June 2020 Newsletter

In the context of the COVID-19 pandemic, Canadians doing their work at home may have used their home as an office and incurred extra costs accordingly. What expenses will then be tax deductible for them?

The deductibility of expenses for tax purposes — including home office expenses — depends, first of all, on whether you are an employee or self-employed. (Many self-employed people were already claiming home office expenses before the pandemic.)

The Canada Revenue Agency shut down most operations on March 18, 2020 for an indefinite period.

So what does this mean, if you’re dealing with the CRA in a tax dispute or potential dispute?

The March 2019 federal Budget introduced various forms of assistance to Canadian journalism organizations, in light of the massive consumer shift away from paper newspapers to online publications. These have now been enacted and are in effect.

There is a little-known refund of excise tax on gasoline for persons with physical disabilities and for registered charities.

This refund is provided under the Federal Excise Gasoline Tax Refund Program, and is legislated in subsection 68.16(1) of the Excise Tax Act. It is a refund of 1.5¢ per litre of gasoline purchased (the CRA also allows 1.5¢ per 10 kilometres driven). The gasoline must have been acquired “for the sole use of the purchaser and not for resale”.

What’s the value of an interest in a trust?

If you own a unit in a publicly-traded trust such as a mutual fund trust, it’s easy to determine the value of your unit, since it trades on the market.

But what if you’re one of three beneficiaries of a family trust worth $3 million? And the trustees have full discretion over whether to pay you, or the other beneficiaries, any monies from the trust? Does your “trust interest” have a value that can be determined?

This issue comes up in family disputes, when couples separate and their assets have to be valued for purposes of equalization. It also comes up for tax purposes, such as when a person emigrates from Canada or dies, and their assets have to be valued for tax purposes so that their accrued capital gains can be taxed.

In the May 2020 Tax Letter, we noted that as part of the COVID-19 tax measures, income tax balances including instalments that are otherwise due after March 17, 2020 and before September 1, 2020, can be paid until September 1, 2020 without interest or penalties. We erroneously noted that "for individuals, this will include the March 15, 2020 instalment…". That last statement should have read "for individuals, this will include the June 15, 2020 instalment…". We apologize for the error.