Archives - 2017

Posts tagged "Income Tax Act"

Hogg v. R. – TCC: Gross negligence penalties upheld in case of false business loss claim
7 décembre 2017 By Bill Innes
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Précis: This is another in a long line of cases where the taxpayer unsuccessfully claimed fictitious business losses and was assessed gross negligence penalties. Mr. Hogg’s appeal to the Tax Court was dismissed. He know what business losses were and he did not have any. There was no order for costs.
Hogg v. R. – TCC: Gross negligence penalties upheld in case of false business loss claimPlus >
Lavrinenko v. R. – TCC: 40% does not qualify as “near equality” in shared custody situation
5 décembre 2017 By Bill Innes
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Précis: Mr. Lavrinenko had shared custody of his son S along with his former spouse. CRA denied his claim for the Canada Child Tax Benefit and the Goods and Services Tax Credit /Harmonized Sales Tax Credit (the “Credits”) on the basis that he did not have custody of S on an equal or nearly equal basis with his former spouse. He appealed to the Tax Court. Justice Paris dismissed his appeal on the basis that his claim of 40% (or slightly less) custody of S did not meet the statutory requirements for the Credits since he and his former spouse did not share custody of S on an equal or nearly equal basis. There was no order as to costs as this was an informal procedure appeal.
Lavrinenko v. R. – TCC: 40% does not qualify as “near equality” in shared custody situationPlus >
Abdalla v. R. – TCC: Tax Court declines to set aside waivers
1 décembre 2017 By Bill Innes
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Précis: The Crown moved to quash the appeals of Ms. Abdalla and 26 other taxpayers on the basis that each of them had executed an Agreement to be Bound and Waiver of Objection and Appeal Rights (the “Waiver”) in respect of a lead appeal known as Mariano v. The Queen, 2015 TCC 244. In Mariano the Court found that the donation plan at issue was a sham and dismissed the appeal. In Abdalla the taxpayers argued that the Waiver was ineffective for a variety of reasons. The Court rejected the various reasons proffered by the taxpayers and quashed their appeals, with costs to the Crown.
Abdalla v. R. – TCC: Tax Court declines to set aside waiversPlus >
Zara v. R. – TCC: 40% of time with shared custody parent amounted to “near equality”
1 décembre 2017 By Bill Innes
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Précis: This is another in a long line of cases dealing with shared custody parents and their entitlement to child tax benefits. The test to be applied is whether the parent claiming the benefits had “near equality” of time spent having custody of the child. Justice Boyle found that on the facts of this case 40% (or perhaps slightly more) amounted to “near equality” and allowed Mr. Zara’s appeal. There was no order as to costs since this was an informal procedure appeal.
Zara v. R. – TCC: 40% of time with shared custody parent amounted to “near equality”Plus >
Dingman v. R. – TCC: Court rejects “leased employee” scheme as sham
23 novembre 2017 By Bill Innes
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Précis: Mr. Dingman got involved in a “leased employee” scheme under which he assigned all of his income from services to Dannea Business Services Inc. (“Dannea”). Dannea maintained an account from which Mr. Dingman was able to draw the funds (less a 7% commission). Mr. Dingman reported no income from employment or business income in the years under appeal. CRA included the amounts paid to Dannea in his income and imposed gross negligence penalties. The Tax Court upheld CRA’s reassessments and dismissed Mr. Dingman’s appeal with costs of roughly $5,000.
Dingman v. R. – TCC: Court rejects “leased employee” scheme as shamPlus >
Kassa v. R. – TCC: Home health care service provider entitled to reasonable car expenses
22 novembre 2017 By Bill Innes
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Précis: Ms. Kassa worked as a home health care service provider which required her to have the use of a car to drive to visit her clients. She claimed various deduction including roughly $10,000 per year in car expenses. CRA denied her claims and she appealed three taxation years to the Tax Court. The Court allowed her appeal in part. She was entitled to a reasonable allowance for car expenses which worked out to roughly 40% of the amount she had claimed.. Although this was an informal procedure appeal the Court took the unusual step of awarding Ms. Kassa her costs.
Kassa v. R. – TCC: Home health care service provider entitled to reasonable car expensesPlus >
Univar Holdco Canada v. R. – FCA: FCA rejects Tax Court’s odd interpretation of GAAR
14 novembre 2017 By Bill Innes
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Précis: This case dealt with the application of the general anti-avoidance rule (the “GAAR”) to certain transactions that would otherwise allow a non-resident person, immediately following an arm’s length acquisition of control of a Canadian corporation, to extract surplus from that corporation (which had accumulated prior to its acquisition of control) without triggering a dividend under section 212.1 of the Income Tax Act (the “Act”).
Univar Holdco Canada v. R. – FCA: FCA rejects Tax Court’s odd interpretation of GAARPlus >
Plains Midstream v. R. – TCC: Assumption of debt did not give rise to interest expense
23 octobre 2017 By Bill Innes
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Précis: As part of a complex restructuring of Dome Petroleum Limited (Dome Petroleum) and Dome Canada Limited (Dome Canada) in the late 1980’s and early 1990’s, Amoco Canada Petroleum Company Ltd. (the predecessor of the appellant corporation) assumed liability for a $225 million loan payable by Dome Canada to Arctic Petroleum Corporation of Japan in 2030. As consideration for the assumption of such liability Amoco received $17.5 million and additional consideration. In this appeal the taxpayer argued that it was entitled to deduct the difference between $225 million and $17.5 million as a form of interest. Although the original claim was based on a straight-line deduction at trial the appellant reduced its interest deduction claim to $1,043,700 per year. This amount was determined by applying a simple interest rate of 5.964% to the $17.5 million. The original expense claimed had been roughly $4.8 million per year. In characterizing the deduction claimed as simple interest the taxpayer relied upon subsection 16(1) and paragraph 20(1)(c) of the Income Tax Act.
Plains Midstream v. R. – TCC: Assumption of debt did not give rise to interest expensePlus >
Bolduc v. R. – TCC: Court rejects gross negligence penalty in case where false business losses claimed
20 octobre 2017 By Bill Innes
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Précis: The taxpayer was employed as a production team leader at Toyota. In 2008 he switched to a new firm of accountants, Solutions 21, on the recommendation of his wife’s aunt. In filing his 2009 tax return he claimed, on the advice of Solutions 21, a business loss of roughly $325,000 part of which was used in 2009 and the balance of which was used to claim refunds for 2006, 2007 and 2008. CRA rejected the loss claim and imposed a gross negligence penalty of roughly $42,000 for the taxpayer’s 2009 taxation year. He appealed to the Tax Court which allowed his appeal, with costs.
Bolduc v. R. – TCC: Court rejects gross negligence penalty in case where false business losses claimedPlus >
Langboung v. R. – TCC: Court rejects evidence of undocumented charitable gifts
20 octobre 2017 By Bill Innes
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Précis: The taxpayer claimed to have made cash charitable donations in each of 2002 to 2005 which represented a substantial portion of his income in those years. He had no charitable receipts or any other form of documentation. The Court permitted the opening of the 2002-2004 taxation years (which would otherwise have been statute-barred) and dismissed the appeals for all 4 taxation years. There was no order as to costs since this was an informal procedure appeal.
Langboung v. R. – TCC: Court rejects evidence of undocumented charitable giftsPlus >

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