Lessons from more than five years of battling the taxman
A taxpayer who fought the CRA in court over just a little more than $13,000 finally won his case but the story is a cautionary tale. He sold a condo that he never lived in, the CRA assessed a tax on the profits as well as applied negligence penalties. Luckily, he was able to prove that he intended to live in the condo but could not. A judge ruled that profit from the condo was considered capital gains and not income. Taxpayers should be aware that when selling a property, the CRA will assess penalties if the profits aren’t reported correctly.
“It’s clear from this story that the CRA is focusing a lot of attention on real estate transactions. So, make sure you understand the factors the taxman will consider when determining the tax treatment of any sale.”