The Federal Budget 2024 proposes to introduce a supplementary rule to strengthen the tax debt anti-avoidance rule, applicable in the following circumstances:
- there has been a transfer of property from a tax debtor to another person;
- as part of the same transaction or series of transactions, there has been a separate transfer of property from a person other than the tax debtor to a transferee that does not deal at arm’s length with the tax debtor; and
- one of the purposes of the transaction or series is to avoid joint and several, or solidary, liability.
Where these conditions are met, the property transferred by the tax debtor would be deemed to have been transferred to the transferee for the purposes of the tax debt avoidance rule.
The Income Tax Act contains a penalty for those who engage in, participate in, assent to, or acquiesce in planning activity that they know, or would reasonably be expected to know, is tax debt avoidance planning. Budget 2024 proposes to extend this penalty to tax debt avoidance planning that is subject to the proposed supplementary rule.
Budget 2024 proposes that taxpayers who participate in tax debt avoidance planning be jointly and severally, or solidarily, liable for the full amount of the avoided tax debt, including any portion that has effectively been retained by the planner.
These measures would apply to transactions or series of transactions that occur on or after Budget Day.
If you would like help with dealing with the CRA or would like to know more about taxable benefits, please feel free to call us at (905) 305-9722 or email us at info@eigenmachtcrackower.com and we will help you out!
