VDP (Voluntary Disclosure Program) Changes Continues ITA Obfuscation

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VDP (Voluntary Disclosure Program) Changes Continues ITA Obfuscation

CRA proposes restricting who and what conditions qualifies for the new VDP. This article is the text of a letter emailed and sent by registered mail to CRA. Click on the picture to download the PDF letter. Picture Credit: CRA

CRA proposes restricting who and what conditions qualifies for the new VDP. This article is from our letter we emailed and sent by registered mail to CRA. Click on the picture to download the PDF letter. Picture Credit: CRA

VDP Changes – Summary

CRA’s proposed VDP changes allows it to continue obfuscating the Income Tax Act (“ITA”), and so continue assessing income tax where, in certain cases, none is owing. Instead of the VDP, explain to Canadians how the ITA really works. Such transparency will result in nearly 100% compliance. Then eliminate the VDP.

Instead of changing the VDP, just explain to Canadians how the ITA really works

VDP Changes – Background

Tax lawyer David Rotfleisch’s July 26th, 2017 article in the Globe and Mail summarizes CRA’s proposed VDP changes.

ITA: Obfuscated

Professionals: ITA is Incomprehensible

The Department of Finance’s (“DoF”) ITA obfuscation means even tax lawyers and professional accountants do not fully understand it. For example, tax guru Vern Krishna stated in his Jan-Feb 2011 CGA Magazine article, “Tax Simplification is Imperative”, that “the ITA is mind-numbingly complex (and) incomprehensible”. Larry MacInnis, former President of the Institute of Chartered Accountants of Ontario, said in his talk to the Empire Club of Canada, “The Canadian ITA is an unmitigated mess! The reason I say that is because it is incomprehensible!”

The ITA is mind-numbingly complex (and) incomprehensible – Tax guru Vern Krishna

DoF Refuses to Explain How ITA Really Works

No wonder ordinary Canadians cannot understand the ITA either. That is why thousands participated in tax minimization schemes such as by Demara Consulting and by Fiscal Arbitrators. Around 500 Fiscal Arbitrators participants appealed their gross negligence penalties to the Tax Court of Canada. Another 40,000 or so Canadians participated in abusive charity tax donation shelters. They have either been reassessed with gross negligence penalties, or are still waiting for reassessments. Despite all this, the DoF still refuses to explain how the ITA really works. If they did, these Canadians arguably would not have resorted to such schemes and suffered penalties, divorces, and bankruptcies.

VDP Changes: Continues ITA Obfuscation

The VDP usually waives prosecution and penalties. However, the proposed VDP changes merely allows the DoF continuing not explaining to Canadians how the ITA really works. Is the DoF maintaining the status quo to increase Canada’s revenue?

Is the Department of Finance maintaining the status quo to increase Canada’s tax revenue?

ITA Obfuscation: Examples

For example, we have never met a CRA officer, tax lawyer, or professional accountant who has been taught that:

  • In 1936 Canada admitted to the Supreme Court of Canada (“SCC”) that it has no jurisdiction to impose employment or social insurance;
  • Canada legally sidestepped that 1936 SCC decision by enticing Canadians to hold a federal “office” as defined by the Canada Pension Plan (“CPP”) and/or the ITA;
  • Enticements are benefits such as CPP, Employment Insurance (“EI”), Old Age Security (“OAS”), Universal Child Benefit (“UCB”), and GST rebates. They are available only through holding that CPP/ITA “office”;
  • A “social insurance number” styled in all lower case letters, as used in ITA s.270(1) under the definition of “TIN”, and by CRA on their T1 form, and on their RC199 VDP form identifies that federal CPP/ITA “office” and/or “officer”;
  • ITA s.270(1), under definition of “governmental entity”, states, “income is deemed not to inure to the benefit of private persons if such persons are the intended beneficiaries of a governmental program and the program activities are performed for the general public with respect to the common welfare or relate to the administration of government”;
  • Your name, as a private person or as an officer, is spelled the same way, and sounds the same;
  • The ITA deems all individuals as receiving income as Canada’s “public money” belonging to that federal CPP/ITA “office”/“officer”, and not as their private property;
  • Self-assessment means also self-assessing whether income is Canada’s “public money” or your private property;
  • Not rebutting the ITA’s deeming through such self-assessment means your income becomes Canada’s “public money”, and not private property;
  • Applying for a Social Insurance Number makes the applicant jointly and severally liable for income tax, and also for any benefits from Canada’s “public money”;
  • Laws allow Canada to deem all books and records are for Canada’s “public money”;
  • Reporting a private person’s private property on a T1, or on a RC199 VDP form, converts it into Canada’s “public money”, with income tax then owing;
  • CRA does not have a form for reporting a private person’s private property, and that also does not convert it into Canada’s “public money”, with income tax then owing;
  • “Source of income”, an undefined term, means income as Canada’s “public money”;
  • Individual income that is Canada’s “public money” is why tax evasion is also fraud.

Why the DoF does not teach this to tax lawyers, professional accountants, or CRA officers remains a mystery.

“income is deemed not to inure to the benefit of private persons if such persons are the intended beneficiaries of a governmental program” – Income Tax Act, s.270(1)

Some Government Officials – Aware How ITA Really Works?

We believe most CRA officers are not taught how the ITA really works. However, in 2015, a taxpayer mailed Stephanie Henderson, currently CRA Manager for Offshore Income (and a witness in the FINA Committee Report) our paper theorizing how the ITA really works. (In 2015 she was Manager of CRA’s Special Enforcement Program).

Thirty-nine other Government of Canada officials, including Deputy Minister of Finance Paul Rochon, the Attorney General of Canada, and the Minister of National Revenue also received copies by registered mail. (Rochon’s letter, and the 40 registered mail receipts, are archived at http://bit.ly/2vq5pI8.) Therefore, these Government officers are choosing to continue obfuscating the ITA.

These Government officers are choosing to continue obfuscating the ITA

ITA Transparency: No Need for VDP

If the DoF explains to Canadians how the ITA really works, we expect compliance increasing from 92% to nearly 100%. This is because the ITA  respects a private person’s private property rights. In addition, that 1936 SCC case also reiterates work is outside federal jurisdiction, since work is a civil right within the Provinces. That is why our theory paper concludes Canada’s individual income tax is a fee for accessing  benefits from “public money”. That way, no private property theft occurs, making income tax both legal and constitutional.

If DoF explains all this, then Canadians can knowledgeably decide to keeping their paycheques as private property, or paying the fee (income tax) for accessing benefits through that “office”.

If there is such transparency, then there is no need for a VDP. Then, also prosecute all tax evasion cases.

VDP Changes: Conclusion

CRA’s proposed VDP changes allows the DoF to continue obfuscating the ITA and continue unjustly enriching Canada. This is because CRA does not have a form for reporting a private person’s private property, and that also does not convert it into Canada’s “public money”, with income tax then owing. This year is the 100th anniversary for Canadian income tax. After 100 years, the only “right balance to tax fairness” is explaining to Canadians how the ITA really works.

CRA’s proposed VDP changes allows the DoF to continue obfuscating the ITA and continue unjustly enriching Canada

Sincerely,

 

 

 

 

Apu Nahasapeemapetilon, Legalese Interpreter

 

Click on the top picture to download the PDF of our letter to CRA!

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