Tax News Daily
The latest tax news from around the world, summarised and tagged for tax professionals. Updated twice daily.
Tax Head
Region
Tax Court of Canada says CRA Cannot Use ‘Fairness’ Reassessment to Immunize a Tax Increase from Appeal: A Canadian Tax Lawyer Analyzes Forrest v The King
The Tax Court of Canada ruled in Forrest v The King that the CRA cannot use a 'fairness' reassessment as a mechanism to increase taxes while simultaneously shielding that increase from taxpayer appeal. A Canadian tax lawyer analyzes the decision, highlighting that the CRA's attempt to invoke taxpayer relief provisions to issue a reassessment that raised taxes—then argue the increase was immune from appeal—was rejected. The court affirmed that taxpayers retain full appeal rights against any tax increase, regardless of the procedural route used by the CRA to issue the reassessment.
Gig Economy Workers Beware How You Are Taxed in Canada: CRA Audit Risks, Creator Income, AI Income, and GST/HST Obligations
Canadian gig economy workers, including content creators and AI-assisted income earners, face significant tax obligations and CRA audit risks. The article outlines how income from platforms, digital content, and AI-generated revenue is taxable as business income under Canadian law, requiring accurate reporting on personal tax returns. GST/HST registration obligations arise once earnings exceed the $30,000 small supplier threshold. The CRA is increasingly targeting gig workers through third-party data matching and platform reporting. Workers must track expenses carefully and understand self-employment tax rules to remain compliant and avoid penalties.
Owner Of Dissolved UK Biz Allowed To Fight Capital Gains Tax
A UK tribunal has permitted the owner of a dissolved UK business to contest a capital gains tax assessment, despite the company's dissolution. The case raises procedural and substantive questions about the ability of former shareholders or directors to challenge tax liabilities arising from a company that no longer legally exists. The ruling is relevant for practitioners handling tax disputes involving dissolved entities, including questions of standing, time limits, and liability attribution. It highlights the importance of understanding how HMRC pursues capital gains assessments in post-dissolution scenarios and the rights of individuals connected to dissolved businesses.
Can Income Tax Additions Be Made Solely on Third-Party Evidence? ITAT Mumbai Says No – A Landmark Judgment Every Taxpayer Must Know
The Income Tax Appellate Tribunal (ITAT) Mumbai has issued a significant ruling clarifying that tax additions cannot be made solely on the basis of third-party evidence without giving the taxpayer an opportunity to cross-examine the source. The judgment reinforces principles of natural justice in Indian tax proceedings, establishing that assessments must be supported by corroborating evidence beyond unverified third-party statements. This landmark decision has broad implications for taxpayers facing scrutiny assessments, limiting the ability of tax authorities to rely exclusively on external evidence when making income additions without proper procedural safeguards.
Partner’s Remuneration Under Section 44ADA: Delhi ITAT Opens the Door, But Is the Debate Really Over?
The Delhi Income Tax Appellate Tribunal has ruled on the deductibility of partner remuneration under Section 44ADA of India's Income Tax Act, which governs presumptive taxation for professionals. The ruling addresses whether a firm can claim partner remuneration as a deduction when its professional income is assessed under the presumptive taxation scheme. While the ITAT has opened the door to allowing such deductions, the article highlights that the legal debate remains unresolved, with conflicting interpretations still possible. This has significant implications for professional partnerships in India operating under the presumptive tax regime.
Policy paper: Changes to reporting of benefits in kind from April 2027
HMRC has published a policy paper outlining changes to the reporting of benefits in kind (BIK) from April 2027. From that date, employers will be required to report and pay Income Tax and National Insurance Contributions on most benefits in kind via payroll software in real time, rather than through the existing P11D process. This mandatory payrolling of benefits represents a significant shift in employer compliance obligations, aiming to simplify reporting and improve accuracy. Employers and payroll professionals will need to update systems and processes ahead of the implementation deadline.
Karachi consumers pay over Rs26bn income tax through electricity bills in FY26
Karachi electricity consumers have paid over Rs26 billion in income tax through their electricity bills during the first months of FY2026, highlighting the significant use of utility bills as a withholding tax collection mechanism in Pakistan. The electricity bill serves as a vehicle for advance income tax collection, with rates varying based on consumption levels and taxpayer status. This mechanism has become a major revenue source for Pakistan's Federal Board of Revenue, reflecting the government's strategy of leveraging utility payments to broaden the tax base and improve compliance among otherwise hard-to-reach individual taxpayers.
Seven Form 990 Red Flags CPAs Should Not Ignore
CPAs reviewing Form 990 filings for tax-exempt organizations should watch for seven key red flags that may signal compliance issues or trigger IRS scrutiny. These include inconsistencies in reported revenue, excessive compensation to officers, related-party transactions, misreported program service expenses, failure to disclose foreign accounts or activities, inaccurate governance disclosures, and misclassification of employees versus independent contractors. Identifying these issues proactively helps nonprofits avoid penalties, potential loss of tax-exempt status, and costly IRS examinations. The guidance is particularly relevant for CPAs advising nonprofit clients on annual filing obligations and internal controls.
Feds Ask Wash. Judge To Back Canadian's $700K FBAR Fines
Federal prosecutors are urging a Washington court to uphold approximately $700,000 in FBAR (Foreign Bank Account Report) penalties against a Canadian individual. The case involves alleged failures to report foreign financial accounts as required under U.S. Bank Secrecy Act rules enforced by the IRS. FBAR enforcement actions against non-resident foreign nationals remain a significant area of U.S. international tax compliance. The government's position reinforces the broad extraterritorial reach of U.S. foreign account reporting obligations and the substantial civil penalty exposure for willful or non-willful violations, even for individuals primarily based outside the United States.
Illinois Crypto Tax Unfairly Targets Traders, Suit Says
A lawsuit has been filed challenging Illinois's taxation of cryptocurrency traders, alleging the state's crypto tax rules unfairly discriminate against or disproportionately burden crypto asset traders compared to other investors. The suit questions whether Illinois's application of its income or related tax rules to crypto transactions is constitutionally or statutorily sound. The case is part of a growing wave of legal challenges to state-level crypto taxation across the U.S. A ruling in favor of the plaintiffs could force Illinois to revise how it taxes digital asset trading activity, with potential implications for other states with similar frameworks.
Kansas City Tax Preparer Sentenced to Prison for Two Financial Fraud Schemes
A Kansas City tax preparer has been sentenced to prison for two financial fraud schemes. The case involves fraudulent tax preparation activities, representing a tax compliance enforcement action by federal authorities. The sentencing underscores IRS and DOJ efforts to prosecute tax preparers who exploit clients or manipulate returns for personal gain. This serves as a reminder of criminal penalties available under U.S. tax law for preparers who engage in fraudulent conduct, including filing false returns or misappropriating client funds. The case highlights ongoing enforcement priorities targeting unscrupulous tax professionals operating in the personal income tax space.
Suspicion Alone Cannot Justify Income Tax Additions: Supreme Court Upholds Deletion of ₹16.61 Crore Alleged Unaccounted Sales
India's Supreme Court upheld the deletion of a ₹16.61 crore income tax addition related to alleged unaccounted sales, ruling that mere suspicion without corroborating evidence cannot justify tax additions. The court reaffirmed that tax authorities must base assessments on concrete material rather than conjecture. This ruling reinforces evidentiary standards in income tax proceedings and limits the ability of assessing officers to make additions solely on the basis of suspicion, providing significant protection to taxpayers facing unsubstantiated assessments of undisclosed income.
Refund Cannot Be Denied for Mere Technical Lapse: ITAT Invokes Article 265 to Protect Taxpayer’s Rights
India's Income Tax Appellate Tribunal ruled that tax refunds cannot be denied solely due to technical lapses by the taxpayer, invoking Article 265 of the Indian Constitution, which prohibits collection of taxes without authority of law. The ITAT held that procedural non-compliance should not override substantive rights to refund where tax has been validly paid and the refund claim is legitimate. This decision strengthens taxpayer protections against arbitrary denial of refunds on technical grounds and has broad implications for refund proceedings across Indian income tax administration.
Americans Don’t Know Their Taxes: A Third Fear They’ve Missed Deductions or Credits
A survey reveals significant gaps in Americans' tax literacy, with approximately one-third of respondents fearing they have missed eligible deductions or credits on their tax returns. The findings highlight widespread uncertainty around personal income tax filing, including confusion about qualifying expenses, available credits, and proper documentation. The data suggests many taxpayers may be over-paying due to lack of awareness rather than intentional non-compliance. The article points to an ongoing need for better taxpayer education and accessible guidance, with implications for tax preparers and advisors who serve clients with limited tax knowledge.
Arbitration Valid In Tax Privacy Suit, H&R Block Tells 9th Circ.
H&R Block is arguing before the Ninth Circuit that an arbitration clause is valid in a tax privacy lawsuit. The case centers on whether customers who allege H&R Block improperly shared their tax data with third parties must resolve their claims through arbitration rather than litigation. The outcome could have significant implications for how tax preparation firms handle data privacy disputes and whether class action litigation in tax-related privacy cases can be compelled to arbitration, affecting millions of taxpayers who use commercial tax preparation services.
IRS Lacks Expert Testimony In Easement Fight, Donor Says
A taxpayer involved in a conservation easement dispute is challenging the IRS in Tax Court, arguing that the government lacks qualified expert testimony to support its position. Conservation easement cases have been a major IRS enforcement priority, with the agency frequently contesting inflated deduction valuations. The absence of expert testimony could weaken the IRS's case significantly, potentially setting a precedent for how the agency must substantiate its valuation challenges in easement disputes and impacting a broader IRS campaign against syndicated conservation easement tax shelters.
How CRA’s Expanded Section 160 and Budget 2025 Supplementary Rule Closes Asset Transfer Loopholes
Canada's Budget 2025 introduces a supplementary rule expanding Section 160 of the Income Tax Act, which holds transferees jointly liable for a transferor's tax debts when assets are transferred at below fair market value. The CRA's expanded provision closes loopholes that allowed taxpayers to shift assets to non-arm's-length parties to avoid tax collection. The new rule targets additional transfer scenarios previously outside Section 160's scope, strengthening the CRA's ability to pursue tax debts through asset transfers. Practitioners advising on estate planning, corporate restructuring, or family wealth transfers must reassess strategies that rely on asset transfers to related parties.
Gambling Loss Limitations Condemned at IRS Hearing
At an IRS public hearing, taxpayers and advocates strongly criticized proposed regulations that would limit the deductibility of gambling losses. The rules, which restrict how session-based losses can be offset against winnings, drew condemnation from affected individuals and industry representatives who argued the limitations are overly burdensome and inconsistent with longstanding tax treatment. Commenters contended the proposals would result in taxation on phantom income, disproportionately harming casual gamblers. The hearing reflects ongoing tension between IRS rulemaking and taxpayer fairness concerns under existing personal income tax provisions governing gambling activity.
Arbitrage Betting and Surebetting in Canada: How the CRA Taxes ‘Guaranteed-Profit’ Sports Wagering Strategies
This article examines how the Canada Revenue Agency (CRA) treats profits from arbitrage betting and surebetting strategies, where bettors exploit odds differences across bookmakers to lock in guaranteed profits. The CRA generally does not tax casual gambling windfalls, but arbitrage betting may be classified as business income when conducted systematically and with a profit motive. The article outlines the factors the CRA uses to distinguish hobby gambling from a taxable business activity, including frequency, organization, and intent. Practitioners advising clients engaged in sports wagering arbitrage should assess whether such income is reportable under the Income Tax Act.
South Carolina enacts “Heirs’ Property Tax Relief Act”
South Carolina has enacted the Heirs' Property Tax Relief Act, providing tax relief for property owners who hold land through heirs' property arrangements — a common situation where property passes without a formal will, leaving multiple family members as co-owners without clear title. The legislation addresses property tax challenges faced by these owners, who have historically struggled to access homestead exemptions and other tax benefits due to unclear title status. The act aims to ensure heirs' property owners can qualify for applicable property tax exemptions and relief programs, offering meaningful financial protection to affected families, often in rural and lower-income communities.
Get the Friday Digest
Every Friday, a curated summary of the week's tax news delivered to your inbox. Choose what you want to hear about — no noise, no spam, unsubscribe anytime.
Tax heads you care about(select all that apply)
Regions you care about(select all that apply)
Your email is never shared or sold. You can unsubscribe at any time. Built in compliance with GDPR.