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Sunday
Oct152017

I MISPLACED MY FRENCH VILLA

Wouldn’t you know it; our finance minister got caught hiding a French villa.  Mind you, Morneau claims it is all a mistake, just a minor bit of forgetfulness.

I don’t know about you, but, I would certainly know if I had a villa and while most of us will never be as rich as Morneau, I am pretty sure you would remember if you had a cottage or maybe a winter home in Florida.

If this was Question Period, the real fun would be in keeping this alive for a bit longer. If you are an opposition party, it doesn’t hurt to pile onto an already damaged minister, wounded by his planned tax reforms and a horribly executed communication plan.

Let’s start with a few simple questions:

1. When did you last visit the villa?

2. How many days did you stay there?

3. How many times have you stayed at the villa?

4. Have members of your family used it?

5. As you own the villa through a corporation there should be records, letters or emails detailing when you stayed there, will you table those records in the House of Commons?

6. How many other villas or properties do you own outside of Canada? Will you table a complete list of them in the House?

Easy but fun questions to ask because each one casts doubt on the minister’s credibility and implies he is hiding something. Plus each one lays a trap- and his answers will give opposition researchers and good investigative reporter’s lots to research and double check on while shredding his credibility in the House. Any failure to completely answer these questions, any attempt to duck these questions, any use of dumb talk points simply makes the minister look worse.

If the opposition parties are up to their game, between his tax reform proposals and his missing villa, they could make it a week of hell for the finance minister. Plus any attempt to change the channel with a few minor tweaks of his tax reform package (a good news story) will get buried with negative villa stories. It could be fun in Question Period.

 

 

Reader Comments (3)

Might I suggest two additional lines of inquiry:
1. Since recent media reports suggest that certain Canadian taxpayers can forget that they own private corporations for periods of two years or more, why does the Minister believe that a 75-day consultation period on the small business proposals was adequate?
2. If a Canadian taxpayer received a dividend from a foreign private corporation that owned property outside of Canada, such as a villa in Provence, that dividend would be taxable in Canada. If a family farm corporation owns the residence on the farm, the value of the occupation of the farm house must be included in income for Canadian taxation purposes. Is it fair that a Canadian taxpayer's occupation of the villa in France does not give rise to taxation in Canada? Would the Minister consider this a "loophole" giving an advantage to the wealthy?

October 15, 2017 | Unregistered Commenterjim

On everyone's T1, there is a specific question: "Did you own or hold specified foreign property where the total cost amount of all such property, at any time in 2016, was more than CAN$100,00?" Yes or no. What did M. Morneau answer?

At issue will be the "total cost amount", often known as the ACB (but not entirely). However, given this is a French corporation, one assumes the property was brought into the corporation with a valuation equal to its fair market value (FMV) as of the date it was brought into the corporation. All sorts of interesting issues would arise should another value be chosen. Don't have much experience with valuing French villas, but find it difficult to believe the valuation as of the time of bringing into the corporation is less than $100,000 CAD, or even less than $200,000 CAD. Even if there is more than one shareholder in this French corp, rather think they're over the reporting line.

There's another issue here - "specified foreign property". If M. Morneau held that villa in his own name and used it ONLY for vacation purposes (as in no rentals in the off-season), then it is possible that ownership of the name would not have to be reported. However, because of the corporate structure, he is now the owner of shares in a corporation, not a vacation villa. And shares HAVE to be reported if they meet the CAD$100,000 cost basis.

October 15, 2017 | Unregistered CommenterFrances

Thx Jim and Francis I forwarded your comments to a few "friends"

October 18, 2017 | Unregistered Commenteratory01

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