RRSPs are an extremely popular investment vehicle for Canadians.  With the mild weather, it may be easy to forget it is February and the RRSP deadline is February 29th.  (The deadline is usually March 1, but with 2012 being a leap year it will be the last day of February.)  This RRSP season, taxpayers and their advisors should be aware of a change in the RRSP rules enacted as a result of the 2011 Federal Budget.  These new "advantage rules" target tax avoidance schemes and other structures that most taxpayers would not be involved in, but these rules also set a trap for the unwary.  If the advantage rules apply, the Canada Revenue Agency ("CRA") may impose a penalty tax of 100%.  In general terms, this 100% tax is on the amount of the "advantage", which may be the entire value of the investment.

This is not a new topic. However, it is one that we deal with time and time again....especially in recent years.

Firstly, this is my list not yours. It is very subjective and is a reflection of my many years of experience of being a tax specialist and building a “tax only” advisory practice.  Most of the practitioners that are clients and friends of our firm know their tax limitations.  However, there are other practitioners whose work we often trip across that do not know their limitations.  The simple fact is that tax is tough.  I would venture to say that it is one of the most challenging professions in existence.  Unfortunately, there is no tax specialist designation in Canada to help the public identify professionals who have credible knowledge and experience in tax.  I'm hopeful that will change soon.

On January 9, 2012 the IRS issued IR 2012-5, which makes two very important announcements:  First, it promises new procedures to bring unfiled returns current for taxpayers who have not filed, but owe no tax.  Second, it indefinitely extends the basic terms of the 2011 Offshore Voluntary Disclosure Initiative (OVDI).

Copthorne Holdings Ltd. v. Canada, 2011 SCC 63 (CanLII) is a recent decision from the Supreme Court of Canada regarding the general anti-avoidance rule (“GAAR”)^[1] and provides the much-anticipated interpretation and confirmation of these rules.  While the “main event” was whether the transactions undertaken by the taxpayer resulted in abusive tax avoidance to which the GAAR applies, this blog focuses on the Court’s analysis of the meaning of “series of transactions”.  The “series of transactions” concept was critical to the outcome of this appeal.  The Court provided guidance on how past, present and future transactions are “contemplated”, thereby confirming the framework by which a “series of transactions” would be identified for the application of the GAAR.

On December 15^th and 16^th I attended the International Taxation conference sponsored by the IRS and held in Washington DC.  There were more than 700 people in attendance and the lunchtime speaker on the first day was Douglas Shulman, the Commissioner of the IRS.  At the end of his prepared remarks he answered only three questions posed by the audience. The first question he answered was mine, which was the following: