Recent Posts

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  CIBC World Markets v. R. – TCC: Section 150 election under the Excise Tax Act precludes claiming ITCs on exported services

  Jun 07, 2018 By Bill Innes

  Categories:

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

  Précis: This is a somewhat unusual case in which the taxpayer seems to have been hoist with its own petard. Despite extensive and clever arguments to circumvent the section 150 election the Court held that the taxpayer was bound by it and dismissed the appeal with costs.
  CIBC World Markets v. R. – TCC: Section 150 election under the Excise Tax Act precludes claiming ITCs on exported servicesREAD MORE »
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  Onenergy Inc. v. R. – FCA: HST/GST Issue - Legal expenses incurred to sue former executives generated ITC’s

  Apr 06, 2018 By Bill Innes

  Categories:

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

  Précis: The taxpayer (formerly known as Look Communications Inc. and sometimes referred to in the decision as “Look”) commenced proceedings to recover $14,700,000 in what were alleged to be excessive payments made to former executives. The proceedings were commenced after it terminated its telecommunications business and was no longer making taxable supplies. The sole issue before the tax court was whether subparagraph 141.1(3)(a) of the Excise Tax Act (the “Act”) deemed the litigation costs to have been incurred in the course of a commercial activity. The question was posed to the Tax Court in an application under Rule 58 of the Tax Court of Canada Rules (General Procedure) (“Rule 58”). The Tax Court answered in the negative and the taxpayer appealed to the Federal Court of Appeal. The Federal Court of Appeal held that there was a direct connection between the sale and winding up of the taxpayer’s business and the litigation expenses. As a result the appeal was allowed with costs since the Tax Court should have answered the question posed in the affirmative.
  Onenergy Inc. v. R. – FCA: HST/GST Issue - Legal expenses incurred to sue former executives generated ITC’sREAD MORE »
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  High-Crest v. R. – TCC: Taxpayer not entitled to ITC’s

  Dec 11, 2017 By Bill Innes

  Categories:

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

  Précis: The taxpayer operated a nursing home in Springhill, Nova Scotia. Most of the beds were underwritten by the Nova Scotia Department of Health (“NS Health). The taxpayer agreed with NS Health to build an extension for 20 additional beds. It received payments from NS Health that were to be used both for construction and to provide services to the residents of the facility. Since the taxpayer did the construction work it was regarded as a self-supply. It claimed input tax credits based on the value of the completed property. The input tax credits exceeded the amount of the output tax reported by the Appellant on the self‑supply. CRA denied the claim on the basis of section 191.1 of the Excise Tax Act which “prevents an overall net tax refund on the self‑supply by increasing the value of the addition for the purpose of computing the tax on the self‑supply” [para. 10]. The amount at issue was roughly $300,000.
  High-Crest v. R. – TCC: Taxpayer not entitled to ITC’sREAD MORE »
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  572256 Ontario v. R. - TCC: Taxpayer entitled to ITCs on expenses incurred by its agent

  Aug 11, 2017 By Bill Innes

  Categories:

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

  Précis: The appellant claimed investment tax credits (ITCs) in respect of HST paid by SVO-Phase Two Management Inc. (SVO) during the Appellant’s reporting period from April 1, 2013 to June 30, 2013 on the basis that SVO acted as its agent in paying the HST in question. CRA denied the ITC claim and the appellant appealed to the Tax Court. The Tax Court accepted the appellant’s evidence the SVO acted as its agent during the period in question and allowed the appeal. There was no order as to costs since this was an informal procedure appeal.
  572256 Ontario v. R. - TCC: Taxpayer entitled to ITCs on expenses incurred by its agentREAD MORE »
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  Le Groupe PPP v. R. - TCC: No ITCs on form of car loss protection plan - not a “warranty”

  Apr 26, 2017 By Bill Innes

  Categories:

  • Bill Innes on Current Tax Cases
  • Commodity Tax

  Précis: The taxpayer operated a form of loss protection plan which enabled drivers whose vehicles were the subject of a partial or total loss (it is not clear from the decision whether “loss” covered theft) to receive a new vehicle from the dealership where they purchased the original vehicle. In effect, the plan topped up the payment received from the vehicle’s primary insurer, which was limited to the depreciated value of the vehicle. The taxpayer claimed ITCs on the basis that it was a form of “warranty” program within the provision of section 175.1 of the Excise Tax Act (the “ETA”). CRA denied the ITCs on the basis that the plan was a form of “insurance” which was specifically carved out of section 175.1. The Tax Court found that the plan operated as a form of insurance, not a warranty, and dismissed the appeal with costs.
  Le Groupe PPP v. R. - TCC: No ITCs on form of car loss protection plan - not a “warranty”READ MORE »
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  North Shore Power v. R. - TCC: No ITCs on Credit Memos which were held to be “credit notes”

  Feb 15, 2017 By Bill Innes

  Categories:

  • Bill Innes on Current Tax Cases
  • Commodity Tax

  Précis: The taxpayer paid GST in respect of several contracts with a supplier, Menova. 8 of the contracts were completed, the balance were not. In respect of the uncompleted contracts Menova issued Credit Memos. Subsequently Menova went bankrupt. The Minister treated the Credit Memos as “credit notes” for the purposes of section 232 of the Excise Tax Act (“ETA”), with the result that the taxpayer paid $338,412.50 in HST to Menova, but was allowed ITCs of only $78,620.00 relating to the 8 completed contracts and no ITCs for any of the Cancelled Contracts. The sole issue was whether the disallowed Credit Memos qualified as “credit notes” for the purposes of the ETA.
  North Shore Power v. R. - TCC: No ITCs on Credit Memos which were held to be “credit notes”READ MORE »
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  9124-0515 Québec v. R - TCC: No ITC’s on $310,000 RV - not used primarily for commercial purposes

  Feb 15, 2017 By Bill Innes

  Categories:

  • Bill Innes on Current Tax Cases
  • Commodity Tax

  Précis: The taxpayer purchased a very expensive recreational vehicle in 2012: [10] On July 2, 2012, the appellant acquired an Itasca-brand vehicle, a 2012 Ellipse, for $310,000. The sales contract indicated that a recreational vehicle had been traded in at a value of $32,400. The sole issue in this appeal was whether the taxpayer acquired the vehicle for use primarily in commercial activities, as required by paragraph 199(2)(a) of the Excise Tax Act (“ETA”).
  9124-0515 Québec v. R - TCC: No ITC’s on $310,000 RV - not used primarily for commercial purposesREAD MORE »
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  By-Pass Ranch Ltd. v. R. - TCC: Taxpayer not engaged in commercial activity - no ITCs

  Feb 07, 2017 By Bill Innes

  Categories:

  • Bill Innes on Current Tax Cases
  • Commodity Tax

  Précis: The taxpayer claimed ITCs totalling roughly $11,000 for the period from April 1, 2007 and June 30, 2011. CRA denied the claim on the basis that it was not supported by documentation and there was no commercial activity by the taxpayer during this period. It also assessed a gross negligence penalty of roughly $3,000. The Court dismissed the appeal holding that the expenses claimed were fictitious and that the taxpayer carried on no commercial activity during the period in question. There was no award of costs since this was an informal procedure appeal.
  By-Pass Ranch Ltd. v. R. - TCC: Taxpayer not engaged in commercial activity - no ITCsREAD MORE »
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  Gibb v. R. - TCC: Taxpayer had no reasonable expectation of profit from horse operation - no ITCs

  Nov 11, 2016 By Bill Innes

  Categories:

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

  Précis: Ms. Gibb has a passionate interest in horses and ran a horse farm operation for 30 years. She showed losses in all of those years except in 2003 she reported net farming income of $1,250 and in 2008 she reported nil net farming income. In 2010 and 2011 CRA denied her GST Input Tax Credits on the basis that her horse operation had no reasonable expectation of profit. She appealed to the Tax Court. The Tax Court, while sympathetic to her position, dismissed her appeal. There was no order as to costs since this was an informal procedure appeal.
  Gibb v. R. - TCC: Taxpayer had no reasonable expectation of profit from horse operation - no ITCsREAD MORE »
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  RAR Consultants Ltd. v. R. - TCC: Taxpayer cannot claim ITCs of sister company

  Sep 29, 2016 By Bill Innes

  Categories:

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

  Précis: The taxpayer attempted to claim ITCs for services rendered by a third party suppliers to one of its sister companies. The Tax Court dismissed the appeal holding that the claim for ITCs was not assignable. There was no order as to costs since this was an informal procedure appeal.
  RAR Consultants Ltd. v. R. - TCC: Taxpayer cannot claim ITCs of sister companyREAD MORE »