Edge Software, Edge of Command, Highshare Franchise Tax Issues
Have you been involved in, and affected by Edge Software, Edge of Command or Highshare Franchise? For a detailed summary of the dispute process that lies ahead, please see our memorandum here.
Edge Software Inc., Edge of Command Inc., and Highshare Inc., are just a few names for one single franchise entity that entered into franchise agreements with individuals across Ontario, and across Canada. The entity ‘Edge/Highshare’ has changed its name several times over the course of the past several years. The franchise agreements that were sold by Edge/Highshare to individual franchisees were for the provision of a cloud-based software to be sold in certain territories.
The franchise agreements began in and 2012, but were being sold as late as 2015-2016.
The CRA is now auditing these agreements as they have determined that the franchise agreements are a tax shelter.
A tax shelter is by definition, an arrangement whereby the tax benefits you receive exceed the amount in which you invested, or donated, in same, pursuant to s.237.1(1)(b) of the Income Tax Act.
Upon investment in the ‘franchise’, Edge/Highshare directed individuals to make certain Capital Cost Allowance (CCA) deductions on their personal tax returns. These agreements, and the later deductions, were largely perpetrated by one Mark Laurin, CPA, operating out of Guelph, Ontario.
In fact however, CCA is only available for capital assets in existence and in use in commercial enterprise. The CRA discovered that the Class 12 software for which the individuals were instructed to claim a CCA deduction by Mark Laurin and the tax shelter scheme, were not in existence, or not available for use in commercial application as it was in beta form only. As a result, the CCA deductions were invalid and denied under s.13(26) of the Income Tax Act.
Beginning in 2013, the CRA started to audit many of the individuals who bought these ‘franchises’ from Edge/Highshare. These individuals are now facing serious financial repercussions as the CRA has proposed not only to deny the CCA deductions but also disallow the investment in the shelter as denied business losses as well as potentially impose penalties on these individuals for their involvement with Edge/Highshare.
If you have been contacted by the Edge Highshare team, please see here for an analysis of their August 19, 2019 circular.
If you have bought into the Edge/Highshare franchise agreements, and are being audited by the CRA, contact our office today.
Many others have fallen victim to this tax shelter. There may be an action against Edge/Highshare and Mark Laurin, CPA, brought by other victims through one of the largest law firms in Canada.
Call us today for more information about this potential action and about how we can help.
This article provides information of a general nature only. It does not provide legal advice nor can it or should it be relied upon. All tax situations are specific to their facts and will differ from the situations in the articles. If you have specific legal questions you should consult a lawyer.