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.

Do you own US securities (or other foreign stocks) in your personal portfolio?  Does your corporation own US securities (or other foreign stocks)?  If so, then pay careful attention to the information below.

With much fanfare, the “kiddie tax” was introduced into Canadian tax law effective January 1, 2000.  My, how time flies.  It does not seem like it was 11.5 years ago that such a tax was introduced to prevent income splitting mischief.

In my many years of practice, it never fails to amaze me how many people rely on non-qualified persons for advice in one of the most complex topics there is – tax planning or, as Moodys LLP likes to call it, “tax optimization”.  There is no shortage of “experts” who seem to think that they understand tax.  In this day and age of instant information vis-à-vis the internet, such “experts” continue to flourish and continue to dispense tax advice to their colleagues and buddies.  Unfortunately, many of those people end up in our offices seeking advice when things go wrong.  In many cases, such advice has led to “planning” which is a ticking time bomb waiting for nasty results should their affairs ever be reviewed.