Post by
wucher on Feb 24, 2017 1:36pm
Note to Canadians who held Liberty Global shares in 2014
Wow, I get the honor of the first post on this board. Downside, I guess, is that nobody will ever read it. In any event, I have exhausted every other conceivable way of alerting my countrymen, who held shares in Liberty Global when it issued it “Bonus” to shareholders in early 2014, that they may have been screwed, in error, at tax time ….. so why not post here as well. The error may have been made, as in my case, by a brokerage firm when it prepared your T5 slip for the bonus issue. If you are interested, you can read the text of a letter which I sent to the Minister responsible for the Canada Revenue Agency immediately below.
Subject: Potentially significant over-payment of tax by a group of Canadian investors
Dear Minister Lebouthillier;
I am writing to request your assistance in determining whether or not Canadian investors who held shares, on February 3 of 2014, in the multinational corporation, Liberty Global, may have significantly over-paid in taxes for that tax year.
My concern is, in fact, for investors other than myself; but, it arises from my own experience. I was an investor in a Liberty Global when that company made what it described as a “bonus issue” of class C ordinary shares to existing shareholders. In essence, the number of shares held by each shareholder was doubled, but at the same time, the value of each share was reduced by half. Shareholders made no gain whatsoever from the transaction.
From discussion with a company official, and from a company news release, I know that Liberty had designed the transaction to be tax neutral for investors who lived in either the US or the UK. They did not specifically research the implications for Canadian investors, as we make up a relatively small proportion of their shareholders.
When my brokerage firm (Richardson GMC) initially prepared the T5 slip to reflect that transaction, they mistakenly reported the “bonus issue” as taxable income. Accordingly, when CRA processed my 2014 tax return, I was charged approximately $17,000 in taxes relating directly to that issue.
Subsequently, my chartered accounting firm (Welch LLC) intervened with the brokerage firm and they both agreed that the share issue, even here in Canada, should not have been reported as taxable income. The brokerage firm prepared a revised T5, my 2014 tax return was reassessed by CRA and my situation has been completely and satisfactorily resolved.
My concern is now with other Canadian investors who may have been unwitting victims of the same mistake. The reasons why I suspect that there may be a significant problem here are the following:
Richardson GMP, my brokerage firm during 2014, indicated to me that in their Ottawa office alone there were 13 other investors affected by the same dividend. No one other than myself raised any concern.
My contact at Richardson insisted that all other brokerage firms would have processed the information from Liberty Global in the same manner as they initially did, and therefore would have produced the same incorrect T5s for their clients.
My contact at Liberty Global provided some support for Richardson’s assertion by indicating that he had received several calls from unhappy Canadians complaining about the tax resulting from the “bonus issue”…… Not likely that they were not all clients of Richardson.
I note that Liberty has a massive capital base, so if Canadians were to hold even under 1%, that could still represent hundreds of millions of dollars. And if all Canadian brokerage houses made the same mistake which Richardson did, that would mean that half of the total investment by Canadians in Liberty Global would have shown up on their T5s as taxable income for 2014. So, potentially enormous sums could be involved.
In the absence of any semblance of interest or cooperation from the major Canadian brokerage firms, and I have formally written to most of them, I am asking you to look into this matter. CRA would, of course, have access to all T5 slips submitted in relation to the “bonus issue” in question, and could, presumably without too much difficulty, determine whether and to what extent affected individuals reported the “bonus issue” as taxable income. Those who did, would have done so based on incorrect information from their respective brokerage firms.
I should mention that I raised my concern with officials in your department last November, so far without response. My hope now is that you personally will see here an opportunity to do right by fellow citizens and, at the very least, look into this matter.
I would, of course, be very grateful to hear, in general terms, the outcome of such examination and whether remedial action is needed or being taken. Thank you for your consideration.