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Lethbridge Herald Newspaper Archives

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Lethbridge Herald, The (Newspaper) - June 8, 1972, Lethbridge, Alberta 20 THE LETHBRIDGE HERALD Thursday, June 8, 1972 'The tax column Relieving provision is necessary By I. H. ASI'ER Topic: "Courts have Inade- quate authority to grant tax re- lief" Every tax statute, particu- larly one which is new, complex and uninterpreted by the courts, should have a relieving provi- sion. A relieving provision is a rule which permits a court to grant tax relief to a taxpayer when the strict interpretation of the law works an unfair hard- ship upon him. A recent tax case points out a heads tile government-wins- tails-the-taxpaycr-loses situation which should be cured cither by legislative amendment or by giving the court the power to waive the law in those cases where it seems oppressive. The case and the law on which it was based, although decided under the old tax system, is still applicable under the reformed law. The taxpayer was aii em- PKOTO FINISHING PHOTO FINISHING PHOTO FINISHING FOCUS POINTS 1 Down losr name 2 Down Type of hobby 1 Across typa of company 2 Across means right away 4 Across mans first name Bring the completed crosword with you whon you come, It's worth an ex Era 10% off any merchandisa our shop. Offer expires June 15, 1972. Fifm Thurs. till 9 p.m. Jvrry 1224 3rd Ave. S., 327-2673, 327-2S65 ployee of a potash mining com- pany with a plant at Esterhazy, Sask. In 1902 the company began operating its mine. It wanted to encourage its staff to live near the mine site, so it of- fered a home owuersliip plan. For each e m p 1 y e e who wanted to own his own home, the employer made available a building lot at a price of per front loot. The lot was usually 70 feet. The employer would then arrange a first mortgage from CMHC for 00 per cent of the construction cost and to cover ttie cost of the lot. In this way the employee would get his own home for a minimal down payment. As a further incentive to promote a stable and permanent work force, the plan provided that if the employee stayed with tlie company for five years, the second mortgage covering the price of the land would te writ- ten off and the debt forgiven. This is not an uncommon PHOTO FINISHING PHOTO FINISHING PHOTO FINISHING conditions of employment, the company lore up the second mortgage. About a year later, during the IMS decline in the Western Ca- nadian potash industry, the em- ployee was forced to leave Es- terhazy. Because of the slow- down and lack of growth in the area, he was unable to sell the house until nearly a year and a half later. When he finally found a buyer in 1970, he had to lake a loss on the sale. Enter the tax rules. The tax officials told him he had to pay tax on the debt the em- ployer Imd written off, because that was a benefit conferred upon him as an employee. Such benefits are clearly taxable under both the old and the system. But then, in the words of tax review board chairman, Keith FJannigan, what "may have seemed to be an insult added to he found that the loss on the sale was not deductible, plan, particularly in mining and I because it was a capital loss. remote communities where there is a desire to avoid tlie so- cial and economic problems as- sociated with "company towns." Tlie taxpayer took advantage of the home ownership plan, ac- quired the lot and gave the company a second mortgage for representing the price of the land. Five years later, the employee having fulfilled the The court had no option but to rule the "benefit" taxable and the loss on sale as non-de- ductible. The two couldn't be offset. It should be noted that al- though the case was only re- cently decided, the events oc- curred before the new tax sys- tem began in January of this year. Under the new system the PAINTING WAY TO WORID CROWN Toller Crcnslon of Toronto is an outstanding skater but, strangely enough, his ambition Is to become a painter of international re- pute. In Weekend Magazine this Saturday, Andy O'Brien tells how Cranston hopes to make enough money by paint- ing to continue skating and become tKe world champion. IN YOUR LETHBRIDGE HERAID WEEKEND MAGAZINE results would be a little better. The mortgage forgiveness would still be taxable but of the capital loss on the sale of the house, half the loss up to a max- imum of can be written off against Ms regular income in the year In which the loss oc- curred. There are many things wrong with even this more generous treatment. Tlie benefit could be taxed at a nigh rate while he was still employed, while the very limited loss de- duction could occur in a year where he, because of the work layoff, has no taxable income against which to offset tlie loss. Under these circumstances the employment benefit would be fully taxed while the loss assi- ciated with the loss of employ- ment would still not be deducti- ble. It is no answer to say that if the parties had practised care- j fill tax planning, as many do, I the tax result would have been different. Nor is it realistic to expect the employee to be suffi- ciently sophisticated to be able to always understand the subtle- ties of the tax system. All he knows or cares about is tiiat he bought a house, sold it at a loss and still has to pay tax. Tlie Tax Act contains provi- sions which allow a court the discretion to levy tax in certain circumstances even though the strict interpretation, of the law levies no tax. Surely it is equally appropriate that the act be amended to allow the court the same discretion to waive tax where the circumstances seem equitable. (Mr. Asper is a Winnipeg law- yer) NEW AMBASSADOR TO U.N. William Ilickson Bar- ton has been named Canada's new ambassador to the Unit- ed Nations and representative to the Geneva disarmament conference. External Affairs Minister, Mitchell Sharp an- nounced the appoint m e n t Monday, in Ottawa. YOUNG TREES Trees used in planting new forests range from two to four years in age. Shot in pub VICTORIA (CP) Charles Herbert Lumley, 49, of Lady- smith, B.C., near Nanaimo, died in hospital here Wednes- about nine hours after lie was shot hi the head in a Ladysmitli beer parlor. Police said Mr. Lumley was shot with a .22 calibre rifle. A suspect was taken into cus- tody. Fires banned CALGARY (CP) A ban on open fires went into effect to- day in the Dow river forest re- serve because of extreme fire hazard conditions due to lack of rain. Tlie department of lands and forests said Ihe ban in the foot- Mils reserve doesn't apply to campground facilities. Managerial role seen by Manning EDMONTON (CP) Senator In this capacity the gowrn- Ernest Manning said here the ;ment would: time has come when govern-I -Clearly define desirable and icnts should "consumate a dy- obtained national social and namic new and meaningful partnership between the public and private He told the annual meeting of the Canadian Manufacturers' Association Ihs.t suth a step would require restructuring of the role and functions of govern- ment. 'There are strong political pressures on governments to continue further down the course that already has led them deeper and deeper into more and more facets of the na- tion's social and economic the former Social Credit pre- mier of Alberta said. The "powerful bureaucracy spawned by constantly increas- ing government involvement" in new areas will not willingly agree to being curtailed. economic goals. from both the public and private sectors for the attainment of specific goals. on the basis of pre-detennined criteria the var- ious proposals submitted, and select the proposals which will best accomplish the desired re- sult. program budgeting when obtaining parliamentary appropriations to finance the contracts awarded. monitor the per- formance in the implementation of the proposals, modifying or terminating them If necessary. The role now being played by the federal government is "cre- ating in Canada a social and Basically, he said, the change [economic structure in which cit- would require the government izens, private and corporate, to concentrate on performing a managerial role rather than being the designer and imple- mentor of a multitude of pro- grams in all areas of social and economic life. are coerced by laws and regula- tions and the tax system into conformity -with a prescribed pattern of social and economic life." Indian lias to be tough to survive in the WINNIPEG CCP) ,To sur- vive in the city today, an In- dian has "got to be tough and those around you better know it': a counsellor with the Na- tional Congress of American Indians said here. Mrs. Howard White of Min- neapolis said her son's school principal complained to her DUNLOPFORD WILL MAKE YOU I BRAND NEW 1972 PINTO 2-DOOR 1600 cc engine, A on tha floor transmission, bucket teals, block hooter and many other Ford better ideas. let an easy guy from Dunlop Ford take you for a ride In one of. our extiting 1972 models and then make you an offer you can't refuse, os we past facloiy volume diicounls pntl holdbacks on te you. Now every 1972 in ttock discounted by hundreds of dollars. YOURS FOR 55 USED CARS ALSO ON SALE! OVER 100 NEW EXECUTIVE DRIVEN CARS ON SALE! 1972 F-250 CAMPER SPECIAL 360 V-8, auto, tram., P.5., P.B., extra cool- ing package, sliding rear window, extra fuel lank, brown and white in color, our stock no. 175. Regular Retail YOURS FOR ONLY FOR THE TRUCKERl 1967 IHC V220 TRACTOR AND TRAILER 5 speed, 2 speed 1972 FORD CUSTOM 500 9 PASS. RANCH WAGON 400 W V-8 engine, auto, trans., P.S., P.B., radio. Deluxe rack and many other Ford Better Ideas. Regular Retail YOURS FOR ONLY Our Stock No. 1969 1969 CHEVROLET BEL AIR A door sedan, aulo., P.S., radio, VS. S1995 1971 RANGER XLT F-100 Blue and white in V8 motor 4 trans., radio, miles, owners namo available. Al unit. S3750 1970 FORD F-100 TON 302, 3 speed with radio, balance of factory warranty, A-1 unit. S2795 1971 TOYOTA 2 DOOR 4 eyl.f 4 low mileage. vinyl roof, 2000