Archives - octobre 2018

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  Barejo Holdings v. R. – TCC: Notes are “debt” for the purposes of paragraph 94.1(1)(a) of the Act – Barejo, the Neverending Story - Perhaps

  24 octobre 2018 By Bill Innes

  catégories:

  • Bill Innes on Current Tax Cases
  • Corporate Tax
  • Federal Income Tax

  Précis: This is the third in a series of Barejo cases. In the first decision, issued on November 4, 2015, Boyle J. was asked on a Rule 58 application whether certain instruments were “debt” for the general purposes of the Income Tax Act (the Act). He answered yes. The Appellant was dissatisfied and appealed to the Federal Court of Appeal which dismissed the two consolidated appeals from the Bench on November 29, 2016 on the basis that hearing the appeals: “would serve no useful purpose and give rise to an improper use of judicial resources” [para. [15]]. Both of these decisions were previously blogged on this site. Barejo applied for leave to appeal to the Supreme Court of Canada. That application was dismissed on June 22, 2017 without reasons, and with costs, by a full 9 person panel of the Supreme Court. In this decision Barejo and the Crown asked Boyle J. to rule on whether the same Notes that were at issue in Barejo No. 1 were “debt” for the purposes of paragraph 94.1(1)(a) of the Act. Justice Boyle held that they were “debt” for such purposes. Costs were reserved to the trial judge.
  Barejo Holdings v. R. – TCC: Notes are “debt” for the purposes of paragraph 94.1(1)(a) of the Act – Barejo, the Neverending Story - PerhapsPlus >
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  Laliberté v. R. – TCC: Cirque du Soleil sends its boss over the moon (almost) but CRA is not amused – a reassessment darkens his re-entry

  23 octobre 2018 By Bill Innes

  catégories:

  • Bill Innes on Current Tax Cases
  • Federal Income Tax
  • Personal Tax, Estate & Wealth Planning

  Précis: M. Laliberté, the Appellant, is the founder of Cirque du Soleil and in 2009 (the relevant tax year) was its controlling shareholder. In 2009 Cirque paid for M. Laliberté spending 12 days on a trip to and from the International Space Station. While in space he participated in a fund-raising drive for One Drop Foundation/Fondation One Drop (“One Drop”), a charity in support of the availability of clean pure water that is closely allied with Cirque. M. Laliberté reported a $4,000,000 shareholder benefit. CRA was not amused and assessed M. Laliberté for a $41.8 million shareholder benefit representing the entire cost of the space trip. M. Laliberté appealed to the Tax Court arguing that none of the cost should be taxable in his hands. Justice Boyle held that on the very limited evidence before him the most he could allocate to a business portion of the cost of the trip (and therefore not taxable) was 10%. He held that the balance was taxable in the hands of M. Laliberté and awarded costs to the Crown.
  Laliberté v. R. – TCC: Cirque du Soleil sends its boss over the moon (almost) but CRA is not amused – a reassessment darkens his re-entryPlus >
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  Atlantic Packaging v. R. – TCC: Taxpayer did not dispose of all or substantially all of the assets used in an active business – gain on income account

  22 octobre 2018 By Bill Innes

  catégories:

  • Bill Innes on Current Tax Cases
  • Corporate Tax
  • Federal Income Tax

  Précis: The Appellant sold its tissue business (the Tissue Division) to a competitor, Cascades Canada Inc. in its taxation year ended May 31, 2010. It treated the resulting gain as being a capital gain in reliance upon section 54.2 of the Income Tax Act on the basis that it had disposed of property that consisted of all or substantially all of the assets used in an active business. CRA denied the application of section 54.2 and the Appellant appealed to the Tax Court. The Tax Court denied the appeal holding that the sale did not represent all or substantially all of the assets used by the Appellant’s Tissue Division. Costs were awarded to the Respondent.
  Atlantic Packaging v. R. – TCC: Taxpayer did not dispose of all or substantially all of the assets used in an active business – gain on income accountPlus >
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  R. v. 594710 British Columbia Ltd. – FCA: GAAR applies to partnership loss transaction, reversing TCC

  19 octobre 2018 By Bill Innes

  catégories:

  • Bill Innes on Current Tax Cases
  • Corporate Tax
  • Federal Income Tax

  Précis: The Appellant was part of a very sophisticated strategy whereby profits within a partnership were, in essence, absorbed, for a fee, by a new corporation brought into the partnership (the new corporation used its own losses to absorb those profits). The Tax Court held that GAAR did not apply to the transaction. The Federal Court of Appeal disagreed and allowed the Crown’s appeal, reserving on the question of costs pending submissions of the parties.
  R. v. 594710 British Columbia Ltd. – FCA: GAAR applies to partnership loss transaction, reversing TCCPlus >
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  Borealis Geopower Inc. v. R. – TCC: SRED grant paid to trust account in 2014 was taxable income in 2014

  18 octobre 2018 By Bill Innes

  catégories:

  • Bill Innes on Current Tax Cases
  • Corporate Tax
  • Federal Income Tax

  The factual basis for this case is somewhat complex technically ... Notwithstanding that complexity the question boiled down to whether the advance of $528,560.00 from SDTC was taxable in 2014, notwithstanding that it was paid in trust to the Appellant. Justice Campbell concluded that the degree of control exercised by the Appellant over the advance from SDTC was sufficient to bring the advance into income in 2014. As a result the appeal was dismissed. There was no order as to costs since this was an informal procedure appeal.
  Borealis Geopower Inc. v. R. – TCC: SRED grant paid to trust account in 2014 was taxable income in 2014Plus >
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  LPIC v. R. – TCC: Ontario’s insurer of lawyers is not exempt from income tax, despite being owned by the Law Society of Ontario

  17 octobre 2018 By Bill Innes

  catégories:

  • Bill Innes on Current Tax Cases
  • Corporate Tax
  • Federal Income Tax

  Précis: Lawyers’ Professional Indemnity Company (LPIC) has apparently claimed an exemption from federal income tax pursuant to paragraph 149(1)(d.5) of the Income Tax Act (the Act), as a “public body performing a function of government in Canada” for some time. CRA reassessed its 2013 and 2014 taxation years denying it the exemption. D’Arcy J. agreed with CRA’s position, finding: The Law Society of Ontario (the Law Society) owns in excess of 90% of LPIC’s capital; The Law Society is a public body within the provision of paragraph 149(1)(d.5);but The Law Society did not at the material times perform a function of government in Canada; and dismissed LPIC’s appeal (apart, that is, from a few small concessions made by CRA) with costs to CRA.
  LPIC v. R. – TCC: Ontario’s insurer of lawyers is not exempt from income tax, despite being owned by the Law Society of OntarioPlus >
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  McCartie v. R. – TCC: Rule 58(1) motion denied on issues arising from prior criminal prosecution in which the Appellant was acquitted

  16 octobre 2018 By Bill Innes

  catégories:

  • Bill Innes on Current Tax Cases
  • Personal Tax, Estate & Wealth Planning

  Précis: The Appellant had been prosecuted for tax evasion. He and his co-accused wife were both acquitted. During the course of the criminal trial certain evidence was ruled inadmissible on the basis of Charter violations. The Appellant moved for a determination of certain questions pursuant to Rule 58(1) of the Tax Court of Canada Rules (General Procedure) (the Rules). Bocock J. dismissed his motion on the basis that the sorts of questions raised were better left to the trier of fact during the course of an actual trial. He awarded costs to the Respondent.
  McCartie v. R. – TCC: Rule 58(1) motion denied on issues arising from prior criminal prosecution in which the Appellant was acquittedPlus >
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  CBS Canada Holdings v. R. – TCC: Court orders CRA to comply with terms of Minutes of Settlement

  12 octobre 2018 By Bill Innes

  catégories:

  • Bill Innes on Current Tax Cases
  • Corporate Tax
  • Federal Income Tax

  Précis: CBC Canada Holdings Co. (CBS) and CRA entered Minutes of Settlement. CRA subsequently refused to complete the terms of the settlement on the basis that it was unenforceable: [1] CBS Canada Holdings Co., the appellant (“CBS”), brings an enforcement motion (the “Motion”) against the respondent requesting an order allowing the appeals and referring the reassessments back to the Minister of National Revenue for reconsideration and reassessment, pursuant to paragraph 171(1)(b) of the Income Tax Act, in accordance with the terms of the Minutes of Settlement, including Schedule A, concluded by the parties (the “Minutes”). Immediately after, the Court was notified a settlement had been reached pursuant to subsection 169(3) of the Income Tax Act. [2] CBS says the Minutes constitute a legally valid and binding settlement agreement after eight months of negotiations and the Minister is obligated to reassess CBS’ taxation years ended March 7, 2007 and December 31, 2007 (collectively the “2007 Years”), December 31, 2008, December 31, 2009 and December 31, 2010 (collectively the “subsequent years”) consistent with the Minutes. In part, to reallocate to CBS a non-capital loss in the amount of $24,366,301 (the “NCL”) in its taxation year ended March 7, 2007. CBS contends the NCL is available for carry-forward from its predecessors arising in years prior to the 2007 Years. Justice Lyons agreed with the Appellant and directed CRA to reassess in accordance with the terms of the Minutes of Settlement. Thus CBS’s motion to enforce the Minutes of Settlement was allowed with costs.
  CBS Canada Holdings v. R. – TCC: Court orders CRA to comply with terms of Minutes of SettlementPlus >
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  Hunt v. R. – TCC: Constitutional challenge to Tax Free Savings Account rules fails

  11 octobre 2018 By Bill Innes

  catégories:

  • Bill Innes on Current Tax Cases
  • Federal Income Tax
  • Personal Tax, Estate & Wealth Planning

  Précis: The Income Tax Act (Act) contains in section 207.05 (and related provisions) a somewhat complex set of rules governing the use of Tax Free Saving Accounts (TFSAs). Mr. Hunt was assessed taxes of $24,833, $14,973, $35,441 and $49,158 on the basis that he had infringed those rules in 2010, 2011, 2012 and 2013, respectively, and he appealed to the Tax Court. This is the report of a motion pursuant to subsection 58(1) of the Tax Court of Canada Rules (General Procedure) to determine two constitutional questions: (a) Is section 207.05 of the Income Tax Act (Canada) unconstitutional for impermissibly infringing on the right to make laws respecting “Property and Civil Rights” which is granted exclusively to the provinces under subsection 92(13) of the Constitution Act, 1867?; or (b) Is section 207.05 of the Income Tax Act (Canada) unconstitutional as a consequence of Parliament having improperly delegated the rate-setting element of the charge imposed thereunder to the Minister of National Revenue in contravention of section 53 of the Constitution Act, 1867? Pizzatelli J. held that section 207.5 was not unconstitutional under either argument and answered both questions No. The Appellant was ordered to pay the Repondent’s costs in any event of the cause.
  Hunt v. R. – TCC: Constitutional challenge to Tax Free Savings Account rules failsPlus >
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  Segura Mosquera v. R. – FCA: No appeal from Nil assessment

  10 octobre 2018 By Bill Innes

  catégories:

  • Bill Innes on Current Tax Cases
  • Federal Income Tax
  • Personal Tax, Estate & Wealth Planning

  Précis: Ms. Mosquera received several Nil assessments from CRA in respect of her 2010 taxation year. She appealed to the Tax Court and Justice Owen dismissed her appeal on the basis that there is no jurisdiction to appeal a Nil assessment. Ms. Mosquera appealed to the Federal Court of Appeal which also dismissed her appeal. Although the Crown sought costs the Court of Appeal ordered that the parties each bear their own costs.
  Segura Mosquera v. R. – FCA: No appeal from Nil assessmentPlus >