We’ve all heard the saying: death and taxes are the only things certain in life. While we may not have much control over the former, we can take steps to reduce our tax bills.
But how far would you go to save a few dollars in taxes? Some taxpayers have been very creative in trying to justify tax deductions. While some attempts were rejected, many others were approved by the Tax Court.
10. Rejected: Income Tax Act incomprehensible
Canadians are often faced with incomprehensible tax laws. The Income Tax Act is one of the most complex and outrageous legislation that Canadians have to deal with every year. The act is filled with ridiculous rules and regulations that the average person cannot understand.
One of the most outrageous examples of a tax claim made in Canada was when a woman tried to claim her pet llama as a dependent on her income tax return. Another woman tried to write off the cost of her daughter’s wedding as a business expense. These are just two examples of Canadians’ many absurd claims every year.
The Income Tax Act is full of complicated rules and regulations that the average person cannot understand. This can lead to confusion and frustration for taxpayers trying to file their taxes correctly. Unfortunately, there is no easy solution to this problem.
R. v. Meikle [2003] 4 C.T.C. 294
9. Accepted: Spousal amount for widows
immediately. Canadians certainly don’t hold back When it comes to making outrageous tax claims! From claiming their pets as dependents to saying they were unemployed while working second jobs, taxpayers have tried it all. But one of the most common (and outrageous) claims is that of spousal amount for widows.
The spousal amount for widows is a tax deduction that can be claimed by a woman who has lost her spouse and is not yet remarried. To qualify, the woman must have been living with her spouse when his death and must have depended on him financially. However, the Canada Revenue Agency (CRA) has cracked down on this claim in recent years, rejecting many applications that don’t meet the criteria.
But despite the CRA’s efforts, many women continue to try to claim the spousal amount for widows.
CRA Views 2003-0050255
8. Rejected: Gambling as a business
Canadians are a creative bunch when it comes to filing their taxes. Every year, there are a few outrageous tax claims that make headlines. Here are some of the most shameful tax claims Canadians have made:
1. Claiming gambling losses as a business expense.
2. Claiming pet expenses as a business expense.
3. Claiming the cost of having a pool built in their backyard as a business expense.
Cohen v. The Queen [2011] TCC 262
7. Accepted: Cat and dog food
Canadians are no strangers to making outrageous tax claims. From questionable charitable donations to expenses for home offices that could just as quickly be considered leisure items, Canadians have tried it all when it comes to reducing their tax bill. But some of the most outrageous tax claims are made in the category of pet food.
In one case, a Canadian woman claimed over $10,000 in pet food expenses, arguing that she needed to feed her dogs and cats the best food possible to keep them healthy. Her argument was rejected by the CRA, which noted that there was no evidence that high-quality feeding food had any impact on her pets’ health.
Another Canadian man tried to claim a $10,000 deduction for purchasing a purebred dog, arguing that the dog was essential for his business.
Zeitz v. The Queen [2002] 4 C.T.C. 2292
6. Rejected: Trips to Vegas
In 2017, the CRA reported that Canadians made $2.5 billion in trips to Las Vegas. While many people go for the gaming and nightlife, a good number also take advantage of the city’s tax laws.
Vegas is well-known for being a place where you can live largely and pay little in taxes. However, those who know how to work the system can exploit several tax loopholes. For example, gambling losses can offset income, and there are no estate or inheritance taxes in Nevada.
Canadians have taken advantage of these loopholes, making some pretty outrageous tax claims. Here are just a few examples:
In 2012, a man from Toronto claimed over $1 million in gambling losses, arguing that they were necessary to earn his living.
Goodwin v. The Queen [2001] 4 C.T.C. 2906
5. Accepted: Golf is not an employment expense if you hate it
Golf is not an employment expense if you hate it. Unfortunately, many Canadians have claimed that golf is an employment expense to get out of paying taxes on the income they earn from playing golf. The Canada Revenue Agency (CRA) shot down this ridiculous claim, which stated that “golf does not meet the definition of an employment-related expense.”
The CRA’s ruling was in response to a tax filing made by a taxpayer in Alberta who attempted to write off the cost of his membership at a local golf course as an employment expense. The CRA ruled that playing golf is not a job-related activity and cannot be written off as an employment expense.
This isn’t the first time someone has tried to use golf as a tax deduction.
Rachfalowski v. The Queen [2008] TCC 258
4. Rejected: Ballet lessons
Canadians are no strangers to making outlandish claims on their taxes, but some of the ballet lessons’ claims take the cake. Here are some of the most outrageous ones:
- A woman in Alberta claimed that she needed ballet lessons to improve her sex life with her husband.
- A man in Ontario claimed that he needed ballet lessons to improve his business dealings.
- A woman in British Columbia claimed that she needed ballet lessons to deal with stress from her job.
- A man in Quebec claimed that he needed ballet lessons because his wife was pregnant, and he wanted to be able to dance with her at their child’s wedding one day.
Levine v. The Queen [1996] 2 C.T.C. 2147
3. Accepted: Diamonds are a girl’s best friend
The CRA has seen several outrageous tax claims from Canadians in recent years. From claiming diamond-studded bras to deductions for luxury cars, taxpayers have tried to claim just about anything on their returns. Here are some of the most outrageous claims that the CRA has had to deal with:
1. A woman tried to claim her diamond-studded bra as a business expense.
2. A man claimed his luxury car as a deduction for business use.
3. A taxpayer tried to write off an $8,000 trip to Europe as a work-related expense.
4. Another taxpayer claimed over $100,000 in home renovations as a medical expense.
5. A couple tried to claim their pet llamas depending on their tax return.
Landry v. The Queen [2009] TCC 399
2. Rejected: Haircuts
Canadians are no strangers to making outrageous claims when it comes to taxes. Canadians have tried it all fro,m claiming their pet as a dependent to saying their home is a principal residence. But one of the most common – and outrageous – tax claims made by Canadians is for haircuts.
Yes, haircuts. According to the Canada Revenue Agency (CRA), taxpayers can claim a deduction for the cost of hair care services, including haircuts, if those services are considered necessary for medical reasons. This includes wigs, hairpieces and other hair treatments prescribed by a doctor or other qualified health professional.
But that doesn’t mean everyone can claim this deduction. The CRA says only those who can provide evidence that they require these services for medical reasons can claim them.
Rouillard v. The Queen [2000] 4 C.T.C. 2065
1. Accepted: Additional food needed by couriers
Canadians are no strangers to making outrageous tax claims, but the ones made by couriers may take the cake. A new report suggests that many couriers are claiming food as a business expense when they only need it to stay alive.
This is costing the government millions of dollars in lost revenue, but it’s also putting an unnecessary strain on the system. As a result, the Canada Revenue Agency (CRA) is currently investigating these claims and plans to crack down on illegitimate ones.
“We’re looking at this carefully,” said CRA spokesperson Cynthia Munoz. “If it’s found that people are making false or unsubstantiated claims for food expenses, we will take appropriate action.”
Munoz added that the CRA is working with its partners in the courier industry to develop a better understanding of how these expenses are claimed.
Scott v. The Queen, 98 D.T.C. 6530
Source: | the Tax Court.
