7 February 2001 Ministerial Correspondence 2001-0066314 - Trust Assessment Court Challenge

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues:

Whether taxpayers have a legal right to challenge CCRA's assessment of another taxpayer.

Position:

A statement of defence has been filed with the court and the case is proceeding under special management of the court to protect taxpayer confidentiality.

2001-006631
M2001-00321

February 7, 2001

XXXXXXXXXX

Dear XXXXXXXXXX:

The Honourable Martin Cauchon, Minister of National Revenue, has asked me to reply to an issue raised in your correspondence addressed to the Honourable Paul Martin, Minister of Finance, concerning the taxation of property when the owner leaves the country and the current court challenge related to this matter. Mr. Martin sent a copy of your correspondence to Mr. Cauchon on January 8, 2001.

The Canada Customs and Revenue Agency (CCRA) is responsible for administering and enforcing the Income Tax Act, while the Department of Finance is responsible for tax policy and any proposed changes to the Act. The CCRA is committed to applying the tax laws consistently and collecting the full amount of tax owing under the law. However, the amount of tax payable for a particular year is based on the law that is in force at that time, and the CCRA does not have the discretion to change the law.

Generally, the Act currently provides that any person residing in Canada who owns taxable Canadian property may leave Canada without having to pay tax on this type of property at the time of departure. However, when the former resident sells the taxable Canadian property, any capital gain realized on the sale is subject to tax in Canada, unless this law is affected by a tax treaty between Canada and the new country of residence. As a result of legislation tabled by the Department of Finance on July 5, 2000, any person including a trust, who leaves the country or transfers property from Canada on or after October 2, 1996, will pay tax on most capital gains that have accrued in Canada up to the time of departure. Exceptions to this rule will include gains that accrue on Canadian real estate and Canadian business property, which can always be taxed when they are ultimately sold.

The confidentiality provisions of the Act preclude me from divulging information on taxpayers' files without their prior written authorization. These provisions are fundamental to the integrity of a self-assessment system and the CCRA takes its responsibility of maintaining confidentiality very seriously.

The Harris case involves one individual's court challenge regarding the tax affairs of another. The Attorney General filed a statement of defence on October 20, 2000, and the case is proceeding under special management of the court to protect taxpayer confidentiality. As this matter is before the courts, I cannot comment further.

I appreciate the opportunity to address your concerns.

Yours sincerely,

Bill McCloskey
Assistant Commissioner
Policy and Legislation Branch