Law Times

November 24, 2008

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Law Times • November 24, 2008 used to call magistrate's court. The perpetrator was a 16- D Report: 'youts' simply puppets ecades ago, I covered a criminal trial in New Liskeard in what we or 17-year-old named Lonnie. At that time, when there was much more free speech than nowadays, I was able to use his name in the newspaper and even talk to him directly. He was an interesting cat, at first skittish about seeing his name in print and the Crown recounting, and my reporting, on his grandi- ose criminal schemes. Later, he ex- pressed pride in his notoriety. His great desire was to get a sen- tence to an adult institution "because I could learn a lot more there." And by that he didn't mean woodworking. into three volumes (two weren't readily available) of the massive five- volume report on the roots of youth violence commissioned by the Lib- eral government and chaired by old- time politicos former chief justice Roy McMurtry and former speaker of the Legislature Alvin Curling. The pair identify as "immediate risk factors" for youth the follow- ing: alienation, low self-esteem, lack of empathy, impulsivity, belief that one is being oppressed or held down unfairly, being unheard, and lacking a sense of hope. Unfortunately, they then add Lonnie came to mind dipping that "many" of the youth who fit the above criteria won't indulge in violence "because no triggering event or circumstances will occur to unleash their feelings or because so- ciety manages to intervene in time." Which means exactly what? one wonders. The report actually dismisses the most obvious "triggering" events: status-seeking, influence from peers, especially in gangs, and the easy money of the drug culture. The report argues that these gang Inside Queen's Park By Derek Nelson courtroom officials, are chastised for too often indulging in "overly- aggressive, belittling, discriminatory, and other inappropriate conduct" when they deal with the young, particularly "minority youth." Neither "minor matters" or "mi- and peer "associations are not roots; the roots are what often produced the deviant peers and made a par- ticular youth susceptible to them." So what are the roots then? Despite listing 14 theories and numerous sub-theories on the roots of youth violence, the report finally falls back on the usual suspects. At fault are poverty, racism, poor community design in hous- ing, transportation and recreational facilities, non-inclusive education, family issues (but specifically not fatherless black families), mental health, lack of economic opportu- nity, "denial of the youth voice," inadequate support for immigrants, and of course, the justice system. But what else might one expect nority youth" are defined, and the caveat about violence rings hollow in the overall context of a report that never allocates any responsibility to perpetrators for their actions. Nor does the report demon- strate where the system over- criminalizes. Since current justice dogma stresses rehabilitation over punishment, it must by definition be more lenient than severe. The report contains several other curious anomalies. For example, robbery and extor- tion in schools, which anecdotes I've heard suggests is a widespread prob- lem, is dismissed without citing any evidence as "much less common" than physical assaults, while simul- taneously conceding it affects a "sig- nificant portion of Ontario youth." The report naturally commends the Liberal government for gutting the Safe Schools Act because it's (mythical) zero tolerance policy on violence in schools had a "dispro- portionate impact on racialized and marginalized students." Yet not an empathic word ap- pears about the victims of that violence — despite the review being set up in the first place be- cause of a school killing. The report contains 30 recom- mendations, number one catching the flavour of many: "The Ontario government must immediately put in place a governance structure that can align and sustain over the long haul the work required from a dozen or more ministries, and at the same time can also support effective collaborative work with other orders of government and communities." Both these guys are former cabinet ministers, so they have to know the mindlessness of that recommendation. Priorities they stress are $200 million for child mental health, creating community hubs in high crime areas, and various from two tired 1970s politicians like McMurtry and Curling, with their tired 1970s ideas of the world? About the justice system, they say that it shows a "lack of strate- gic thinking" and co-ordination in tackling youth violence. In fact, they criticize the system for the "counterproductive ways" in which it actually stimulates youth violence. This includes "over-criminalization,"where there is "excessive reliance on the justice system for minor matters that do not involve violence." Front line police especially, but also correctional officers and racism indoctrination programs, including assessing police on their "competence on race." The latter probably results from the report's fascination with "critical anti- COMMENT PAGE 7 rule, taxpayers must use existing rules to advantage. Investors will remember 2008 for a long time. T Use your losses to advantage ax planning is about legitimately minimiz- ing taxes. As we await the Lipson decision on the scope of the general anti-avoidance Daily stock markets' swings of 900 points are com- mon. In October, the Toronto Stock Exchange in- dex lost 5.6 per cent of its value in one day! We saw the Dow Jones Industrial Index hit a high in April 2007 and then witnessed the rocky rides down in response to the American subprime mortgage fias- co. The Dow Jones industrial average skidded from its high of 14087 to 9325 on Oct. 31. In these circumstances, investors may be sitting on both ac- crued capital gains and losses and will want to tax plan for the year-end. One of the distinguish- ing characteristics of the Canadian income tax sys- tem is that it pigeonholes income into separate cate- gories and applies different rules to each category. For example, the Income Tax Act considers capital gains and losses to be quite distinct from business or employment income. Thus, investors cannot use capital losses to re- duce employment or business income. Pigeonholing income classes makes it difficult for taxpayers to tax plan. For example, assume that Harry, an employee, earns $75,000 and loses $10,000 in the stock market. His net pre-tax wealth increases by $65,000. For tax purposes, however, Harry must pay the full tax on his employment in- come. He cannot use his capital loss to reduce the tax on his employment salary. In effect, Harry will pay tax on more than his economic gains unless he can do something to use his capital losses. The simplest solution for investors lucky enough to have capital gains is to offset their losses against the gains. Investors have until about the third week of December to prune their portfolios and minimize their taxes. If Jane, for example, real- ized $10,000 of capital gains earlier in 2008, she should sell shares with an equal amount of losses and shelter the gains from current taxes. If Jane has more than $10,000 in current losses and declared capital gains in 2005, 2006, or 2007, she can carry back her losses to the earlier years and apply them against her capital gains in those years for a refund of taxes. For example, if Jane declared taxable capital gains of $5,000 in 2006 and $7,000 in 2007, she should realize sufficient capital losses — $24,000 in 2008 — to apply against the earlier gains. The process is quite simple: declare on your tax return that you wish to carry back losses and the Canada Revenue Agency will take care of it. If you are optimistic that your stocks will rise again, you can "bed and breakfast" them: Sell and then repurchase the shares. However, wait for at least 30 days after the date of sale before you buy back the shares. Otherwise, any losses that you trigger on the shares will be "superficial" and you will not be able to offset them against capi- tal gains. This is entirely legitimate tax mitigation and not subject to any anti-avoidance rule. Technically, a superficial loss arises when an individual — or certain affiliated or related par- ties — buys or sells identical properties within a Letters race theory," an American-originated doctrine that essentially blames ev- erything bad in life on white males. In fact, the heart of this report is its denial of the existence of free will. No one in the McMurtry-Curling world ever actually makes choices. They are simply puppets dancing on social strings, buffeted by forces beyond their control. Lonnie in New Liskeard would have laughed out loud. LT Derek Nelson is a freelance writer who spent 19 years at Queen's Park. His e-mail is jugurtha@rogers.com. to the Editor I am pleased to read Glenn Kauth's article on Parent Alienation Syndrome. As a social worker and s. 30 assessor, these are matters I wade into regularly. One of the challenges for the assessor is discerning if the distance between parent and child is the outcome of "alienation" where the one parent's intrusive behaviour undermines the relationship of the other parent with the child or alternately, "estrangement," where the distance be- tween parent and child is the outcome of that par- ent's behaviour singularly. In other words, I am to blame for the problem in the relationship with my child or the other parent is to blame. As we have learned, the answer can be one, the oth- er, or both. Depending on how this is then assessed, intervention will vary. It may be necessary to hold the www.lawtimesnews.com period of 61 days of the time of his original sale of purchase. For example, if Harry sells 100 shares of Royal Bank of Canada for $45 each for a loss of $15 per share and buys back 100 identical RBC shares within 30 days for $42 per share, he cannot claim the $1,500 loss against his capital gains. In- stead, he must add the loss of $15 per share to the cost of his new RBC shares. Thus, the new shares now have a cost of $57 per share. Consequently, when Harry disposes of the "sub- Financial By Vern Krishna stituted property" — the new RBC shares — he can reduce any ultimate capital gain on the property. For example, if he sells the shares for $60 per share, his gain will be only $3 per share — that is, $60 pro- ceeds less his adjusted cost of $57 per share. The superficial loss rules Matters quires property. The rule also applies to property that certain affiliated persons may acquire during the 61 days. For example, it applies to property that the individual, his spouse or common law partner, or controlled corporation acquires. With proper planning, an individual may be able to use the superficial loss rules to advantage. Assume, for example, that a married couple — Joan and Hari — each have a portfolio of stocks. Joan has accrued capital gains of $10,000 on Bank of Nova Scotia shares that she purchased for $30,000. She has no offsetting losses. Hari has accrued capital losses of $10,000 on CIBC shares that he bought for $50,000. He has no offsetting gains in the current of prior three years. Hari could sell his CIBC shares and trigger his loss of $10,000. Joan could purchase an equal number of CIBC shares for the same amount. The superficial loss rules would deny Hari his loss of $10,000 and compel Joan to add the loss to the cost of her shares. Thus, Joan's cost now becomes $50,000 for tax purposes even though she paid only $40,000 for the shares. If Joan waits 31 days and sells the CIBC shares, she can — assuming no change in market price values — recognize her loss of $10,000 and offset it against her capital gains. In effect, Joan and Hari can reduce their joint prevent individuals from claiming paper losses for tax purposes. For the pur- pose of the rule, the 61- day period commences 30 days before, and ends 30 days after, the day that the taxpayer disposes of or ac- tax burden even though the Income Tax Act gen- erally prohibits income splitting. Thus, they can stand the anti-avoidance rule on its head and use it to legitimately avoid taxes. Is it legal? Thus far, the CRA says "yes." But we may want to wait for the Supreme Court of Canada' decision in Lipson to see how the court interprets the general anti-avoidance rule and balances it against the Westminster principle that says that taxpayers are enti- tled to legitimately minimize taxes. The only question that remains as we await the Supreme Court' sion: What are the rules that govern GAAR? s s deci- LT Vern Krishna, QC, FCGA, is tax counsel with Borden Ladner Gervais LLP, and executive director of the CGA Tax Research Centre, Univer- sity of Ottawa. He can be reached at vkrishna@ blgcanada.com. tween a parent and child is neither alienation or estrangement, but rather an alignment or prefer- ence. Given particular ages, some children will be reasonably more aligned with the same sex parent, particularly if they share similar interests. As for adolescent children, their residential motives may be the result of the ever-emerging importance of their social network and therefore which home is closer to these friends. In the end, claims of Parent Alienation Syn- alienating parent accountable to facilitate visitation, while at the same time requiring the other parent to attend counselling to address their parenting style. Further, there are times when distance be- drome do require an educated and unbiased as- sessment in order to tease out these and other intervening variables. Thereafter, the appropriate course of action can be determined. His e-mail address is gary@yoursocialworker.com, and his web site is www.yoursocialworker.com. Gary Direnfeld. Sincerely,

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