Ontario family loses house after charitable deduction rejected
TORONTO – Heather and Wayne McDonald of Mississauga, Ont., are in a battle with the Canada Revenue Agency, and so far it’s cost them $100,000, their home, and several years of increased stress.
The McDonalds, on the advice of an accountant, invested in a charitable tax shelter that the CRA later deemed not to qualify for tax-exempt status.
As a result of the reassessment, a decision which also affected thousands of other Canadians, the McDonalds’ were assessed a $70,000 charge by the CRA. But the revenue agency also added fines, late payment charges, and interest onto the bill which pushed the total to more than $200,000.
The McDonalds say they signed their tax return believing that the investment shelter was bona fide, as did other Canadians who were caught up in the CRA reassessment.
“We paid our fair share of taxes,” said Wayne McDonald, outside a Mississauga house where his wife, children, and grandchildren are staying now in cramped quarters. His wife, Heather, sleeps on the sofa in the family room.
The McDonalds were evicted from their home on Easter weekend in April. They took only a few suitcases of clothing and couldn’t return to collect them after their house was seized.
The majority of their personal possessions are still in the house and since then, they’ve been in a bitter battle with the revenue agency.
“It’s not fair, it’s cruel,” said Heather McDonald, a mental health nurse who works two jobs and has done so since the CRA assessment.
The couple accepts responsibility for being reassessed over the tax shelter. However, they say the CRA is being punitive because it refuses to remove a lien on their home.
After paying back $100,000, Heather McDonald says she barely put a dent on the ever increasing tax bill which compounds because of interest and penalties.
Earlier this year the couple finally filed for bankruptcy. As a result, they say their debt to the CRA has been taken care of. However, the government tax collector has refused to remove a lien on the property allowing for its sale, even though the bankruptcy trustee wishes to sell the property to members of the McDonald family. The couple wishes to move back in and pay rent to the new owners.
A spokesman for the Canada Revenue Agency, Sam Papadopoulos, said he could not comment on this specific case, due to privacy regulations. However, Papadopoulos said the McDonalds could avail themselves of the court system if they felt aggrieved.
The couple says it’s unfair that the CRA will not lift the lien so that the new buyers can purchase the house allowing the couple and their children and grandchildren to move back in. Heather McDonald says her family agreed to pay $30,000 above market value in order to purchase the house without a hitch.
The tax department spokesperson told Global News the agency’s intention is to work with a taxpayer in cases like this, but the McDonalds say the CRA has not done that in their case.
© Shaw Media, 2014