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The Canada Revenue Agency (CRA) is warning Canadians about “aggressive tax schemes” that involve “critical illness insurance” designed to avoid taxes, that could lead to participants facing serious consequences.

In a news release issued Thursday, the tax agency said these schemes or arrangements involve complex transactions for reasons including borrowing money to pay for insurance and can mislead taxpayers.

“These schemes often use limited recourse loans, where the lender can only get their money back from certain assets, usually the insurance policy itself,” the news release read.
“If the borrower doesn’t pay back the loan, the lender cannot go after other assets beyond the agreed-upon as collateral.”

The tax agency had issued warnings earlier about similar schemes involving Offshore Disability Insurance Plan and Offshore Leveraged Insured Annuity.

“These arrangements are problematic because they appear to be legitimate insurance transactions but are actually designed to let shareholders take money from their company without paying taxes,” the CRA said.

Typically, these arrangements are promoted by a group of companies or individuals that can be based inside or outside Canada.

The structure of these arrangements creates a “circular flow of funds,” according to the CRA, where a shareholder borrows funds from a third-party lender connected to the promoter group and transfers them to their corporation.
The corporation then uses that money to buy a critical illness insurance, often from an offshore provider, recording the loan as a liability. This allows the shareholder to then withdraw and use the funds tax-free, the CRA explained.

“Those who promote or participate in these schemes can face serious consequences, including penalties, court fines, and even jail time,” the tax agency warned.

The CRA added that the participants in these schemes would be denied the tax benefits received and promoters of the schemes could have to pay third-party penalties.

“Seek independent advice from a qualified and reputable tax professional before entering into any complex financial arrangement,” the CRA advises.

“Be cautious of any scheme that promises to reduce taxes through complicated insurance or loan structures.”

Source: ctv.ca

The Bank of Canada lowered interest rates to 2.25 per cent on Wednesday, but cautioned that monetary policy can't fix the structural economic damage caused by the U.S. trade war.

The central bank said it made the 25-basis-point cut as weakness ripples through the Canadian economy and with inflation expected to stay close to the bank's two per cent target.

In a scathing new report released Tuesday, the auditor general found Canada Revenue Agency contact centres are repeatedly failing to answer calls in a timely manner — and when agents do connect to a customer, they are often providing inaccurate responses.

While the CRA has committed to answering 65 per cent of calls within 15 minutes — a standard that is already much lower than it was in the past — Auditor General Karen Hogan found that just 18 per cent were answered in that time frame in 2024-25. In June, the service offered was even worse: fewer than five per cent of calls were answered within 15 minutes.

The AG's office placed 167 test calls to the CRA between February and May of this year to assess the agency's promised response time — the average wait time to reach an agent was nearly 33 minutes. Between time on hold and spent with an agent, the report said it took analysts about 50 minutes on average to get an answer to a query.

That aligns with the CRA's own data, which shows it took 31 minutes on average to reach an agent for the tens of millions of callers each year — twice the time it took the year before and a sign that standards are slipping and service is getting worse.

CRA call centres also deflected some 8.6 million calls last year, which means many customers were not even given the option to speak to an agent. That figure is a lot higher than the 1.4 million calls that were deflected the year prior.

As a result, customer complaints about the CRA have soared with the auditor general finding a 145 per cent spike between 2021-22 and 2024-25, despite the agency's claim that some 77 per cent of callers who answer a survey are satisfied with their experience.

The AG is recommending the CRA figure out a better system to triage calls related to issues with the agency's online portal, MyAccount. Many calls are related to being locked out of that digital system and its tying up agents, the report found.

Taxpayers are spending hours on hold with the CRA — despite repeated promises of faster service (new window)

Perhaps the auditor general's most troubling finding is that tax-filers are often getting inaccurate information from CRA agents.

The auditor general's office assessed the quality of the test calls it placed and found only 17 per cent of the answers provided to non-account-specific or general questions about individual taxes were accurate — and those sort of calls make up about one-fifth of all calls answered by agents.

The answers to questions about benefits and business taxes were better, but CRA agents still barely received a passing grade, with 56 and 54 per cent of those respective calls determined by the auditor general to be accurate.

The AG found that the CRA spent little time or effort on improving the accuracy: there was just 2,200 hours of coaching, feedback or training in 2024-25, which is under 30 minutes per agent annually.

The auditor general also found that the CRA is not getting the full value of its contract with IBM, which handles the telephony services. When AG analysts dialled through to test the system, they were not provided with the expected real-time updates on their queue position, which left callers waiting with no idea how long it would be before reaching an agent.

Canadians are trusting the Canada Revenue Agency to provide answers to their tax and benefit questions that are accurate and complete. Errors in taxes and missed deadlines can be costly to taxpayers, Hogan said.

Source:
John Paul Tasker · CBC News

Buckley is the owner of one of nearly 5,000 inactive companies that were fined $1,000 for filing their 2024 tax return by paper, raising questions about whether a 2023 legislative change is overly broad and harsh.

The Bank of Canada today reduced its target for the overnight rate by 25 basis points to 2.5%, with the Bank Rate at 2.75% and the deposit rate at 2.45%..

Bank of Canada lowers policy rate to 2½% The Bank of Canada today reduced its target for the overnight rate by 25 basis points to 2.5%, with the Bank Rate at 2.75% and the deposit rate at 2.45%.

The federal government has instructed the Canada Revenue Agency (CRA) to devise a 100-day plan to improve service at its call centres so more Canadians can get through by phone.

A growing number of TurboTax customers in Ontario are facing unexpected bills from the Canada Revenue Agency after audits showed they were given financial credits to which they weren’t entitled after using the popular tax preparation software for several years.

https://youtu.be/zl5F2ePCjQg?si=86m1ZgZAOyG3Ppei

Today, the Bank of Canada maintained its target for the overnight rate at 2.75%, with the Bank Rate at 3% and the deposit rate at 2.70%.

Bank of Canada holds policy rate at 2¾% The Bank of Canada today maintained its target for the overnight rate at 2.75%, with the Bank Rate at 3% and the deposit rate at 2.70%.

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