Nouvelles récentes

Posts tagged "Tax Litigation"

Wilson v. R. – FCA: Tax Court dismisses appeal on procedural grounds – Court of Appeal upholds Tax Court
13 juin 2019 By Bill Innes
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Précis: The Tax Court struck portions of the taxpayer’s Notice of Appeal and gave him 60 days to file an amended Notice of Appeal, which he failed to do. The Tax Court then ordered the taxpayer to file a compliant Notice of Appeal within 60 days. The taxpayer filed an amended Notice of Appeal and the Tax Court Judge concluded that the amended Notice of Appeal did not comply with the two preceding orders and dismissed the taxpayer’s appeal. The Federal Court of Appeal (per curiam) held that while dismissing an appeal on procedural grounds was a “severe remedy” there was “no palpable and overriding error of fact or mixed fact and law and no error of law by the Tax Court” so as to permit the Court of Appeal to allow the appeal [para. [25]]. Thus the appeal was dismissed with costs.
Wilson v. R. – FCA: Tax Court dismisses appeal on procedural grounds – Court of Appeal upholds Tax CourtPlus >
Goheen v. R. – FCA: Crown not required to amend pleadings to rely upon evidence disclosed by discovery of taxpayer – no reversible error
22 mai 2019 By Bill Innes
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Précis: The taxpayer claimed a US $30,000 charitable donation which CRA denied on the basis of absence of donative intent and imposed gross negligence penalties. During discoveries of the taxpayer it appeared that US $30,000 was subsequently deposited in the same account from which the alleged donation was made. The Crown relied upon that evidence at trial and the Tax Court dismissed the taxpayer’s appeal. The taxpayer appealed to the Federal Court of Appeal arguing, in part, that the Crown should have amended it pleadings if it intended to rely upon the US $30,000 deposit to support the disallowance of the alleged gift. The Court of Appeal dismissed the appeal from the bench holding that the deposit was simply evidence of the taxpayer that was relied upon by the Crown to support its assessing position, i.e., absence of donative intent. Costs were awarded to the Crown.
Goheen v. R. – FCA: Crown not required to amend pleadings to rely upon evidence disclosed by discovery of taxpayer – no reversible errorPlus >
Trower v. R. – TCC: Amounts of dividends paid without proper corporate authority not taxable in the hands of former director/shareholder
16 mai 2019 By Bill Innes
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Précis: The taxpayer and her estranged spouse were shareholders and directors of Cove BD Inc. (Cove). They separated in the Fall of 2015. The taxpayer ceased to be a director and shareholder of Cove on October 2, 2016 (or, possibly, September 30, 2016). In February of 2017 her husband caused Cove to declare retroactive dividends of $50, 342 payable to the taxpayer in 2016 (representing a taxable amount of $58,900). CRA assessed her in respect of the alleged dividends and she appealed to the Tax Court. The Tax Court Judge found that Cove could not legally pay dividends to the taxpayer in respect of the period of 2016 in which she was a director and shareholder without her concurrence, which she had not given. Accordingly the appeal was allowed. The parties were to bear their own costs.
Trower v. R. – TCC: Amounts of dividends paid without proper corporate authority not taxable in the hands of former director/shareholderPlus >
Burton v. R. – TCC: Insufficient evidence of binding legal agreement to permit deduction of support payments in 2013
14 mai 2019 By Bill Innes
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Précis: The taxpayer sought to deduct spousal support payments made in 2013. CRA allowed deductions for payments made in 2014 and 2015 on the basis that a finalized separation agreement was entered into in 2015 since under the provisions of the Income Tax Act deductions were permitted in “the year and previous year” in which the agreement was reached. CRA denied the deduction for 2013 on the basis that no binding separation agreement was reached in either 2013 or in 2014. The taxpayer appealed to the Tax Court which agreed with CRA’s position and dismissed the taxpayer’s appeal, but without costs since this was an informal procedure appeal.
Burton v. R. – TCC: Insufficient evidence of binding legal agreement to permit deduction of support payments in 2013Plus >
CRL Engineering Ltd. v. R. – TCC: “Real‑Time Vehicle Arrival Prediction Model for Transitlive” research project to predict movements of transit buses was entitled to SRED credits
1 mai 2019 By Bill Innes
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Précis: The taxpayer claimed SRED credits for a research project known as “A Real‑Time Vehicle Arrival Prediction Model for Transitlive” which was designed to provide accurate real‑time predictions for public transit bus movements. The Court reviewed the five traditional tests for determining whether research met the SRED criteria and concluded that this project did. Thus the appeal was allowed, limited to $25,000 per taxation year since the appellant had pursued the informal procedure option.
CRL Engineering Ltd. v. R. – TCC: “Real‑Time Vehicle Arrival Prediction Model for Transitlive” research project to predict movements of transit buses was entitled to SRED creditsPlus >
Jackson v. R. – TCC: Taxpayer’s motion for summary judgment based on a 5 day delay by the Crown dismissed with costs against the taxpayer
30 avril 2019 By Bill Innes
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Précis: Counsel for the taxpayer brought a motion under Rule 21(4) of the Tax Court of Canada Rules (Informal Procedure) for failure by CRA to serve the Reply to the Notice of Appeal within the 5 day period following the filing of the Reply by CRA with the Court pursuant to Rule 6(2). While such motions are technically possible I can never recall one having been granted. This case was no exception. The motion was dismissed with costs of $250 payable within 30 days of the Court’s order, notwithstanding the fact that this was an informal procedure appeal.
Jackson v. R. – TCC: Taxpayer’s motion for summary judgment based on a 5 day delay by the Crown dismissed with costs against the taxpayerPlus >
Morrissey v. R. – FCA: Different panel of FCA endorses 45% shared custody test from Lavrinenko
26 avril 2019 By Bill Innes
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Précis: In the decision of Lavrinenko v. The Queen, 2019 FCA 51, blogged on this site another panel of the Federal Court of Appeal endorsed a 45% test for shared custody for the purpose of the Canada Child Tax Benefit and the GST/HST Credit. In Morrissey the presiding panel endorsed the result in Lavrinenko. Thus Ms. Morrissey’s appeal was allowed since her shared custody partner, Mr. Murphy, only had custody for 42.86% of the time. Ms. Morrissey was awarded her costs.
Morrissey v. R. – FCA: Different panel of FCA endorses 45% shared custody test from LavrinenkoPlus >
Lavrinenko v. R. – FCA: Federal Court of Appeal sets 45% floor for “shared custody” rule for the Canada Child Tax Benefit (CCTB) and the GST/HST Credit
25 avril 2019 By Bill Innes
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Précis: “Shared custody parents” are entitled to split the Canada Child Tax Benefit and GST/HST Credits in respect of children whose custody they share on an equal or near equal basis. The courts have long held that “shared custody” does not require and exact 50/50 percentage split. The question on this appeal (and the appeal in Morrissey v. The Queen, 2019 FCA 56 which was released on the same day) was how far the flexibility of “near equal” extends. The taxpayer was unsuccessful in the Tax Court and appealed to the Federal Court of Appeal. Mr. Lavrinenko submitted that he had custody of his child 41% of the time which he argued should suffice for “near equal”. The Court of Appeal found that was not sufficient to establish near equal shared custody. While the precise rule enunciated by the Court is somewhat more complex it seems to boil down to a 45% floor for based on simple mathematical rounding principles. Thus Mr. Lavrinenko’a appeal was dismissed. Although the Crown sought costs the Court of Appeal declined to award any.
Lavrinenko v. R. – FCA: Federal Court of Appeal sets 45% floor for “shared custody” rule for the Canada Child Tax Benefit (CCTB) and the GST/HST CreditPlus >
Plains Midstream Canada ULC v. R. – FCA: Tax Court did not err in denying taxpayer interest deduction claimed
24 avril 2019 By Bill Innes
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Précis: This is an appeal from a decision of the Tax Court blogged earlier on this site. 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 theIncome Tax Act. The Court rejected the taxpayer’s “economic substance” argument holding that subsection 16(1) did not operate to convert the difference between $225 million and $17.5 million into an interest expense. In obiter the Court observed that the payment might be an additional element of the cost of the shares of Dome Petroleum acquired by the taxpayer. As a result the appeal was dismissed by the Tax Court. Plains Midstream appealed to the Federal Court of Appeal. The Court of Appeal dismissed the appeal with costs. The panel accepted the analysis of the Tax Court.
Plains Midstream Canada ULC v. R. – FCA: Tax Court did not err in denying taxpayer interest deduction claimedPlus >
Savics v. R. – TCC: Settlement agreement precluded the taxpayer from disputing the inclusion of partnership gains in his income
23 avril 2019 By Bill Innes
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Précis: This case involves some ingenious and complex legal argumentation but boils down to the question whether a Tax Court settlement entered into in 2014 between the taxpayer (and many others) and CRA allowed the taxpayer to claim deductions in 1997 and 1998 from a limited partnership of which he was a member but precluded CRA from adding partnership gains to his income during the same period. CRA reassessed the taxpayer adding such gains to his income and the taxpayer appealed the reassessments again to the Tax Court. The 1997 appeal was quashed on consent for a technical deficiency. The 1998 appeal was dismissed on the basis that the settlement agreement permitted CRA to reassess the taxpayer’s 1998 taxation year to include partnership gains in his income. Accordingly the appeal was dismissed with costs.
Savics v. R. – TCC: Settlement agreement precluded the taxpayer from disputing the inclusion of partnership gains in his incomePlus >

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