Minister's obligation is to assess in accordance with the law. It would throw the administration of taxation in this country into chaos if the Minister were bound by every private deal he made, whether in accordance with the law or not.2

Is immunity to the laws of Canada and freedom from personal attribute such as Honesty, Decency, Fairness, Integrity, Compassion, Dependability etc what you expect from your government?

If you are not happy to be lied to, deceived, and/or exposed to legalized extortion then you must take action.

Contact every Member of Parliament in your riding, including opposition MP’s and notify them in definite terms: “Commit to correcting Canada’s defective taxable benefit legislation to put an end to taxing honest, hard-working Canadians on money that never existed.” “And include provision to fairly compensate Canadians who have already been victimized in this way.” “The U.S.A. government has already corrected their defective “Alternative Minimum Tax (AMT) legislation and included provision to treat those victimized fairly.” Ref: www.reformamt.org

If the U.S.A. can take corrective “phantom income tax” action at this time – when their economy is much worse than Canada’s -- then what excuse does Canada have to perpetuate this unfair, unjust, outrageous tax policy?

Who needs a government staffed by elected individuals who have no sense of responsibility to their constituents and who blindly follow party policy that grossly abuses those who elected them?

I do not – and neither do you.

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

Victor Drummond ©

CANADIAN VICTIMS..

CANADIAN-- PHANTOM INCOME TAX VICTIMS – NEED NOT APPLY

The Federal Conservative Party has made great promises to all Canadian citizens –
telling them many times and in many ways of the party’s “Action Plan” to provide “fair” and “equal” treatment under Canadian “Income Tax” laws.

In 2005, when the Federal Conservative Party (FCP) was still the “opposition” party in Canada’s House of Commons they spent a small fortune on media ads telling Canadian citizens how corrupt the Federal Liberal Party (FLP) was and how if elected to form Canada’s government they would make everything better.

They were going to crack down on Canada’s loose system of justice and get tough on repeat offenders.

They were going to introduce amendments to Canada’s personal and business taxation system – to bring fair and equal treatment – under Canada’s tax laws – to all honest, hard working Canadians.

They were going to: “enact legislation to ensure that full, just, and timely compensation will be paid to all persons who are deprived of personal or private property as a result of any federal government initiative, policy, process, regulation or legislation.” Reference “Conservative Party of Canada Federal Election Platform 2006” – “STAND UP FOR CANADA BROCHURE” page 43. “The Plan.”

On January 30, 2007, The Honourable James M. Flaherty, Minister of Finance, made the following statements while addressing the House of Commons, Standing Committee on Finance (FINA).

The Title of this address is:
“MINISTER OF FINANCE STANDS FIRM ON TAX FAIRNESS FOR ALL CANADIANS”
Ref: url: http://www.fin.gc.ca/n07/07-007-eng.asp

“Make no mistake, the decision that was taken on October 31st is all about fairness.”

“Fairness for Canadian taxpayers and their families who would be asked to pay more and more.”

“Fairness within the corporate sector, where the current rules give income trusts a tax advantage and distort investment decisions.”

Fairness for Canadian taxpayers, who are seeing tax dollars sent out of the country to foreign investors; and
Fairness for all Canadian governments, federal and provincial, who are experiencing a significant loss of tax revenue.”

And in his concluding remarks Flaherty said:

It is not tax fairness if it is only for a few.” “And it is not strengthening the economy if the playing field is not level for all businesses.”

So what about “Tax Fairness for all Canadians”?

The events -- surrounding and following the Tax Remission Order (TRO) requested by the Honourable Gary Lunn, CP, MP, for the riding of Saanich – Gulf Islands, British Columbia, prepared at the request of the Honourable Carol Skelton, CP, MP for the riding of Saskatoon-Rosetown-Biggar, Saskatchewan, and approved by The Right Honourable Stephen Harper, Prime Minister of Canada and also signed by Her Excellency Michaelle Jean, Canada’s governor General -- tell it the way it really is.

When signing this TRO her Excellency said: “I do so in the best interests of all Canadians.”

Many Canadians who were fortunate enough to have been employed in the communications field -- during the years of the Hi-Tech boom, i.e. 1985 to 1999 – were also unfortunate enough to have participated in the government sponsored “Fight the Brain-Drain” projects which supported corporations implementing “Incentive Share Option” (ISO), “ Employee Share Option” (ESO) and “Employee Share Purchase Plan” (ESPP) plans.

Both Canada and the United States of America (USA) enacted legislation to capture the taxes that would be generated by these ISO, programs while the shares of communications corporations were increasing in value on the worlds stock exchanges.

All went well until the Hi-Tech Stock Market Boom went BUST in mid year 2000. Then the defects in the USA “Alternative Minimum Tax” (AMT) legislation and the Canadian Taxable Benefits legislation (CTB) were triggered.

Honest, hard-working, taxpayers suddenly found they were being levied taxes on purely theoretical , might-have-been, money which generated tax levies that often exceeded the taxpayers gross annual income by as much as 1000 percent.

Individual victimized taxpayers in both Canada and the USA appealed for tax relief for years between the year 2001 and 2009 without success and grass-roots lobby groups sprang up in both country’s and began making organized appeals for tax fairness.

In Canada the Gary Lunn TRO was enacted and gave the promised “Fair” taxation relief to a total of 37 victimized Canadians. Our Prime Minister, The Right Honourable Stephen Harper, was quoted as saying: “we’ll get it resolved – it will take a change of code” when asked if the same tax relief would be extended to “All Canadians victimized in the same way.”

In October 2009 the USA government amended their defective AMT – revoked all related outstanding taxes and penalties and provided a means of fairly compensating American victims who had already paid taxes and/or penalties.

As of today Canadian victims -- of taxes levied on phantom income -- are still waiting for their tax on phantom income to be “resolved” and the promised “fair taxation for all Canadians” to be fulfilled.

Why?

After so much rhetoric on the issue of “Fair Taxation for all Canadians” by the government now in power?

What happened after our Honourable James M. Flaherty made the grand announcement of an “Updated Bill of Taxpayers Rights” in May 2007.

Nothing happened as far as Canadian victims of phantom income tax is concerned.

Why not?

Perhaps the answer to that question is to be found in the statements made by his Honour Judge Donald Bowman, a chief justice in “The Tax Court of Canada”, when asked about the Gary Lunn TRO.

Reference: http://www.gowlings.com/resources/enewsletters/taxationlaw/Htmfiles/V1N97_20070208.en.html

Justice Bowman is quoted in the Feb. 2007, issue 97, Taxation Law @ Gowlings, as saying:

“In the wake of political pressure, the CRA has apparently relented from its initial refusal to grant relief to the affected JDS workers, and agreed to refund all taxes and interest paid. The natural reaction to this is, of course, "what about the rest of us?". A spokesperson for CRA has indicated that the CRA will not be granting such relief to other taxpayers who may find themselves in similar circumstances.”

“Most taxpayers would consider the CRA's stance on this issue to be patently unfair. However, absent further political pressure, or legislative amendment, taxpayers would probably be surprised to learn that Canadian courts have generally refused to recognize a duty of consistency on the part of the CRA in the course of administering and enforcing the Income Tax Act, and have expressly held that the CRA has no positive legal obligation to treat similarly situated taxpayers consistently.1 As stated by now Chief Justice Bowman of the Tax Court in Harvey v. The Queen:”

“The Minister's obligation is to assess in accordance with the law. It would throw the administration of taxation in this country into chaos if the Minister were bound by every private deal he made, whether in accordance with the law or not.2”

Is this the same Justice Donald Bowman who declared in his ruling in the case of: “The executive that hates golf.” that: “where no benefit has actually been conveyed to the employee it does not matter what cost the employer expended to confer a benefit to the employee there is no benefit to tax.”?

There is a government document with the title: “Serving Canadians – Canada’s System of Justice”

Reference: http://www.justice.gc.ca/eng/dept-min/pub/just/img/courten.pdf

If Justice Donald Bowman is correct in saying: “Canadian courts have generally refused to recognize a duty of consistency on the part of the CRA in the course of administering and enforcing the Income Tax Act, and have expressly held that the CRA has no positive legal obligation to treat similarly situated taxpayers consistently.” then the document: “Serving Canadians – Canada’s System of Justice” is null and void and the Conservative Party Action Plan to provide “Fair and Equitable Taxation for All Canadians”, is a farce.

For Canadians -- who have been financially decimated by horrendous taxes on money never seen – to attempt to use Canada’s courts or the newly created “Taxpayers Ombudsman” to obtain “fair” tax treatment is a crap shoot.

When it comes to obtaining the promised: “Fair and equal treatment” under the tax laws of Canada" – victims of taxation on money never seen – NEED NOT APPLY.”

If Canadians really want the Government we all deserve then let your riding Member of Parliament know that you demand -- the victimization of fellow Canadians on the pretext of phantom income being a taxable benefit – be stopped NOW and our defective taxable benefit legislation be corrected to exclude equities “purchased” within an ISO, or ESO or ESPP be treated as a conventional stock purchase -- not as a taxable gift or award – which it never was and never will be.

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

Victor Drummond ©

WHY SOME HEALTHY CANADIANS...

WHY SOME HEALTHY CANADIANS HOPE TO DIE
A commentary on the impact of Canada’s defective Income Tax Act relating to taxing of phantom income with tax deferral as an alternative to instant bankruptcy.

By Victor Drummond ©
December 2009

Within the few hundred honest, hard-working Canadians, who have contacted the group: “Canadians for Fair and Equitable Taxation” (CFET) I can name two that have crashed and burned financially because of the Canadian government’s unfair and unjust taxable benefit legislation.

They both had a well paying job during the Hi-Tech boom years, they bought their own homes, they saved money in RRSP’s and in personal savings accounts looking forward to the day they could retire and begin to enjoy the benefits of having worked steadily for 40, or more, years and raising a family.

Victim number (1) actually got to retire in the conventional way, with a retirement party, a parting gift or two and a decent golden handshake separation benefit. He also received his last allotment of Employee Shares Options (ESO) with a notice informing him that he could: (a) take the value of the underlying corporate shares in cash or (b) take the shares into his personal account for later disposition.

Before announcing his decision, on these equities, he asked a corporate ESO Plan Administrator to advise him on the tax implications of both choices.

He was advised, in writing, that the first ESO Plan administrator had consulted with a second of the corporate plan administrators and they both agreed the tax implications would be as follows: If he accepted the cash value now offered by the employer then the value of the payout would be treated as a “Capital Trade” and he would only be taxed on the actual profit (if any) at the capital gain’s inclusion rate for that year.

If, however, he elected to take the ESO option underlying shares and hold them in his personal account there would be no immediate tax implication. Taxes would only be applied if he realized a profit at the time he sold those shares and the taxes would be at the Capital Gains inclusion rate applicable in the year of sale.

Taking into consideration that at the time of retirement he had his normal 12 month salary, plus his separation benefit and to add another significant amount to his current gross income -- by accepting cash for his ESO shares -- would generate a huge one-time income tax levy. To avoid this happening he elected to take the underlying shares, into his personal account, and hold then for at least the next year.

Imagine his shock when in the following year his T4 arrived reporting his “Earned Income” the previous year was over $1,000,000.00 and his income tax levy was in the $250,000.00 range. This tax levy alone was over 300% of his gross earned income for the entire year.

Naturally he appealed to The Revenue Canada Agency (CRA) for a revised assessment that would base his income tax levy on his actual taxable income. His appeal was denied and the CRA politely explained his taxes were based on his deemed gain on the ESO shares he had received from his employer and was still holding.

The CRA also informed him he could defer the taxes levied on the ESO shares he had acquire that cost $100,000 or less in any specific year.

Even this tax deferment recourse was not fully explained, or perhaps misunderstood, because his initial perception of this option being that he would not be taxed until he sold the shares and then only if he realized a profit on those shares at the time of sale.

He made further inquiries and discovered the deferred tax would stand -- as initially levied – and become payable if he disposed of his shares, or moved out of Canada, or his employer went out of business.

Not long afterward his employer reported financial distress and filed for bankruptcy protection.

Now our honest, hard-working Canadian citizen began to have anxiety attacks and sleepless nights with the prospect of having his deferred taxes on phantom income come due and payable which would: (1) wipe out his RRSP and personal retirement savings, and (2) Force him to remortgage or sell his house and leave he and his wife to live on welfare for the rest of their retirement years if his pension, which was also now in jeopardy was lost.

After further research our victimized taxpayer discovered that should he pass away – due to natural causes -- while his tax deferment was still in effect then his estate would not be required to pay the deferred outstanding taxes on money he never saw.

His wife could then remain in their family home and receive the benefit of the RRSP and retirement savings they had planned to share before this outrageous unfair, unjustified tax was levied on their phantom income.

Although I do not have similar details of victim No (2) the fact that he also stated he hoped to die -- while his tax deferment was still in effect -- is a fairly good indication he is under the same duress as victim no (1).

Finding two Canadian taxpayers in this situation in the few dozen victims that have come to the notice of the CFET group is an indication there are likely a few hundred similar victims spread across Canada.

There is absolutely no excuse for even one, honest, hard-working, Canadian taxpayer to be abused in this manner.

Especially after the U.S.A. government has amended their Income Tax legislation (October 2009) to revoke taxes and related penalties levied on the phantom income of U.S. taxpayers.

Every true Canadian citizen should be outraged at this insidious tax trap which our high level bureaucrats insist is fair. They wouldn’t think so if they were the victim of their own tax policy.

Help bring relief to all Canadians caught in this tax trap by contacting all Members of Canada’s 40th Parliament and informing them you demand the following action:

(1) Canada’s defective taxable benefit legislation be corrected to put a stop to taxing phantom income – as the U.S. government has done.

(2) All Canadians who have outstanding deferred taxes levied on phantom income have to have these taxes revoked as was done for 37 victims per the Gary Lunn Tax Remission Order.

(3) All Canadians who have paid taxes on phantom income in the years 2000 to 2009 have their tax money refunded with interest at the income tax overpayment rate.


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

Victor Drummond ©