News of Note

CRA considers that if an individual has multiple regular places of employment (RPE) and travels between them during the day, the trip from the individual’s home to the first RPE and the trip home from the last RPE is personal, whereas travel between RPEs is considered employment-related – so that reimbursement of or allowances respecting the former but not the latter would give rise to employment benefits. In this context, CRA stated that “travel between an employee’s home and their employer’s business location is personal, even when the employee has a home office that is a regular place of employment” (cf. Cork), and that “a location may not be a RPE for an individual if, for example, the individual works at that particular location only once during the year or perhaps for only a few days in the year.”

Neal Armstrong. Summary of May 2016 Alberta CPA Roundtable, Q.3 under s. 6(1)(b).

The amended version of s. 163(1) imposes penalties for the 2015 and subsequent taxation years in accordance with a more favourable formula than previously. CRA will not exercise its discretion under s. 220(3.1) to reduce penalties assessed for the 2014 and prior taxation years to this more favourable basis, and instead will only apply its usual (somewhat onerous) criteria for penalty relief.

Neal Armstrong. Summary of May 2016 Alberta CPA Roundtable, Q.4 under s. 220(3.1).

Notwithstanding that CRA acknowledges that assessing a s. 162(7) penalty for failure to file T1135s for periods before the normal reassessment period (as potentially extended by three years under s. 152(4)(b.2)) would require CRA to demonstrate that such failure “was an error that a prudent and conscientious person would not have made” (which often would be difficult for CRA to do where there were few records or memories), CRA nonetheless states that in order for failure to file T1135s to be exonerated under the voluntary disclosure program, “the taxpayer would have to complete the T1135 for all years for which such filing was required.”

This was position was formulated even before the more recent trend towards providing less encouragement to taxpayers to make voluntary disclosures.

Neal Armstrong. Summaries of May 2016 Alberta CPA Roundtable, Q.17 under s. 152(4)(a)(i) and s. 220(3.1).

The Reg. 59071(2)(b) election to have a dividend come out of pre-acquisition surplus (i.e., as an ACB reduction), rather than out of other surplus, can only be made on a “whole” dividend. Accordingly, given uncertainties as to surplus balances, foreign affiliate distributions often prudently should be paid out as multiple dividends, so that there can be later flexibility as to which dividends, if any, will be elected upon.

Neal Armstrong. Summary of Clara Pham, “Paying FA Dividends When Surplus Balances are Unclear,” Canadian Tax Focus, Vol. 7, No. 1, February 2017, p. 2 under Reg. 5901(2)(b).