News and Sports

May, 2019

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Professional Athlete Ends Up Destitute After Offshore Tax Scheme Is Discovered By CRA

Professional athletes may find themselves in a unique situation when it comes to paying taxes. They usually earn income in Canada and the United States that charge different jock tax rates. Tax planning and working with an audit insurance company is very important for athletes who earn a steady income throughout the year.

Donovan Bailey is a retired Jamaican-Canadian sprinter who legally broke the 10-second barrier in the 100 meters to hold an Olympic world record. Bailey gave $3.75 million to charity with the assurance that one day who he would get a chunk of the money. This is part of a tax plan that will protect the money he has earned from sponsorship fees and prizes.

The funds are shielded from taxes in an athletic trust but after his retirement, Bailey had to gradually close the trust to minimize CRA’s cut on his earnings. The donation that was made to charity will flow back through a complicated series of transactions before it becomes tax-free through an offshore trust.

However, the charitable donation plan was a way to escape paying taxes which the government found later on. The architect of the plan was Stuart Bollefer, a Bay Street tax lawyer who claims to have the ability to provide innovative resolutions to the tax issues of his clients. The tax scheme was also promoted to other athletes that include a prominent Olympic athlete and a world champion skier.

The scheme allowed Bollefer’s clients to shuttle millions of dollars to offshore accounts using a colourful cast of characters. The Canadian government went after Bailey and Bollefer’s clients for unpaid taxes otherwise, they will face criminal prosecution. Bailey owed the Canadian government almost $2.3 million in taxes. Bailey was given the wrong advice in handling his money and he has to settle his tax debt.

The protection provided by audit insurance company prevents disputes from happening between accountants or lawyers and their clients. Fees associated to tax audits are paid promptly and the client avoids sleepless nights of stress and worries. Audit insurance covers previously logged returns including those that the accountant did not lodge or prepare.

California Falling Behind 2020 Recycling Target

Recycling isn’t just a business, but also a matter of preservation. The state of California, one of the foremost leaders in recycling in the US, with its many junk removal Orange County companies and the like, set a self-imposed goal for recycling; by 2020, the state hopes to have 75% of the materials it uses to be recyclable.

The most recent annual recycling rate recorded by the state was 42%, in 2017, which is a dip from the highest set by California; 50% in 2014.

CalRecycle Spokesperson Lance Klug, says that, regardless of when the state gets there, whether by 2020, 2025, or 2030, California needs to set a goal, in order to figure out the vision is, plan things out, set the right policies and enact those appropriately, as those will affect the state, particularly businesses that handle recycling and junk removal Orange County, among others.

Klug explains that there are a lot of variables that have led to the current state of recycling in California, but the biggest one, reportedly, is China. The country’s is the biggest exporter of recycled goods for California, which is why The Golden State have been hit hard.

According to Klug, it’s not just a matter of making sure that the materials are recyclable, it’s also a matter of finding a market for these things.

On top of that, online shopping have also upped the use of packaging of paper and plastic containers across the world.

Californians Against Waste’s Mark Murray says that plastic is the biggest obstacle when it comes to recycling. Plastic are classified into numbers, based on their composition. Number one to two, like water and soda bottles, are in demand, but plastics numbered three to seven aren’t really in demand.

Higher numbered plastics have become harder to recyclable in recent years, hence their lowered demand. Plastics numbered three to five, which include yogurt containers, have depreciated in value, which is still better compared to those numbered six and seven, which don’t have a market.

Murray explains that higher numbered plastics are becoming more commonplace as they’re cheaper to manufacture for companies who are dealing with increased cost.

The primary suggestion is aimed at consumers, in order to discourage them from using one-time plastic. However, the proposed Senate Bill 54 would pressure companies to increase their sale and utilize recyclable materials.

L’Occitane Acquires Natural Skincare Brand For $900 Million

The demand for organic skin products is growing, and the French cosmetics giant has taken notice, opting to make a business acquisition into the market segment with one of the largest investments, perhaps the largest acquisition, for the company to date.

L’Occitane International S.A. reported that it managed to get a definitive deal for the acquisition of one of the UK’s biggest luxury skincare and organic skin products companies, Elemis, for a value of $900 million, paid fully in cash. The latter was being sold the private equity firm, L. Catterton’s subsidiary, Steiner Leisure Limited. The transaction was finalized within the first quarter of 2019.

The largest independent British skincare brand, specializing in organic skin products, Elemis was co-founded by Noella Gabriel, Oriele Frank and Sean C. Harrington, with the last one acting as CEO since the company’s founding. The British cosmetics brand has a strong customer base among Millennials and Gen Z customers. The product enjoys worldwide distribution, being available at more than 1,600 salons, spas, stores, as well as e-retailers across the world, on top of being sold on QVC.

L’Occitane CEO Reinold Geiger issued a statement on the acquisition, saying that they happily welcome Elemis in its entirety; brand, business, and people alike, to the L’Occitane’s family, and notes that it’s a major stepping stone for the French company in their goal of creating a portfolio of premium beauty brands that’ll lead the industry, at large. He says that, with its award-winning products, broad appeal, effective consumer-focused strategies, and strong R&D activity, Elemis is in a good spot right now for continued expansion, and L’Occitane has always looked to the British company as a good example of how to operate a major business.

Geiger finished it up by saying that they have admired Elemis for their commitment to and specialization in organic materials as well as scientific innovation, and that they’re also looking forward to bring their expertise and resources in the industry in order to expand the British brand’s reach across the world.

Currently, L’Occitane has at least 3,000 retail outlets, with more than 1,500 of them being owned stores, and has market presence and operations in 90 countries across the world.