Must I Consent to a Police Search Request? And the Uncontrollable Urge to Say "Yes"

"No." Unlike some of my what can unfortunately seem like long winded and not as definitive as clients might like answers, consent to search spawns a clear cut single word answer. At least in Canada. 

Police questioning is totally different from police searches as to whether you have a choice or not in responding. While my default advice is always “say nothing” in response to police questions, unfortunately the real world is much more nuanced than that. Sometimes you must answer police questions, depending on what they are asking about (like insurance automobile questions). And sometimes it's in your best interests to answer police questions in an attempt to clear up suspicions and avoid being charged, even if you aren't obliged to answer (though often its not a good idea to do so). But never do you have to consent to a search.

Either the Police Have a Power to Search or They Don't

Either the police have powers and grounds to search, or they don't. It's only when they don't have grounds that they might ask you a question after a highway speeding stop like: "you mind if I take a look in your trunk?" And sometimes if you do say "no", you might get a response like "hey, if you don't have anything to hide, why would you say no?" Your best response is to remain firm and polite in your "no." At the very least, call a lawyer for advice. 

Sometimes, the police might even pull out a form for you to sign, which says that you've been told: (1) you don't have to consent, (2) that you can withdraw your consent at any time, and (3) anything found during the search can later be used against you as evidence in court. Now reading this, you might be thinking: "Why would anyone consent? I would certainly never consent! I'm not that stupid!"

Why Do So Many People Consent to Police Searches?

But thousands of people a year throughout Canada (and in other countries with similar constitutional protections against unreasonable search and seizure, like the United States) do just that, and consent to searches where the police have no grounds to search. Some even carefully read those forms, do understand them, but sign anyway. Why?

It seems to be something to do with people feeling that: (1) they have no choice, (2) they have nothing to hide, or (3) even though they do have something to hide, the police won't find it, and this is the best way to get rid of them. These "yes" men and women are wrong on every count. 

First, you do have a choice if the police ask if you mind if they do a search. Be it a search of your vehicle, a search of your house or office, a search of a bag you are carrying, or a search of your person, just say that you do mind. Be polite about it. You can even ask whether the police will go ahead without your consent, because they believe they have some kind of other authority?

The Police May Already Have Other Authority to Search Anyway

Sometimes the police will already have - or have sufficient grounds to obtain - a search warrant to search your vehicle, house or office. If they do, then your consent is irrelevant. Don't try to stop the police from executing a warrant (or otherwise conducting any kind of search), unless you want to be charged with obstructing justice. But they must get the warrant from a judge or justice before conducting a search, or have some other kind of lawful power to search without consent. 

Sometimes the police will already have grounds and powers to search incident to arrest without a warrant. Again, if they do then your consent is irrelevant. But they must have first arrested you, told you what you are being charged with (unless it is an emergency), and not exceed the limits of the search incident to arrest power (usually limited to your person and what you are carrying - though occasionally it might extend to a vehicle you are in; it will never extend to your whole house or office). 

Sometimes the police will be able to invoke exigent circumstances to search without a warrant or arrest if there is an emergency situation, where the search just can't wait. Again, your consent will be irrelevant. Though be aware that true exigent circumstances searches are very rare, since the police do have investigative detention powers to hold you, your vehicle, or even your home or office for a reasonable period of time pending the arrival of a search warrant. 

All Consent Searches are Vulnerable to Challenge

If my police powers to search explanation is starting to sound a bit complicated, that's because it is complicated. Lawyers and judges disagree frequently about when particular powers exist, and well intentioned police officers can certainly get it wrong if the judges are having trouble getting it right. Though throughout the training I still do for police officers on search and seizure, the best mantra for those officers to repeat is: "if in doubt, get a warrant." I especially teach my police students: never rely on consent, it's too uncertain of an authority, with too unpredictable later results. 

If you are the subject of a police search - by consent or otherwise - and something incriminating is found that leads to you being charged, my recommendation is to consult a lawyer about your prospects for challenging the search in court. I'm not saying you are guaranteed success on such a challenge, but in my experience most people never challenge police searches. Sometimes a search will be completely legal, and sometimes it won't be. But only by involving a lawyer will you be able to find out which category your search falls into.

No One Would Believe This In a Movie Script

While serving as a Federal Crown Prosecutor I once was involved in a case where a BMW speeding along the TransCanada Highway was stopped by police for a traffic violation. The stopping officer only had grounds for a traffic violation, but his suspicions were quite appropriately aroused.

The occupant of the fancy car seemed overly polite when stopped. And overly nervous, constantly shifting in his seat, eyes darting about, hands tightly gripping the steering wheel. Plus the vehicle had out-of-province plates, and the conscientious officer remembered from his training that fast food wrappers strewn about a car might be a sign that the occupants were driving non-stop over a great distance for illicit purposes (yes, there is a course on that, I've seen the materials; it might motivate all of us to tidy our vehicles). 

So, after giving him a speeding ticket, the officer asked the driver if he minded if the officer took a quick look in the trunk of the car. This officer was very well trained, and made it clear to the driver that he didn't need to consent, that he was free to go, and that anything he found could be used against the driver in court. The officer even pulled out a consent form for the driver to sign. Now what the officer definitely didn't know in advance was that the driver had 10 kilos of coke and $100,000 in cash in the trunk. And what do you think that driver did? He signed, and popped the trunk!

Gordon S. Campbell practices criminal defence law throughout Ontario, with a focus on search and seizure cases which he has appeared on up to the level of the Supreme Court of Canada. He also trains law enforcement agencies throughout Canada on search warrant & wiretap drafting, and is author of The Investigator's Legal Handbook series of books.

Le droit de garde et d’accès pour les grands-parents : trois erreurs à éviter

Le rôle des grands-parents dans la vie des petits-enfants

Les grands-parents peuvent jouer un rôle essentiel dans la vie d’un enfant et soutenir les parents dans l’éducation de ce dernier. Beaucoup de grands-parents offrent de s’occuper de leurs petits-enfants sans rémunération et prennent le temps de faire des activités avec ceux-ci. De plus, les grands-parents peuvent représenter un point de référence culturel pour que les petits-enfants comprennent mieux l’histoire de leur famille. Par ailleurs, certains grands-parents contribuent aux dépenses financières des parents pour offrir de meilleurs opportunités éducatives, religieuses ou sociales aux enfants, ce qui finit par aider l’enfant à s’épanouir.

Les éléments pris en compte pour obtenir la garde ou l’accès aux petits-enfants

Au cours de l’histoire du droit de l’enfance, deux tendances se sont développées : d’un côté, les décisions en faveur de l’autonomie parentale, de l’autre côté, les décisions favorisant l’intégration des grands-parents dans la vie des enfants. En Ontario, depuis 2016, la Loi portant réforme du droit de l’enfance autorise de manière explicite les grands-parents de réclamer la garde et l’accès de leurs petits-enfants.

Lorsque les grands-parents présentent une requête pour avoir des droits de garde ou d’accès à leurs petits-enfants, les tribunaux prennent en considération les facteurs suivants :

  • l’amour, l’affection et les liens affectifs qui existent entre l’enfant et les grands-parents
  • le point de vue et les préférences de l’enfant, dans la mesure où il est raisonnablement possible de les déterminer
  • la durée de la période pendant laquelle l’enfant a vécu dans un foyer stable
  • la capacité et la volonté des grands-parents de donner des conseils à l’enfant, de s’occuper de son éducation, de lui fournir les objets de première nécessité et de satisfaire ses besoins particuliers
  • le projet des grands-parents relatifs aux soins et à l’éducation de l’enfant
  • le caractère permanent et stable de la cellule familiale où l’on propose de placer l’enfant
  • l’aptitude des grands-parents à agir en tant que parent et
  • les éventuels liens familiaux entre l’enfant et les grands-parents

Malgré l’évolution du droit, les tribunaux continuent souvent à privilégier le droit d’accès des parents par rapport à ceux des grands-parents. Cela dit, en plus d’analyser la relation des grands-parents avec l’enfant, les tribunaux regarderont aussi si les parents ont décidé de nier l’accès aux grands-parents de manière arbitraire. Pour que leurs droits d’accès ne soient pas réduits ou supprimés, les grands-parents doivent éviter de commettre les trois erreurs suivantes.

1. Les grands-parents ne doivent pas remplacer le rôle des parents

En aucun cas les grands-parents doivent usurper le rôle du parent. Même si les parents souffrent de difficultés financières, psychologiques ou émotionnelles, le rôle des grands-parents n’est jamais de venir prendre la place des parents pour éduquer et élever les enfants. Bien sûr, les grands-parents sont toujours bienvenus pour assister dans le développement de leurs petits-enfants. Cependant, l’intervention des grands-parents dans la vie des petits-enfants doit être limitée et doit être approuvée par les parents.

Imposer un régime alimentaire ou une religion quelconque à l’enfant ou encore, inscrire un enfant à une activité ou un établissement scolaire spécifique sans consulter les parents sont des exemples de comportement qui seront réprimandés par les tribunaux judiciaires.

2. Les grands-parents ne doivent pas adopter une attitude hostile envers les parents

Bien que la législation ontarienne prévoie que les tribunaux doivent prendre en considération les droits des grands-parents lorsque ceux-ci présentent une demande d’accès aux petits-enfants, le droit d’accès aux petits-enfants n’est jamais automatique. Ainsi, il est important pour les grands-parents de garder une conduite qui est raisonnable envers les deux parents, notamment si les deux parents se séparent.

Parfois, des tensions peuvent se bâtir entre les grands-parents et le parent qui a la garde des petits-enfants, surtout si ce parent n’est pas leur enfant. Lorsque les grands-parents adoptent une attitude hostile envers le parent qui a la garde de l’enfant, ils réduisent leurs chances d’avoir gain de cause en cour. Souvent, les tribunaux préfèreront éviter de mettre de l’huile sur le feu en obligeant le parent en question d’autoriser l’accès de l’enfant aux grands-parents.

3. Les grands-parents ne doivent pas ignorer les petits-enfants

Pour maximiser le temps d’accès avec leurs petits-enfants, les grands-parents doivent s’assurer de bâtir une bonne relation avec l’enfant dès sa naissance. Dans les cas où l’enfant ne connaît presque pas ses grands-parents, un tribunal pourrait décider qu’il n’est pas forcément dans le meilleur intérêt de l’enfant de donner des droits d’accès aux grands-parents.

Il incombe aux grands-parents bâtir une relation positive avec l’enfant et ses parents. Visiter l’enfant de temps à autre est insuffisant pour créer ce type de relation. Les grands-parents doivent créer des liens affectifs réels et participer de manière très active dans la vie de leurs petits-enfants. De façon générale, les tribunaux sont prêts à accorder des droits d’accès aux grands-parents lorsque l’enfant a vécu chez eux ou lorsqu’il a passé une période considérable avec eux peu de temps avant les procédures judiciaires.

Avant de présenter une requête devant les tribunaux, il peut être judicieux de retenir les services d’un avocat pour connaître ses droits et ses obligations par rapport aux petits-enfants.

Karen Kernisant est avocate à Aubry Campbell MacLean et pratique dans le domaine du droit de la famille, du contentieux civil et du droit criminel.

Canadian Taxes A to Z (2018): "U" is for UCC, "V" is for V-Day, "W" is for Withholding Tax, "X" is for X-Mark, "Y" is for Year End, "Z" is for ZBB

Today is the last in the series of Canadian Taxes A to Z (2018) posts. Yes, I know you're sad. I'm sad too. But at least you can look forward to receiving that big tax refund generated through your newfound interest in Canadian tax law!

I'm combing the last six letters of the alphabet into one post, rather than stretching them out into six separate posts, because we're down to the wire for filing deadlines. So I hope you'll forgive me for the combination of the last six tricky letters of the alphabet. 

If you run into trouble with the CRA out of the 2017 taxation year, I urge you first to consult a designated accountant or tax planning lawyer. You may need to file an objection, or seek other relief; you'll be subject to strict time deadlines in doing so. 

If you still can't sort things out, and need to go to the Tax Court of Canada or the Federal Court after exhausting the CRA's internal remedies, given me a call, or drop me a line. 

UCC STANDS FOR MORE THAN UNIFORM COMMERCIAL CODE

"U" is for for Undepreciated Capital Cost (UCC). It's very important to keep track year to year of your UCC for each capital asset (within each class) that you own. It's not enough to simply know how much you paid for the capital item, and what percentage of depreciation can be claimed each year, since each year the depreciation claimed will be a slightly smaller figure (the same percentage of a lower number), whereas in the first year the depreciation claimed will be a much small number (half the normal depreciation rate) because of the half year rule. Keep all your UCC receipts organized by class, and year of acquisition. 

"V" ISN'T JUST FOR VICTORY

"V" is V-Day. No, not Victory Day. Not Victoria Day. Definitely not Valentines Day. V-Day stands for Valuation Day in tax speak. V-Day is any day when you needed to determine a fixed financial value for something that you'd owned for a while, and planned to own for a while longer, but which didn't have a readily apparent value (like a share price). 

For example, if you bought a commercial property back in the 1960's prior to capital gains being taxable, and then planned to sell it now, you'd need to establish a value for it as of the end of 1971 after which capital gains became taxable. There could be other tax reasons for a V-Day, like making a particular election under the Income Tax Act. In any case, you may need to later defend your V-Day value if challenged by the CRA, so ideally you'll employ a professional to establish a fair market value.

ENSURE YOU WITHHOLD TAX WHEN REQUIRED

"W" is for Withholding Tax. Canadian law stipulates many situations where a payor of money is required to withhold a certain percentage of that money, and instead of paying it over to the person to whom it is owed, must remit it to the government for estimated taxes owning. The most common type of tax withholding is that of employers who are required to withhold a percentage of employee wages as income taxes, with the percentage of withholding rising with the level of the employee's wages. Other kinds of common withholding taxes are those required by financial institutions on RRSP withdrawals, and those required on foreign residents for Canadian income. 

At tax filing time, the government may determine that there was too much or too little withholding, leading to a refund or additional taxes owing. The trick to navigating withholding rules is to try to bring yourself within the conditions where no withholding is required, or to keep the payments you receive below the threshold where a higher level of withholding is triggered. 

X MARKS THE SPOT

"X" is for ... well ... er ... I don't know what X is for. I've look in the Income Tax Act. I've studied accounting term glossaries. And none are big on the letter X.

Perhaps Taxgirl (who gave me the inspiration for all these Canadian taxes A to Z posts) can help out? Her X word is sometimes the name of an IRS form which doesn't really help in the Canadian context. In other years she cited financial terms involving X, but I like her 2012 post the most: X is for X-Mark (Signature): http://www.forbes.com/sites/kellyphillipserb/2012/03/28/taxes-from-a-to-z-x-is-for-x-mark-signature/

Taxgirl quite rightly points out that a tax return in the U.S., just like a return in Canada, isn't valid unless it's signed! It's easy to forget that last step, after putting in all the up front work on the numbers. Electronic returns also need to be "signed," but there are deeming rules that you signed it if you submitted it in the correct way through the electronic portal. 

BEWARE OFF-CALENDAR YEAR ENDS

"Y" is for Year End. Many organizations (including corporations) have off-calendar fiscal years. Often, the timing of the year-end is to coincide with a time of the year when business is slow and employees are not on holiday, and thus there are more resources available to close the year-end books. Tax consequences of having a non-calendar fiscal year can be to shift some income to a future taxation year, and thus defer tax. 

However, unincorporated individuals operating as sole-proprietors or partners can generally no longer benefit from a permanent income/taxation shift. While they might initially defer some tax in the first year of business, that tends to get picked up in the second year of business (possibly pushing the businessperson into a higher tax bracket by capturing more than 12 months of income). Definitely get professional accounting advice prior to deciding to go with a Year End other than December 31.

ZERO BASED BUDGETING LOOKED SO GOOD ON PAPER

"Z" is for Zero Based Budgeting (ZBB). Yes, not really a tax term. But like the letter X, there aren't a whole lot of Z tax terms. And zero based budgeting could ultimately affect your tax situation by increasing (or decreasing) your net revenues.

The concept was first deployed on a large scale by the Texas Instruments corporation in the 1960's in the private sector, and later championed in the public sector by Jimmy Carter (prior to his becoming U.S. president). 

It's another of those looks great on paper, not so easy to practically implement concepts. For any business (or government), the theory goes that instead of a new fiscal year's budget starting with the previous year's budget as a base (and thus being prone to incremental budget creep), each year should start with zero, with every line item being required to be justified all over again year after year. The theory is that ZBB is a great way to eliminate waste. If you can't justify why you've got a budget line, then "poof" you're eliminated. 

The problem with ZBB is that rebuilding a budget every year from the ground up can become an overwhelming, all consuming task. And valuable parts of an organization with less tangible outputs could get snuffed out, to the detriment of the entire organization. 

Gordon S. Campbell practices Federal and Ontario court litigation and dispute resolution, including tax, immigration & citizenship, business, property, criminal, family, professional conduct, and farm law. Learn more at www.acmlawfirm.ca/gordonscottcampbell

Canadian Taxes A to Z (2018): "T" is for Terminal Loss

In today's Canadian Taxes A to Z, T is for Terminal Loss. Twenty letters down, six to go. And yes, I'm aware there's only one day left!

For some reason, I've always liked the term Terminal Loss. Maybe because it conjures up travel images of train and bus terminals. Perhaps because of its finality. It's another of those "tax terms" that if you're not in the know, you'd never guess at what it means.

SELLING FOR LESS THAN UCC GENERATES A TERMINAL LOSS

When depreciable capital property is sold for a value lower than its undepreciated capital cost (UCC) at the end of a fiscal year, then it can general a terminal loss if there are no other assets left in the class. A terminal loss is fully deductible against other income.

Say you buy a Big Purple Machine, take some depreciation over a couple of years that reduces its UCC to $10,000, but then sell it for only $5,000. Perhaps because Big Purple Machines were an industry fad for a couple of years, but ultimately didn't make anyone any money. Thus the low resale value.

If nothing is left in the Big Purple Machine class, you can claim another $5,000 terminal loss deduction for the difference between the UCC and what you sold it for. Pretty good, eh?

BEWARE RECAPTURE INSTEAD OF TERMINAL LOSS

But watch out. Terminal Loss has an evil twin called Recapture. If you sell the Big Purple Machine for $11,000, but have already depreciated it to a $10,000 value, and nothing is left in the class, then you wind up with a $1,000 recapture that you've got to include in income!

The moral of the story is try to sell used business assets for amounts lower than the depreciation you've taken on them. You'll be able to deduct any loss you take, and won't wind up getting stuck with paying taxes on any sale profit.

Gordon S. Campbell has argued tax cases as high as the Supreme Court of Canada. He also litigates civil, criminal and family law cases in Ontario & Federal courts, as well as practicing immigration & citizenship law. Learn more at www.acmlawfirm.ca/gordonscottcampbell

Canadian taxes A to Z (2018): "S" is for Small Business Deduction

In today's Canadian Taxes A to Z, we finally get to the letter "S". Arguably the most useful of Scrabble letters, and not too shabby from a tax perspective either. S is for Small Business Deduction.

THE SMALL BUSINESS DEDUCTION REDUCES TAXES TO INCREDIBLY LOW RATES

The Small Business Deduction reduces taxes for Canadian Controlled Private Corporations (CCPCs). It unfortunately does nothing for you if you're operating as a sole proprietor or partnership. The reduction is available on the first $500,000 of income. It results in a significant tax reduction off the base corporate tax rate.

This Small Business Deduction is in addition to the already generous Federal Tax Abatement knocked off the base corporate tax rate. What this means is an incredibly low 10% federal tax rate for 2018, plus another few percent provincial tax (in Ontario the rate has dropped to 3.5%). This combined rate can make United States taxes look high by comparison.

WHAT'S THE CATCH TO THE SMALL BUSINESS DEDUCTION?

So what's the catch? First, the corporation must be private (meaning not publicly trading shares) and controlled by Canadian residents. Neither of these are very onerous requirements for incorporated small businesses.

The bigger catch is that you'll get taxed again as an individual when you withdraw income from the corporation, such as being paid as an employee. There are various ways to structure the means through which you pay yourself from the corporation to minimize the taxes paid, but there is always a risk of double taxation: once in the hands of the corporation, and then again when the money passes into your own hands.

Likely the most important factor to keep in mind in considering whether incorporating your business is going to do much for you from a tax perspective is whether you'll be in a position to shelter net income in the corporation, or will need to withdraw all the profits each year for your own living expenses. If you're able to shelter income, then you'll be able to invest those excess profits after losing only 10.5% of them to tax.

So it's kind of like an RRSP, but one where you lose a small amount off the top. Unlike an RRSP, you aren't claiming a deduction for the income you shelter in the corporation, but the effect is the same because you won't personally pay any tax on that income until you take it out of the corporation and place it in your own hands.

While there can be other legal and tax benefits to incorporation, like limiting your personal liability and taking dividends out of the corporation that are taxed at a lower rate than salaries, you should get accounting advice on whether incorporation is really going to save you any money at tax time. It's possible that it might actually cost you money (after increased legal and accounting fees are taken into account).

2016 BUDGET INTRODUCED NEW SMALL BUSINESS ANTI-AVOIDANCE MEASURES

The 2016 Federal Budget introduced a variety of anti-avoidance measures targeting corporate and partnership structures established to take advantage of the Small Business Deduction even though notionally their related incomes supposedly exceed the $500,000 Small Business Deduction threshold. There already were measures in place to address such issues, so it remains unclear how the new measures will affect not only tax planning but legitimate business structures implemented for reasons beyond purely income tax minimization. Read the government's take on the new measures here: Federal 2016 Budget .

Canadian Taxes A to Z (2018): R is for RRSP & RRIF

Today in Canadian Taxes A to Z, we come to the letter R. Unlike that stumper letter Q, R presents an embarrassment of riches when it comes to choosing tax-relevant words. I've chosen to present you with two R acronyms today, because they're very important to your taxes, and there is sometimes confusion when it comes to knowing how they save you on taxes.

Eighteen letters down, eight to go! And only four days left to tax filing deadline. Clearly I'm going to have to pick up the pace. And figure out what in the world I'll do with X, Y and Z!

RRSPS ARE REALLY ONLY A TAX DEFERRAL VEHICLE

First up, RRSP. Most know it stands for Registered Retirement Savings Plan. This is a tax deferral vehicle, not a tax free vehicle. Meaning, you get to save on tax when you deposit money to it, and the taxman gets you when you later withdraw money from the plan. 

In theory, RRSPs are supposed to save you money in two ways. First, because the dollars you deposit to your RRSP are pre-tax dollars, there are more of them to deposit, and thus more of them available to earn a return on investment. That's probably going to mean you have somewhere between 50% and close to 100% more money invested up front (depending on the level of your marginal tax rate). 

Thus if you've got $100 to invest, and you put it into an after-tax outside of RRSP investment account, you'd really only be investing $75 dollars (if you're paying tax at 25% - many of us pay at a higher rate). If you're able to invest at a 5% annual rate of return, that $75 investment would be worth only $78.75 after one year. Whereas, if you had placed it into an RRSP you'd have $105 after one year. And all the benefits of increased compounding in future years. 

The second way RRSPs may save you money is that when it comes time to withdraw from the plan, you'll be retired, and earning a lower income (and thus be in a lower tax bracket) than when you originally contributed to the plan. The important word to focus on here is "may."

WHY RRSPS COULD BE BAD FOR YOU

Many people don't realize that it's entirely possible they could actually be earning more money later in life than earlier in life, such as if they're collecting a pension and also still working full or part time. Additionally, the government could decide at some point to raise marginal tax rates. You'll get hit with whatever rate is in force and applicable to your current income at the time you make the withdrawal, not the rate applicable when you made the deposit. The up front tax saving may still be worth it, but be careful.

RSP investment earnings also don't benefit from Canadian dividend capital gains tax breaks, any any other kinds of breaks for special kinds of investments. Everyone gets taxed when withdrawing money from an RSP as if it is just interest income, regardless of how the profits were generated.  

RRIFS ARE FORCED RRSP WITHDRAWALS

RRIFs are essentially forced withdrawals from RRSP plans, starting at age 71. The government won't force you to withdraw too much each year, but your RRSP must be converted to a RRIF by age 71 at the latest, and the withdraws increase as you get older.

The idea seems to be to force you to pay some tax on all the RRSP accumulation while you're still alive, rather than leaving it to your heirs to be hit with the tax (which might be at the top marginal rate if all those RRSPs become income to you in the year of your death).

Thus you should think twice before deciding that the best place to stash all your excess cash (however much or little that might be) is in a RSP. 

Gordon S. Campbell is a tax lawyer practicing throughout Canada who has argued tax cases as high as the Supreme Court of Canada. He also litigates other kinds of civil, criminal and family law cases, as well as practicing immigration & citizenship law. Learn more at www.acmlawfirm.ca/gordonscottcampbell