TaxMatters@EY – March 2012

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Tax issues affect everyone. To help you get up to speed on the latest hot topics, the March issue of Canada's TaxMatters@EY is now available — featuring the lead article, "Check out our helpful online tax calculators and rates."

This monthly bulletin is a guide to managing your taxes, and includes recent tax news highlights, resources and publications.

The March issue also features:

  • A recent court decision that highlights the potential pitfalls of charitable donation tax shelters
  • A caution from the Canada Revenue Agency to watch out for "e-audit" email scams
  • A useful reminder to parents that if you claim the caregiver tax credit for grandparents who look after your children, you’ll be ineligible for the more beneficial child care expense deduction
  • A recent court decision that looks at the existence and valuation of goodwill in a regulated industry

You’ll find all this and more in the latest edition of TaxMatters@EY.

Check out our helpful online tax calculators and rates
Aneela Rojo, Lucie Champagne and Bob Neale, Toronto

Frequently referred to in financial planning columns, our 2012 Personal Tax Calculator is found on our website at This popular feature permits you to compare the combined federal and provincial 2012 personal tax bill in each province and territory. A second calculator provides a comparison of the 2011 combined federal and provincial tax bill.

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If it looks too good to be true...
The pitfalls of charitable donation tax shelters
Andrew Rosner, Toronto

A recently rendered Ontario Superior Court of Justice decision offered a succinct description of the efficacy of charitable donation tax shelters:

When [the plaintiff] heard about... an opportunity to obtain a $10,000 charitable tax credit in return for a $2,500 donation – he thought it was "too good to be true." It was. (Cannon v Fund for Canada Foundation, 2012 ONSC 399)

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Debunking tax myths: the CRA uses email to conduct "e-audits"
Editor’s note: In a 23 January 2012 Newswire entitled "Debunking tax myths," the CRA addressed nine misleading statements and myths about Canadian tax laws and the way they are administered. Reproduced below is myth 8.

The CRA has been made aware of what appears to be an email audit scam currently going on in the United States. Although the CRA is not aware of any confirmed cases of such scams in Canada, we would like to alert Canadians to act prudently should they receive a similar email.

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How effectively are you managing indirect taxes?
First published in Commodity Tax News, January 2012, Volume 19 Issue 2
Bruce Goudy, Toronto

While indirect taxes account for more than 75% of all business tax expenditures, there is often an imbalance in the resources and attention devoted to them relative to the volume of dollars at risk:

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One or the other: child-care expenses and the caregiver credit
Krista Fox and Maureen De Lisser, Toronto

It is increasingly common for Canadians to find themselves living with and caring for aging parents while raising their own children. Often, the live-in grandparents provide child care for their grandchildren.

A recent CRA external technical interpretation serves as a useful reminder to parents paying their children’s grandparents for child care that claiming the caregiver credit with respect to the grandparent will come at the cost of eligibility for the (usually) more beneficial child care expense deduction.

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When does goodwill exist?
TransAlta Corporation v The Queen, 2012 FCA 20
Jennifer Smith, Ottawa

TransAlta Corporation is the first Federal Court of Appeal (‘FCA) decision to consider the existence and valuation of goodwill in a regulated industry. Although the case dealt with a specific set of facts, the decision includes a good summary of the principles for determining whether goodwill exists and the circumstances under which the Minister is justified in reallocating the purchase price agreed to by the parties under section 68 of the Income Tax Act (Canada). (the “Act).

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