The Canada Revenue Agency is trying to tax Toronto city councillors on benefits ranging from golf and zoo passes to underground parking spaces. And the city is fighting back.
On Feb. 18, each councillor received a letter from the city's pension, payroll and employment division with the results of a CRA employer compliance audit. Each letter included a figure (some in the thousands of dollars) for taxable benefits related to passes for the Toronto Zoo, Sony Centre, TTC and city garages. It also included councillors' expenses (each has a budget of $53,000 annually) as taxable benefits.
"The city does not agree with the interpretations set out in the proposal," the division's director, Celine Chiovitti, wrote in the letter, adding that the city believes councillors need all of these things to do their jobs and shouldn't have to pay taxes on them.
The city is challenging the CRA's findings through a submission to its audit division and a notice of objection. The city has until March 15 to respond, the letter said, asking councillors to submit information on their 2006 and 2007 expenses by that date.
The city has set up drop-in sessions for councillors to meet with the lawyers it has retained to deal with the dispute: David Spiro and Timothy Fitzsimmons of Fraser Milner Casgrain.
Councillor Joe Mihevc said he's puzzled by the designation. "It's appropriate that we pay our appropriate share of taxes ... I have no problem on that front," he said. "But when you look at the things they want to tax, it seems a bit ridiculous." He added that most councillors use their expenses budget to cover such costs as newsletters and community meetings, not personal items. "My sense is that the CRA gave us a cursory look and did not probe in detail as to how these quote-unquote 'benefits' are actually used by city councillors," he said.
But Councillor Rob Ford, who has long spoken out against councillors' "perks," said the CRA is right to crack down on free passes for councillors.
"All these perks, one right after the other. And I've tried to get rid of them at budget meetings and they just laugh at me," he said. "I think it's great that they're forcing us to show who's used [a pass] and how many times you've used it. And if you have used it, you have to pay taxes on it, 'cause it is an income."
Mr. Ford said he has filed numerous complaints with the CRA, and, "finally, somebody up there's listening."
Yesterday evening, CRA spokesman Philippe Brideau said he couldn't immediately confirm that the agency has conducted the audit and is asking for payment. He cited confidentiality provisions in the Income Tax Act.