CRA GTS Policy No More

The Canada Revenue Agency announced a new policy in October 2012 called the Gifting Tax Shelter (GTS) policy.   The purpose of this policy was primarily intended to deter taxpayers from particpating in Registered Gifting Arrangements , commonly referred to as Donation Tax Shelter.  Under this policy,  CRA would not process any taxpayers properly filed tax return until after they had completed their audit of the  Gifting Arrangement.   This often took 2 or 3 years or more, subsequently denying the taxpayer certain rights and causing consequential damages to many taxpayers.   For example, the lack of a tax assessment caused problems for other benefits like the Old Age Security,  Provincial Insurnace plans, getting a bank loan, etc.  

Several appeals to Federal Court were launched by taxpayers to quash this policy.   The most notable were the Ficek and McNally cases.   In both of these cases, the taxpayer won.   Initially, the CRA ignored these decisions, but when the McNally case was lost again on Appeal,  the CRA had not choice but to follow the law.   We truly hope they will continue to do so.

For the returns that are currently being held,  CRA is following the process described below:

1.   CRA is now processing all returns that were being held because of the GTS policy.   
2.  For taxpayers who participated in a program/year where the audit is not finished, they are allowing the donations and issuing the refunds.  They are issuing a supplemental notice telling donors that the audit is underway and there could be a potential reassessment
3.  For taxpayers who have already received a proposal letter, they are issuing the assessments and denying the donations/refunds.   They are issuing a supplemental notice with the more details that could not be printed on the normal assessment
If a taxpayer falls into category 3,  he has the right to file a Notice of Objection.  If you want to file an Objection,  you have only 90 days to do so!  We have more details and instrucitons in the Members Section of our website.