Did Fiscal Arbitrators?CRA says you are “Grossly Negligent”

But what if the Government is “Grossly Negligent”?

Version 4.0

Disclaimer

This is NOT legal advice.

This is an intro so you can get legal advice.

www.CanadaIncomeTaxIsLegal.is

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Do due diligence: show this to your lawyer and/or professional accountant. It will probably confirm what we are saying here: the Government also misled them.

Summary

• Fiscal Arbitrators: 3,000 people; 500 in Tax Court

• CRA Project FABLE: gross negligence penalties

• Gov’t seems grossly negligent; has “dirty hands”

• Loses legal right to gross negligence penalties

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CRA’s program against FA is called “Project Fable”: “the name “FABLE” was selected as it represented False Business Loses”. Check our website for any Project Fable updates.

Two Legal Systems• Civil law-based: Gov’t grants privileges

• No inalienable right to private property

• Extreme case: Communism

• Common law-based: Creator’s inalienable rights

• Right to private property cannot be taken away

• Canada is not a Communist country!4

Inalienable definition: “incapable of being alienated, surrendered, or transferred; inalienable rights”: https://www.merriam-webster.com/dictionary/inalienable. Private property rights are based on Biblical laws: https://canadaincometaxislegal.is/bible-income-taxes/

Canada’s Legal System

• Civil law-based: Private property privileges

• Quebec (since formerly part of France)

• Common law-based: Private property rights

• Provinces outside Quebec

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We use rights as meaning the Gov’t cannot take them away. In contrast, we use privileges as meaning the Gov’t can take them away at any time.Download pages from a Government brochure about Canadians having Freedom of Private Property: https://canadaincometaxislegal.is/offshore-income-canadians-must-report/

– A former Canada Department of Justice tax lawyer

“Income tax is about property rights.”

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There is no legal definition of “income” in Canada’s Income Tax Act (“ITA”). Here is a speech to the Empire Club of Canada by a past President of the Certified General Accountant’s Association of Ontario admitting Canada’s tax laws do not define “income”: http://speeches.empireclub.org/60811/data?n=4. (It also talks about the self-assessment principle).

Who is Property Owner?

• Income = property - but who is the owner?

• If private property: owner is you

• If “public money”: owner is Canada

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“Public money” is defined by Section 2 of Canada’s Financial Administration Act: “public money means all money belonging to Canada”: http://laws.justice.gc.ca/eng/acts/F-11/page-1.html#h-2Since Canada’s tax laws do not define income, your income could be “public money”.Canada is represented by “Her Majesty”. Canada is also a corporation (gathering) of Canadians. When Canadians get hurt, “Her Majesty” legally represents those affected Canadians in court.

“Public Money”

• “Public money” = Consolidated Revenue Fund

• “Public money” = credit to Receiver General

• T1 benefits paid from Canada’s “public money”

• CPP, EI, Universal Child Care Benefits, etc.

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The T1 Income Tax and Benefits Return, on page 4, says make payments to the Receiver General: http://www.cra-arc.gc.ca/formspubs/t1gnrl/llyrs-eng.html. “Consolidated Revenue Fund means the aggregate of all public moneys that are on deposit at the credit of the Receiver General”: from the definition of “Consolidated Revenue Fund” in Section 2 of Canada’s Financial Administration Act: http://laws.justice.gc.ca/eng/acts/F-11/page-1.html#h-2.

“Public Money”• Income tax is paid to Receiver General

• paid into Canada’s “public money”

• But income tax is paid out of your income; so

• your income is also “public money”; so

• your income is not your private property!

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Recall the Income Tax Act (“ITA”) has no definition for “income”. Page 4 of the T1 Income Tax and Benefits Return says make payments to the Receiver General: http://www.cra-arc.gc.ca/formspubs/t1gnrl/llyrs-eng.html.

Now Just a Minute!

• My paycheques are Canada’s “public money”?

• The law deems them so

• My paycheques are not my private property?

• No (unless you overcome the laws’ deeming)

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This is our conclusion from researching Canada’s tax laws. We call our research, “Apu’s Theory”: https://CanadaIncomeTaxIsLegal.is. But what if Apu’s Theory is wrong?

The Alternative• What if your income is not “public money”?

• income tax then not paid to Receiver General

• Gov’t would then be stealing your private property, a Criminal Code offence

• CPP, EI, UCCB benefits then not filed on T1

• CPP, EI, UCCB then not from “public money”

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Theft is an offence under Section 322(1) of Canada’s Criminal Code: http://laws-lois.justice.gc.ca/eng/acts/C-46/page-74.html?txthl=theft#s-322 CPP = Canada Pension Plan is reported on a T1 at Line 114; EI = Employment Insurance at Line 119; UCCB = Universal Child Care Benefit at Line 117.The logical conclusion: the law “sees” our paycheques as “public money” belonging to Canada.

Fiscal Arbitrators

• Fiscal Arbitrators (“FA”): incorrect refunds

• Reduces “public money” for T1 benefits:

• CPP, EI, Universal Child Care Benefits, etc.

• Affects 75% of Canadians

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An analogy is a bicycle wheel. All the contributors and users of CPP, EI, UCCB, etc are represented by the wheel spokes. At the centre is the hub; the Consolidated Revenue Fund, aka “public money”. Anyone who applies for and receives incorrect deductions leaves less $ in the hub for all other contributors and users. See our blog article on “affected Canadians”: https://canadaincometaxislegal.is/tax-evasion-fraud-public/.

FA Reassessments

• Her Majesty recovers incorrect FA refunds for affected Canadians (“disgorgement”)

• Equity Law: Deterrence: fines and penalties

• Income Tax Act: gross negligence penalties

• Deters future similar behaviour

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Her Majesty: see our blog article, “The Meaning of Her Majesty in Canadian Law - Part 1”: https://canadaincometaxislegal.is/meaning-majesty-canadian-law/Disgorgement: “The act of giving up something (such as profits illegally obtained) on demand or by legal compulsion” - Black’s Law Dictionary.Equity Law: “A branch of English law which developed hundreds of years ago when litigants would go to the King and complain of harsh or inflexible rules of common law which prevented "justice" from prevailing.” - Duhaime’s Law Dictionary. The ITA s.163(2), gross negligence penalties seem to be equity remedies for discouraging similar future behaviour. Deterrences are allowed in equity law: Hodgkinson v. Simms, 1994 CanLII 70 (SCC), [1994] 3 SCR 377 http://canlii.ca/t/1frpl: “The remedy of disgorgement is not sufficient to guard against the type of abusive behaviour engaged in by the respondent.  The law of fiduciary duties has always contained within it an element of deterrence.”

Due Diligence

• ITA gross negligence penalties

• Why you may not be grossly negligent:

• Followed professional / tax preparer advice

• Followed CRA advice

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Gross negligence penalties are in s.163(2) of the Income Tax Act: http://laws.justice.gc.ca/eng/acts/I-3.3/page-193.html#docCont .Due diligence definition: “Reasonable verifications and precautions taken to identify or prevent foreseeable risks.” - Duhaime’s Law DictionaryA court case on whether FA participants exercised due diligence: Torres v. The Queen, 2013 TCC 380 (CanLII), http://canlii.ca/t/g28dc, paragraphs [68] to [71].

Due Diligence Problems

• Why you may not be grossly negligent:

• Followed professional / tax preparer / CRA advice

• But don’t know how ITA really works

• Gov’t never told them either

• Fraud or deceit = Gov’t has “dirty hands”

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Legal maxims are undisputed, truthful statements. Having “clean hands” is an Equity Law maxim: “A maxim of the law to the effect that any person, individual or corporate, that wishes to ask or petition a court for judicial action, must be in a position free of fraud or other unfair conduct.” - Duhaime’s Law Dictionary. See also: https://en.wikipedia.org/wiki/Clean_hands.

Test Your Advisors• What is the difference: Social Insurance Number

versus T1 / T4 / TD1 “social insurance number”?

• What is a CRA (re)assessment?

• Why are tax evasion cases heard first in provincial courts, and later again in Tax Court?

• Since couples marry under provincial marriage licenses, what is a CRA “federal spouse”?

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It is not their fault if your advisors cannot answer these questions. The Government has never taught them either how Canada’s tax laws really work.

Unfair = “Dirty Hands”

• “Dirty hands” is an Equity Law principle:

• Gov’t cannot seek equity (gross negligence penalties) if :

• deceitful (no full disclosure)

• unfair or unreasonable conduct

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An equity law legal maxim says, “he who seeks equity must do equity”. (Those seeking fairness must first be fair themselves). For more, see: https://toplawsearch.wordpress.com/2015/11/03/he-who-seeks-equity-must-do-equity/

Income Conversion• Income is property - but who is the owner?

• Your paycheque starts as private property

• owner is you

• The law deems you want to convert your property (income) into “public money”

• owner then becomes Canada (CRF)

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Your paycheque starts as your private property because Canada is not a Communist legal system!Conversion is defined by Duhaime’s Law Dictionary as, “a legal action against a person who found and converted someone else’s property to his own use.” Canada’s tax laws deem you want to convert your property into “public money”: https://canadaincometaxislegal.is/deem-canada-law-presume-guilt/. This is why the ITA is deliberately obfuscated (https://canadaincometaxislegal.is/obfuscation-income-tax-offences/) so that nobody knows this. CRF = Consolidated Revenue Fund: http://laws.justice.gc.ca/eng/acts/F-11/page-1.html#h-2

Silence Converts Income

• Silence = consent to being deemed:

• income is converted so owner is Canada;

• your income is “public money”, so

• not your private property, so you are also

• an agent for Canada’s “public money”

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Since Canada’s tax laws works on deemed so-called “facts”, if you are silent, then those assumptions are treated as agreed facts. The landmark court case about this is Johnston v. Minister of National Revenue, 1948, Supreme Court of Canada (canlii.ca/t/1nmzm)Since your income is deemed as “public money”, you are then also deemed an Agent handling “public money” belonging to Canada, the Principle. This is why not responding to any CRA assessment legally makes it a collectible debt!

Agent: Characteristics

• Principal - Agent relationship:

• Agent must have full disclosure from Principal

• Otherwise agent cannot fulfill principal’s needs

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CRA’s Policy Paper P-182R discusses when a Principle - Agent relationship exists: http://www.cra-arc.gc.ca/E/pub/gl/p-182r/p-182r-e.html. Some of these characteristics are on the next slide.

Agent: Fiduciary Duties

• Filing honestly & completely all “public money”

• Cannot make secret profits

• Not trading on its own account

• Must disclose any conflict to Principle (Canada)

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A deemed agent owes fiduciary duties to Canada, the owner of the “public money”. It is the same as being a GST agent for Canada’s money. The secret is tax laws deem (https://canadaincometaxislegal.is/deem-canada-law-presume-guilt/) your paycheques to also be Canada’s money. Martin Armstrong met a Canadian politician who said the same thing (https://www.armstrongeconomics.com/world-news/taxes/marxist-socialism-now-relabeled-as-the-sharing-economy/) - “everything you earned belonged to the state (Canada).”

Fiscal Arbitrator’s Theory

• Thought income is private property (wrong); so

• Principal is you (therefore, also wrong)

• Agent is some kind of legal person (but what?)

• Couldn’t identify who the legal person is

• Couldn’t identify legal person’s type of income

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It is natural to assume your income is your private property. However, being unable to identify the legal person, how CRA identifies it on their forms, and what type of income it handles doomed FA’s theory in court. The Gov’t has done a very good job of obfuscating Canada’s tax laws (https://canadaincometaxislegal.is/obfuscation-income-tax-offences/). It also corroborates our position that your income is not your private property. “Type of income”: CRA 5000G General Income Tax and Benefit Guide, Line 130, uses this term: http://www.cra-arc.gc.ca/formspubs/t1gnrl/llyrs-eng.html.

FA: Problems• Principal is you (individual)

• Agent is a legal person?

• Two legal persons

• But work done by one human body (one people); so

• YOU CANNOT INVOICE YOURSELF; so

• YOU CANNOT DEDUCT INVOICES TO YOURSELF!

PrincipalIndividual

Agentlegal

person?

$ = deemed NOT private

property!

One people, but two legal persons?

FA = Fiscal Arbitrators. FA’s main problem is not knowing what the legal person is. Apu’s Theory (https://CanadaIncomeTaxIsLegal.is) concludes it is you, as an “officer” as defined by the Canada Pension Plan (“CPP”) and/or ITA. Both laws state, “officer means a person holding such an office”. Therefore, you and such an “officer” are from one human body. Another problem: FA was unaware Canada’s tax laws deem all individual income as “public money”.

FA: Not Deductible!• FA thought income is private property, so

• Principal is you (wrong)

• did physical and/or mental work

• Agent is some kind of legal person (true)

• interfaces with tax laws; so

• Principle invoiced Agent for work done24

FA thought the Agent could deduct expenses for physical and/or mental work done by the Principal (you). However, Apu’s Theory concludes this is legally impossible because the Agent is you, but as a CPP/ITA “officer”. This means you and that “officer” is the same human body (one people). Work done by you is work done by you as that officer. CRA’s program against FA is called “Project Fable”: “the name “FABLE” was selected as it represented False Business Loses”. Check our website for any Project Fable updates.

FA: Former CRA Officer

• Didn’t know income deemed “public money”

• Thought individual income is private property

• Used wrong style of SIN for their “legal person”

• Despite that FA partner had worked for CRA

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FA partner Carlton Branch formerly worked for CRA, but still didn’t know tax laws deem individual income as “public money”. FA also use the wrong style of SIN to identify their “legal person”, their Agent. This shows the Gov’t has obfuscated Canada’s tax laws even with CRA. How then is CRA supposed to audit you fairly? Or perhaps the Gov’t wants unfair audits which results in higher assessments? Would FA have even existed if the Government fully disclosed how Canada’s tax laws really work?

“Apu’s Theory”• Individual: you

• Agent: as CPP/ITA “officer”

• ID: social insurance number

• on T1, TD1, T4, T2125, etc.

• “Office” $ = “public money”

• Principal: Canada, for

• affected Canadians: other CPP/ITA “officers”

Principal

Agent“officer”

Individual$ = Canada’s

“public money”$

One people, but as two legal persons

Other CPP/ITA

“officers”CRF

Apu’s Theory (https://CanadaIncomeTaxIsLegal.is) concludes FA’s legal person is an “officer” defined by CPP and/or ITA. Both laws state, “officer means a person holding such an office”. You and such an “officer” are from one human body (one people), even though the law “sees” officers as artificial persons: https://canadaincometaxislegal.is/officer-special-powers-zootopia/. “When two rights concur in one person, it is the same as if they were two separate persons” - Bouvier’s Maxim of Law, 1856 4 Co. 11.

“Apu’s Theory”• Agent: you, deemed holding CPP/ITA “office”

• Identified by “social insurance number”

• on T1, TD1, T4, T2125, etc.

• CPP/ITA “office” income = “public money”

• Principal: Canada, for affected Canadians (75%)

• Type of income: Canada’s “public money”

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Apu’s Theory fills in FA’s missing pieces: as the income is deemed “public money”, the Principle is not you, but Canada, and the Agent is you as a CPP/ITA “officer”) handling “office” income, the “public money”. Both office and officer are identified by the SIN used as a “social insurance number” styled in all lower case letters. CPP definition of office(r): http://laws.justice.gc.ca/eng/acts/C-8/page-1.html#h-2. ITA definition of office(r): http://laws.justice.gc.ca/eng/acts/I-3.3/page-269.html#h-159. T1 forms: http://www.cra-arc.gc.ca/formspubs/t1gnrl/llyrs-eng.html. Article on “affected Canadians”: https://canadaincometaxislegal.is/tax-evasion-fraud-public/

No Full Disclosure• Did Gov’t tell you, FA, or professionals that T1, TD1,

T4, and T2125 income is “public money”?

• No

• Did Gov’t tell you, FA, or professionals that filing private property on T1, TD1, T4, and T2125 converts it to “public money”?

• No

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Conversion is defined by Duhaime’s Law Dictionary as, “a legal action against a person who found and converted someone else’s property to his own use.” Only you, as the property owner, can legally consent to converting your private property into “public money”. The legal term is “consensual interference”: 373409 Alberta Ltd. (Receiver of) v. Bank of Montreal, [2002] 4 SCR 312, http://canlii.ca/t/1fwx6, paragraph [9]: “No action lies in conversion or trespass to chattels for consensual interferences with goods: the nature of these torts involves wrongful interference with goods and an interference that is consented to cannot be wrongful.  Consent may be express, as in a contract or agreement for bailment or lease, or it may be implied from the circumstances.” 

Gov’t: “Dirty Hands”• Another reason for not being grossly negligent:

• Deemed agent for Canada’s “public money”

• No full disclosure on how ITA really works

• Gov’t has “dirty hands” under equity law

• Cannot receive equity (gross negligence penalties) if have “dirty hands”

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An equity law legal maxim says, “he who seeks equity must do equity”. (Those seeking fairness must first be fair themselves). For more, see: https://toplawsearch.wordpress.com/2015/11/03/he-who-seeks-equity-must-do-equity/

Gross Negligence: Who?

• Gross negligence penalties

• Punishes and deters similar future behaviour

• Gov’t cannot receive equity (gross negligence penalties) if have “dirty hands”

• Against natural justice principles (inequitable)

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“Put simply, other Canadian taxpayers should not have to bear the financial burden which arises from unfortunate circumstances such as those that exist here.”: Canada v. Nunn, 2006 FCA 403 (CanLII), http://canlii.ca/t/g2qw8.

Tax Court: No Remedy

• Tax Court of Canada is not a court of equity

• Only a court of equity can adjust downwards or eliminate gross negligence fines & penalties

• No relief even if against natural justice principles

• Example: JDS Uniphase shareholders

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“It should also be noted that the tax court is not a court of equity”: Federal Income Tax Litigation in Canada, by Christina Tari, Issue 40, February 2013, https://store.lexisnexis.ca/en/categories/shop-by-jurisdiction/federal-13/federal-income-tax-litigation-in-canada-skusku-cad-00085/details, ($795), at paragraph 5.14.3.No equity for JDS Uniphase shareholder: Trickovic v. The Queen, 2003 TCC 261, http://canlii.ca/t/7c1t.

Appeal Reasonableness

• Appeal instead to Minister of National Revenue

• Appeal on natural justice principles

• Appeal on reasonableness

• Never received full disclosure

• Gov’t has “dirty hands”

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The Minister may waive penalties and interest based on reasonableness: ITA s.220(3.1). The landmark case on reasonableness: Dunsmuir v. New Brunswick, [2008] 1 SCR 190, 2008 SCC 9 (CanLII), http://canlii.ca/t/1vxsm. A short, easy to read case on this type of process: Spence v. Canada Revenue Agency, 2010 FC 52 (CanLII), http://canlii.ca/t/27lqd.

Judicial Review

• If needed, appeal Minister’s decision to Federal Court as a court of equity

• Judicial Review:

• Gross negligence penalties unreasonable

• If needed, appeal to Federal Court of Canada

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Judicial review: “A process where a court of law is asked to rule on the appropriateness of the decision of an administrative agency or tribunal.” - Duhaime’s Law Dictionary. Income tax is administrative law. You cannot appeal a CRA assessment by judicial review. However, it can appeal whether the procedure to arrive at the penalties violates principles of natural justice.“By contrast, the Federal Court and Federal Court of Appeal do have equitable jurisdiction”: Federal Income Tax Litigation in Canada, by Christina Tari, Issue 40, February 2013, Lexis Nexis, at paragraph 5.14.3. See also Federal Courts Act, sections 3 and 4: http://laws.justice.gc.ca/eng/acts/F-7/page-1.html#h-3

Remission Order?

• If win judicial review,

• Minister recommends a remission order,

• Governor General announces it,

• Canadian Gazette records it

• Example: JDS Uniphase shareholders

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See: “Relief for Workers in Stock Collapse”: http://www.jamiegolombek.com/articledetail.php?article_id=796. The Remission Order granted to 35 JDS Uniphase shareholders is recorded in the Canadian Gazette: http://publications.gc.ca/gazette/archives/p2/2007/2007-11-14/pdf/g2-14123.pdf (pages 258 to 260). Remission orders are through the Financial Administration Act, Part II, Public Money, at s.23(2): http://laws.justice.gc.ca/eng/acts/F-11/page-7.html#docCont.

Conclusion

• Gov’t: no grounds to receive any gross negligence penalties due to “dirty hands”

• Cannot get equity remedy in Tax Court

• Seek Minister of National Revenue review

• Appeal in Federal Court by judicial review

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About 3,000 people were involved with FA, with 500 cases in Tax Court. All DeMara Consulting participants were also reassessed. Yet the Gov’t STILL refuses to educate you, professionals, tax preparers, and CRA on how the ITA really works. We conclude the Gov’t is still deliberately not giving full disclosure so it can continue financially raping Canadians, at the expense of their pocketbooks, marriages, and kids’ futures. So who is the party that is grossly negligent? See our blog article: https://canadaincometaxislegal.is/uninformed-consent-income-tax/.

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Test Answers?• Social Insurance Number: agreeing to be legally

liable for CPP/ITA “officer”: ITA s.159(1)

• A social insurance number: identifies the CPP/ITA “office” and/or “officer” (also for EI, GST)

• CRA issues a (re)assessment when they can prove taxpayer has received Demand to File and still has not filed. It is a CRA “initial assessment”

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ITA s.159(1): http://laws.justice.gc.ca/eng/acts/I-3.3/page-187.html#docCont. The SIN used as a “social insurance number” styled with all lower case letters identifies both the office and its officer because “the office and officer are conceptually divisible but legally indivisible”. Income Tax Act s.248(1) definition of “assessment”: “assessment includes a reassessment”. Freewill choice means YOU initially assess the of amount and type of income: https://canadaincometaxislegal.is/self-assessment-canadians-fill-tax-forms/. A CRA Notice of Assessment then is a reassessment of your initial assessment. However, if you received a Demand to File by registered mail or personal service, and still have not filed, then CRA has evidence you failed to perform your fiduciary duties with deemed “public money”. Only then should CRA do an initial assessment. Since ITA “assessment” is defined as “a reassessment”, (re)assessment = a CRA initial assessment.NOTE: Until the Government gives Canadians full disclosure, there is no proof these answers are correct!

Test Answers?• Tax evasion cases: first in provincial courts = crime

of breach of fiduciary duty since your income is deemed to be Canada’s “public money”

• Tax evasion cases: next in Tax Court = tort to recover “public money” + impose deterrence under Equity Law (gross negligence penalties)

• CRA’s “federal spouse” = CPP/ITA “officer”. That is why divorces are deemed as federal jurisdiction

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Tort definition: “The body of the law which allows an injured person to obtain compensation from the person who caused the injury.” - Duhaime’s Law Dictionary . See our blog article on who the injured persons are: https://canadaincometaxislegal.is/tax-evasion-fraud-public/. For more see, https://canadaincometaxislegal.is/obfuscation-income-tax-offences/. The ITA does not define “federal spouse” that CRA uses in their Notice of Assessments. CRA’s “federal spouse” is identified on page 1 of a T1 with a “social insurance number”. NOTE: Until the Government gives Canadians full disclosure, there is no proof these answers are correct!