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Tax Breaks, Schemes, and Loopholes

Tax Breaks, Schemes, and Loopholes

A tax loophole is defined as an intentional exploitation of a tax law in order to reduce, eliminate, or avoid tax liabilities. While some might construe these as tax breaks, or tax schemes, with a tax loophole the file is purposely intending to test (or take advantage of) the tax regime to his/her advantage in a manner not intended by the tax law.

For example, you may have heard of the recent tax loophole afforded non-resident owners of property in the Vancouver BC area, to which Finance Minister Bill Morneau stated that you need to live here in Canada in order to benefit from our tax exemptions. Previously, anyone who sold their principal residence in Canada did not have to report it to the Canada Revenue Agency (or the profit earned from that sale) as the CRA provides a tax exemption on property that is used as your primary home. Now, you need to report the sale, but so long as the property was your primary residence it is still exempt. The CRA will now be auditing tax forms to verify that the beneficial owner actually lives here in Canada, and is living in the home, in order to claim and receive the Principal Residence tax Exemption (PRE).

The Government of Canada has taken steps toward closing this and other tax loopholes that negatively impact all Canadians.

You should contact the Canada Revenue Agency as soon as possible with any information about potential tax cheats.

For more information regarding tax cheats, tax evasion, and tax schemes, please contact the CRA.

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