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Mar 2024 Edition

▶️ What If You Disagree With CRA?

Disagreeing with the CRA on an Audit decision or Notice of Assessment, or on months of silence, can feel daunting. Here are the different levels of handling your disputes:

1. Initial Contact: Start by calling the CRA. Often, issues can be resolved with a simple conversation, clarifying misunderstandings or providing additional information. Always as for a Case number and Agent ID of the CRA agent you speak with. They are required to provide this to you.

2. Notice of Objection: If the call doesn’t resolve the issue, request a formal review. Submit a written objection to the CRA outlining your case and evidence. This step initiates an official reassessment process.

3. Appeals Branch: If the formal review is unsatisfactory, escalate the matter to the CRA’s Appeals Branch. This independent division reevaluates your case, with the mandate to ensure fairness in the assessment.

4. Tax Court of Canada: Still disagree? You can take your case to the Tax Court of Canada. This legal avenue allows you to argue your case before a judge, ideally with a Tax Lawyer by your side, presenting evidence and legal arguments against the CRA’s assessment.

▶️ Do You Own a Short-Term Rental Property?

If you operate a rental property as a short-term rental (AirBnB, VRBO, other platforms, or privately), a recent court case concluded just this month highlights the GST/HST exposure you may have on sale of the property.

Facts:

• The property owner, a corporation, bought a Condo in 2008 and rented on long-term basis until 2017 (9 years).

• Then, just for one year, they rented the Condo on AirBnB as a short-term rental.

• They sold the Condo later in 2018.

Judgment:

Even though majority of the period that the property was owned, it was rented out on a long-term basis, the Tax Court deemed that at that time of the sale, the property was being operated as commercial in nature, and that the entire proceeds from sale of the Condo would be subject to GST/HST - approx. $77K for this taxpayer.

This court case is brand new and will set a precedent for future cases, as well as for CRA to potentially use this ruling to target other sales of short-term rentals for unpaid GST/HST.

Takeaway:

The time period used to determine if the rental was “short-term” was if the lease term is less than 60 days.

If you do own a rental property and rent it out on a short-term basis, you should be aware of your potential exposure to GST/HST on the eventual sale of the property, and, where possible, take steps to minimize it.

If you need a consultation on this with our Tax Team, reach out.

▶️ Cancelled: Bare Trust Reporting for 2023

CRA seems to be making a pattern of announcing new rules, with unclear guidance, panicking the public and accountants, only to backtrack on it at the last minute (anyone remember UHT returns)?

Well, the same thing has happened with Bare Trust returns filing.

On March 28th, one business day before the filing deadline, CRA has issued that Bare Trust returns are not required for 2023, “unless directly requested by the CRA”.

▶️ ICYMI - Previous March 2023 Shares:

• PST Series: Should You Charge BC PST?

• How to Handle a Vehicle Expense Audit by CRA

🤓 PHOTO OF THE MONTH

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