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To: scion who wrote (2942)	11/9/2010 7:25:12 PM
From: scion	Read Replies (1) \| Respond to of 53574

The laws of the land give the CRA an exceptionally wide range of powers and privileges. As such, the deck is heavily stacked in its favor from the outset. According to the Income Tax Act, taxpayers must disclose their income annually and estimate the tax payable according to guidelines provided by the tax agency each year. Failure to do so accurately, and in a timely manner, can result in criminal prosecution. The following are the relevant excerpts from the Income Tax Act: [...] NON–ARM’S LENGTH TRANSFERS OF PROPERTY The following are some taxation issues that can arise when parties are not independent business people. Simple transfers at a less than fair market value Section 160 of the Income Tax Act was put in place to prevent the taxpayer from avoiding payment of outstanding taxes by transferring property in a non-arm’s length transaction for less than the receipt of fair market value. If the tax debtor transfers property in a non-arm’s length transaction during or after the taxation year in which the tax debtor is liable, the transferor and the transferee can be jointly and severally liable for payment of the tax debtor’s liability to the agency. This liability can apply even if no assessment was made against the tax debtor. Under Section 160, if the transfer is made during the taxation year in which the tax is owed, or at any time thereafter, the recipient of the property (the transferee) can be held personally responsible for all or part of the tax owed by the transferor up to the shortfall for the fair market value paid for the property. There is no time limitation on the CRA’s right to assess the transferee for the tax owing. Spouses may be divorced or widowed, business partners may have long since dissolved their ties and friends may have gone their separate ways. Notwithstanding any or all of the previously mentioned, the tax liability remains. The CRA can go after any party to the transaction. Transferring the business to the children, or “related party” transactions Recent statistics indicate that, in the next five to 10 years, a change of ownership will occur among 50 percent of Canada’s small- and medium-size businesses, many of which will be taken over by shareholders’ children. In practice, the capital gains deduction is available to individuals who sell their shares to outsiders, but is almost never an option when shares are transferred to children. Section 84.1 of the Income Tax Act is likely to apply and convert the capital gain that would otherwise be eligible for the capital gains deduction into ineligible dividend income. So, before passing the business torch onto your children, you should set up a comprehensive tax plan that will minimize negative tax consequences under Section 84.1 of the act. Loan to a family member to acquire shares: Some parents may be tempted to assist their children by lending funds to purchase investments or to establish a corporation. Particular attention should be paid to transactions of this kind because of legislative provisions that counter income splitting. Such loans could trigger undesired tax consequences for lenders wishing to invest in the same project as a related person. If a loan is made to children or a spouse at a rate of interest below a reasonable rate or the rate prescribed by the government (whichever is lower) and the interest remains unpaid 30 days after the end of each year, income earned on the investments acquired with the loan will be deemed to belong to the lender (except for capital gains realized by the children). The lender will then be liable for the related income taxes without having gained a thing. Transfer to a related person for less than fair market consideration: It is not uncommon for sellers to transfer property to a “related” buyer for less than fair market consideration without realizing that such a transfer clearly leaves them open to double taxation. More specifically, at the time of transfer, the seller would be deemed to have transferred the property at fair market value and would accordingly have to pay income tax computed on the basis of this assumption. Later, when the recipient eventually disposes of the property, the tax would be based upon the difference between the selling price and the nominal value that he or she previously paid and not upon the difference between the selling price and the deemed proceeds of the disposition when the property was first transferred. How to avoid Canada Revenue Agency tax traps by Paul Anderson businesstodaymagazine.com

To: scion who wrote (2942)	11/9/2010 7:49:00 PM
From: SteveF	Read Replies (1) \| Respond to of 53574

During the quarter the Company paid approximately $100,000 toward the purchase of a new corporate office building located in Thorold, Ontario. The purchase price of the building was $369,769 at an interest rate of 7%. The vendor took back the MORTGAGE on the building, which is denominated in Canadian dollars and will fluctuate based on the exchange rate in effect. The Company expects to continue to make significant investments in property and equipment in the future. Is this the same "New York property"? How did they not realize the property was in Canada? NIAGARA FALLS, Ontario, Feb. 12, 2010 (GLOBE NEWSWIRE) -- JBI, Inc. (the "Company") (OTCBB: JBII) announces that it has purchased a New York property for business expansion. The facility will be used for P2O processing and consists of a warehouse, processing building, weigh station and office space located on 10 security-fenced acres with parking availability for 27 trucks. The property, located in New York, was purchased for $100,000 down with a $270,000 loan and will serve as a primary P2O site. Additional details will be provided at the Annual Shareholders' Meeting.