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Mortgage Broker News | 16 Apr 2013, 12:00 AM Agree 0
The recent Canada Revenue Agency interest in people claiming their condos as homes instead of investment properties is long overdue, says one mortgage broker, also suggesting the crackdown illustrates the role brokers can play.
  • SLev | 16 Apr 2013, 09:32 AM Agree 0
    didnt the Canada Supreme Court restrict the "Reasonable expectation of profit" test in 2002?
  • Debbie | 16 Apr 2013, 10:07 AM Agree 0
    Calum Ross stick to brokering..........really!
  • Tomas | 16 Apr 2013, 11:35 AM Agree 0
    "One of the key benefits of real estate investments is the preferential tax treatment they can receive when STRUCTURED PROPERLY"

    Calum Ross has a CRA audit proof way to avoid tax? Is he sure it's audit proof?
  • Atefeh | 16 Apr 2013, 11:54 AM Agree 0
    Calum, These auditors don't know what they are doing. IT-120R6 paragraph 5-10 allows individuals to have/claim more than one property as a principal resident. It further explains that Even if a person inhabits a housing unit only for a short period of time in the year, this is sufficient for the housing unit to be considered ordinary inhabited in the year by that person. That is the law.

    From what I saw, individuals small investors are not cheaters, politicians are. Perhaps Mr. Flaherty should look around himself.
  • Ron Butler | 16 Apr 2013, 01:33 PM Agree 0
    I don't think Calum ever suggested that he has an "audit proof" secret. Calum is also highly experienced and educated in this area. Calum does stick to brokering as one of the highest producing individual agents in Canada.

    I think Calum very rightly pointed out that CRA has been on the attack for over a year and many people have been badly burnt with penalties, garnishments and account freezes.
    My lawyers have told me of dozens of incidents of CRA investigations of quick sales of apartment condo units and sales by assignment that had terrible results for sellers.

    A good broker would warn a client that the fast sale of a condo may draw attention and they client should be cautious.
  • Tomas | 16 Apr 2013, 01:39 PM Agree 0
    Ron,

    The article quotes that there is a "proper structure."

    It would be interesting to know how flexible this structure is, and if this structure has successfully hurdled CRA audit.
  • Ron Butler | 16 Apr 2013, 01:47 PM Agree 0
    A "proper structure" could be: declare as a rental and pay the proper taxes on sale. Calum did not mention any magic.
  • Robert Stanfield, Invis | 16 Apr 2013, 02:55 PM Agree 0
    Once again, negative comments posted by people to shallow to include their full name. If you want to take shots at people quoted in the articles posted, have the maturity to put your full name in the response. Kudo's to Ron Butler for posting a positive comment.
  • Calum Ross | 16 Apr 2013, 07:42 PM Agree 0
    If anyone wants some of the rulings on expectation of profit pertaining to real estate investments then I am always happy to share. My education is in finance and not tax - I don't profess to be a tax expert and only accountants and tax lawyers have the liability insurance to properly advise on such matters. I am broker advocate who works hard to elevate the profile of industry - consider this before you make comments that add little or no value and/or sound like sour grapes.

    The quotes in the article are only a part of the story. I won't engage in a typing debate on a matter in a public forum...not to be disrespectful but it is neither useful or effective medium for such things.

    If someone wishes to challenge me on my opinions then I am more than happy to discuss them with a qualified party who has the basis to offer an opinion. I am not interested in engaging in mindless debate with someone who doesn't have the courage (or perhaps competence?) to post something under their real name. I am curious to know why people don't post under their real name, because cyber research indicates it is typically often because they don't really know what they are talking about and/or because the real name won't carry enough credibility with it.

    I have a huge amount of respect for the business that Rob Butler has built and there is no question that Rob is one of Canada's leading authorities on the residential mortgages. Let's work together to keep our comments constructive and useful to the industry at large - the way this was intended to be. I welcome anyone to offer a qualified alternative input on the matter.

    Wishing you all the best - Calum
  • John Dearin | 19 Apr 2013, 11:21 AM Agree 0
    IT 120R6 was cancelled last month and the information contained in it is no longer applicable. Most IT's are replaced by "Income Tax Folio's" which are a much easier read. In particular for those interested view FOLIO S1-F3-C2: Principal Residence. ( http://www.cra-arc.gc.ca/tx/tchncl/ncmtx/fls/s1/f3/s1-f3-c2-eng.html#N10568 ) A quote from this folio:

    More than one residence in a tax year
    2.28 While only one property may be designated as a taxpayer’s principal residence for a particular tax year, the principal residence exemption rules recognize that the taxpayer can have two residences in the same year, that is, where one residence is sold and another acquired in the same year. The effect of the one plus in variable B in the formula in ¶2.20 is to treat both properties as a principal residence in such a year, even though only one of them may be designated as such for that year.

    this is the only time that you will get more than one exemption on a principle residence, even then CRA will only allow one to be designated as such. (ie for rental purposes and maintain principle residence status)

    The folio is an interesting read as most Canadian taxpayers do not know these rules and when they run afoul of the rules, these dirty rotten tax auditors can really beat you up. The best one I saw was an individual that bought five adjacent pieces of land, then as he built a house on one, he moved in, built a second and moved in and so on. CRA caught him in the fourth house, considered him to be involved in a "Adventure or Concern in the Nature of Trade" and assessed HST on the fair market value of each property. All his gains were wiped out before the 90 day appeal period was up. AH the memories.
  • John Dearin | 19 Apr 2013, 11:33 AM Agree 0
    The Expectation of Profit Test" was used by CRA to determine the viability of business's that had substantial losses that were wrote off against other income. In short the CRA auditor got to foretell the future and deny the expenses. SLev is right in that it was shot down completely by the Supreme Court back in 2002. the auditor couldn't show how the Chrystal ball worked (Sarcasm).

    It was replaced by the department of finance by the "Cumulative Expectation of Profit" test in 2005. Finance broadened the scope to include passive income (Rentals, Investments) and even to corporations. In short, take your losses but when you shut down, they look at the cumulative losses and then deny them all, resulting in assessments going back years.

    Anyone interested in this stuff, the CRA website is very well put together. But as Calum says, stick to brokering and refer these issues to a paid professional with a designation, not some yahoo with a shingle saying financial advisor.

    Debbie and Atefeh would do themselves a favor by listening to the likes of Ron and Calum
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