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Opinion

Budget 2019 – Poor wording requires 2 ex-spouses within 5 years for Home Buyers Plan

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6 minute read

by Cory Litzenberger

This is one of those rare times I hope I am wrong in my interpretation, and look forward to being proven wrong by my professional colleagues.

On March 19, 2019 the federal government tabled its election-year budget. One of the newest and strangest provisions is the ability for people going through a separation or divorce to potentially have access to their RRSP under the Home Buyers Plan.

Now in my article and podcast entitled: “Escape Room – The NEW Small Business Tax Game – Family Edition” with respect to the Tax On Split Income (TOSI) rules, I made a tongue in cheek argument that people will be better off if they split, because then the TOSI rules won’t apply.

In keeping with the divorce theme, beginning in the year of hindsight, 2020, the federal government is giving you an incentive to split up and get your own place.

However, there are a few hoops:

On page 402 of the budget, under new paragraph 146.01(2.1)(a), at the time of your RRSP withdrawal under the Home Buyers Plan, you must make sure that:

  • – the home you are buying is not the current home you are living in and you are disposing of the interest in the current home within two years; or
  • – you are buying out your former spouse in your current home; and

you need to:

  • be living separate and apart from your spouse or common-law partner;
  • have been living separate and apart for a period of at least 90 days (markdown October 3, 2019 on the calendar),
  • began living separate and apart from your spouse or common-law partner, this year, or any time in the previous 4 years (ok, you don’t have to wait for October); and…

…here is where the tabled proposed legislation gets messy.

Proposed subparagraph 146.01(2.1)(a)(ii) refers to where the individual

  • wouldn’t be entitled to the home buyers plan because of living with a previous spouse in the past 4 years that isn’t the current spouse they are separating from

“(ii) in the absence of this subsection, the individual would not have a regular eligible amount because of the application of paragraph (f) of that definition in respect of a spouse or common-law partner other than the spouse referred to in clauses (i)(A) to (C), and…”

The problem with the wording of this provision, is that it is written in the affirmative by the legislators using the word “and”. This means, you must be able to answer “true” to all the tests for the entire paragraph to apply.

The way I read this, the only way to answer “true” to this subparagraph is if you have a second spouse (ie: spouse other than the spouse referred to) that you shared a home with and you split from in the past four years.

If you have a second spouse that you shared a home with in the past four years, then “paragraph (f)” in the definition of “regular eligible amount” would apply and the answer would be “true”.

If the answer is “true” you can then get access to your RRSP Home Buyers Plan.

If you don’t have a second spouse then, even though “paragraph (f)” might be met, the phrase “spouse other than the spouse referred to” would not be met, and therefore the answer would be “false”.

This would, in turn, cause the entire logic test of the provision to be “false” and so you would not be able to take out a “regular eligible amount” from your RRSP for the Home Buyers plan because you do not meet the provisions.

If my interpretation is correct then I would really be curious as to what part of the economy they are trying to stimulate.

In my opinion the legislation could be fixed with a simple edit:

“(ii) in the absence of this subsection, the individual would not have a regular eligible amount because of the application of paragraph (f) of that definition in respect of:

(A) a spouse or common-law partner; or

(B) a spouse or common-law partner other than the spouse referred to in clauses (i)(A) to (C); and…”


Cory G. Litzenberger, CPA, CMA, CFP, C.Mgr is the President & Founder of CGL Strategic Business & Tax Advisors; you can find out more about Cory’s biography at http://www.CGLtax.ca/Litzenberger-Cory.html

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Business

Global Affairs Canada Foreign Aid: An Update

Published on

The Audit

 

 David Clinton

Canadian Taxpayers are funding programs in foreign countries with little effect

Back in early November I reached out to Global Affairs Canada (GAC) for a response to questions I later posed in my What Happens When Ministries Go Rogue post. You might recall how GAC has contributed billions of dollars to the Global Fund to Fight AIDS, Tuberculosis and Malaria, only to badly miss their stated program objectives. Here, for the record, is my original email:

I’m doing research into GAC program spending and I’m having trouble tracking down information. For instance, your Project Browser tool tells me that, between 2008 and 2022, Canada committed $3.065 billion to the Global Fund to Fight AIDS, Tuberculosis and Malaria. The tool includes very specific outcomes (like a drop of at least 40 per cent in malaria mortality rates). Unfortunately, according to reliable public health data, none of the targets were even close to being achieved – especially in the years since 2015.

Similarly, Canada’s $125 million of funding to the World Food Programme between 2016 and 2021 to fight hunger in Africa roughly corresponded to a regional rise in malnutrition from 15 to 19.7 percent of the population since 2013.

I’ve been able to find no official documentation that GAC has ever conducted reviews of these programs (and others like it) or that you’ve reconsidered various funding choices in light of such failures. Is there data or information that I’m missing?

Just a few days ago, an official in the Business Intelligence Unit for Global Affairs Canada responded with a detailed email. He first directed me to some slightly dated but comprehensive assessments of the Global Fund, links to related audits and investigations, and a description of the program methodology.

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To their credit, the MOPAN 2022 Global Fund report identified five areas where important targets were missed, including the rollout of anti-corruption and fraud policies and building resilient and sustainable systems for health. That self-awareness inspires some confidence. And, in general, the assessments were comprehensive and serious.

What initially led me to suggest that GAC was running on autopilot and ignoring the real world impact of their spending was, in part, due to the minimalist structure of the GAC’s primary reporting system (their website). But it turns out that the one-dimensional objectives listed there did not fully reflect the actual program goals.

Nevertheless, none of the documents addressed my core questions:

  • Why had the programs failed to meet at least some of their mortality targets?
  • Why, after years of such shortfalls, did GAC continue to fully fund the programs?

The methodology document did focus a lot of attention on modelling counterfactuals. In other words, estimating how many people didn’t die due to their interventions. One issue with that is, by definition, counterfactuals are speculative. But the bigger problem is that, given at least some of the actual real-world results, they’re simply wrong.

As I originally wrote:

Our World in Data numbers give us a pretty good picture of how things played out in the real world. Tragically, Malaria killed 562,000 people in 2015 and 627,000 in 2020. That’s a jump of 11.6 percent as opposed to the 40 percent decline that was expected. According to the WHO, there were 1.6 million tuberculosis victims in 2015 against 1.2 million in 2023. That’s a 24.7 percent drop – impressive, but not quite the required 35 per cent.

I couldn’t quickly find the precise HIV data mentioned in the program expectations, but I did see that HIV deaths dropped by 26 percent between 2015 and 2021. So that’s a win.

I’m now inclined to acknowledge that the Global Fund is serious about regularly assessing their work. It wouldn’t be fair to characterize GAC operations as completely blind.

But at the same time, over the course of many years, the actual results haven’t come close to matching the programs objectives. Why has the federal government not shifted the significant funding involved to more effective operations?

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espionage

Chinese spies arrested in California

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From The Center Square

PRC operatives arrested in Guam during historic missile test

People’s Republic of China (PRC) and Chinese Communist Party (CCP) operatives and spies continue to be arrested in the U.S. The latest include two Chinese spies in California and several arrested in Guam near a U.S. military installation on the same day as an historic live ballistic missile interception test.

In California, a 64-year-old man was arrested on several charges including allegedly acting as a PRC agent while working as a campaign manager for a southern California city council candidate elected in 2022, according to the U.S. Department of Justice. The operative “allegedly discussed with Chinese government officials how the PRC could ‘influence’ local politicians in the United States, particularly on the issue of Taiwan” and was allegedly involved in operations “to combat ‘anti-China forces’ in the U.S., among other conspiracies.

He was also charged with conspiring with another PRC operative who was sentenced to prison last month for acting as an unregistered PRC agent and bribing an IRS agent. In that case, two PRC citizens living in Los Angeles were targeting members of the Shen Yun Performing Arts Center, a multi-agency investigation found.

In Guam, U.S. Customs officers arrested PRC citizens who illegally entered near a U.S. military installation, according to the Guam Customs & Quarantine Agency.

As part of their investigation, officers learned the PRC operatives were dropped off the coast of Guam by a vessel originating from Saipan, in the U.S. territory of the Commonwealth of the Northern Mariana Islands (CNMI).

On Dec. 10, they apprehended and detained two PRC women. On Dec. 11, they apprehended four PRC men who were all transported by the same vessel originating from Saipan, authorities said.

One PRC male was apprehended in the Tanguisson Beach area; three PRC men were apprehended in the vicinity of a U.S. military installation.

They were apprehended as the U.S. Missile Defense Agency, working with U.S. Department of Defense partners, “successfully conducted a live intercept of a ballistic missile target, marking the first Ballistic Missile Defense event executed from Guam,” the MDA announced. The operation was conducted off the coast of Andersen Air Force Base, Guam.

MDA Director Lt. Gen. Heath Collins said the successful operation enabled them to “build upon and validate joint tracking architecture and integrated air and missile defense capabilities for Guam.”

The flight test was “a critical milestone in the defense of Guam and the region,” Commander, Joint Task Force-Micronesia Rear Adm. Greg Huffman said. “It confirmed our ability to detect, track, and engage a target missile in flight, increasing our readiness to defend against evolving adversary threats.”

“Within the context of homeland defense, a top priority for the Department of Defense, Guam is also a strategic location for sustaining and maintaining United States military presence, deterring adversaries, responding to crises, and maintaining a free and open Indo-Pacific region,” MDA said.

Recognizing the threat posed by the PRC, the Guam Customs & Quarantine Agency has apprehended 152 PRC individuals “who were determined to be in violation of Guam entry laws” since 2022.

It’s also involved in a multiagency border security task force targeting illegal entries, which includes the Guam Police Department, Guam Fire Department, Guam Attorney General, Guam Port Authority, Guam Department of Labor, Guam Homeland Security, Guam Department of Agriculture Conservation Division, Marianas Fusion Center, Commonwealth of the Northern Mariana Islands Customs and Department of Public Safety, US Coast Guard, US Navy, US Customs and Border Protection, US Department of Homeland Security’s Homeland Security Investigations, and Federal Bureau of Investigations.

The task force is asking its community to contact them with any information related to illegal entry and to remain “vigilant and keep watch for individuals suspected to have made illegal entry to the island or who may be involved in smuggling activities.”

Border security and immigration law violations in the CNMI have long been a concern expressed by members of Congress, including the explosion of illegal birth tourism on the islands, The Center Square reported.

The recent PRC operatives arrests come as the greatest number of Chinese nationals illegally entered the country in U.S. history under the Biden administration, more than 176,000, The Center Square first reported.

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