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Archives - octobre 2017

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 >
Cook v. R. – TCC: Child tax credits cannot be prorated where support payable for part of year
19 octobre 2017 By Bill Innes
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Précis: The taxpayer agreed in 2010 to pay monthly support to her former wife in respect of a son of the marriage. In 2013 the former wife moved and, as a result, agreed that the son would be primarily in the custody of the taxpayer who would pay no further support in respect of the son. The taxpayer claimed dependent and child tax credits under paragraphs 118(1)(b) and (b.1) of the Income Tax Act for 2013. CRA denied the claim on the basis that during part of that year the taxpayer was paying support to her ex-wife in respect of the child. The taxpayer appealed to the Tax Court which agreed with the position of CRA holding that the credits in question could not be prorated. Accordingly the taxpayer’s appeal was dismissed. There was no order as to costs since this was an informal procedure appeal.
Cook v. R. – TCC: Child tax credits cannot be prorated where support payable for part of yearPlus >
Elander v. R. – TCC: Subsection 160(1) assessment not defeated where funds used for household expenses
18 octobre 2017 By Bill Innes
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Précis: The taxpayer’s husband was a tax debtor. He transferred funds (roughly $62,000) over a period of 5 years either into their joint account or the taxpayer’s personal account. The funds were primarily used for normal household expenses, including mortgage payments on the home which was owned by the taxpayer. The taxpayer argued, unsuccessfully, that $9,500 of the amount at issue had been taken back by her husband immediately and used in his law practice. As to the balance of the funds the taxpayer argued that she gave adequate consideration by providing her husband with a home and necessities. Relying on the prior Federal Court of Appeal decision in Yates, the Tax Court dismissed the appeal holding that the provision of basic necessities did not constitute “consideration” for the purposes of subsection 160(1) of the Income Tax Act. Costs were awarded to the Crown.
Elander v. R. – TCC: Subsection 160(1) assessment not defeated where funds used for household expensesPlus >
Brassard v. R. – FCA: Court of Appeal declines to set aside subsection 160(1) assessment
17 octobre 2017 By Bill Innes
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Précis: Mr. Brassard’s brother transferred a piece of land with a mobile home to him at a time when he had tax arrears. CRA assessed Mr. Brassard roughly $66,000 as the value of the property less what he had paid for it (which CRA assumed was $50,000). Mr. Brassard lost in the Tax Court and appealed to the Federal Court of Appeal. Mr. Brassard essentially argued that CRA’s valuation of the property was incorrect and attempted to rely upon other evidence of value. The Court of Appeal held that there was no reversible error on the evidence and dismissed the appeal with costs.
Brassard v. R. – FCA: Court of Appeal declines to set aside subsection 160(1) assessmentPlus >
Vrantsidis v. R. – TCC: Adult son with ADHD and learning disability not entitled to Disability Tax Credit
13 octobre 2017 By Bill Innes
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Précis: The taxpayer sought a disability tax credit (DTC) in respect of her adult (19 years old) son who was diagnosed with Attention Deficit Hyperactivity Disorder (ADHD) and a learning disability. CRA denied the DTC and the taxpayer appealed to the Tax Court. The Court dismissed the appeal on the basis that the taxpayer’s son did not meet the tests of a disability that “markedly restrict[s] his ability to perform mental functions necessary for everyday life, all or substantially all of the time” [para. 13]. There was no order as to costs since this was an informal procedure appeal.
Vrantsidis v. R. – TCC: Adult son with ADHD and learning disability not entitled to Disability Tax CreditPlus >
Shenanigans Media v. R. – TCC: Taxpayer allowed small portion (roughly 10%) of disallowed expenses
12 octobre 2017 By Bill Innes
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Précis: This case involved both corporate expense claims and assessments against the shareholder for taxable benefits. The shareholder was an extremely young (14-16) but very successful Canadian actor. The disputed amounts were expenses alleged to have been incurred by the corporation to further the taxpayer’s career. By the time the matter made it to the Tax Court most of the outstanding issues had been resolved and there was only roughly $23,000 in dispute over the period from 2009-2011. The Tax Court allowed roughly 10% of the disputed amounts. Thus the appeals of both the corporation and the individual shareholder were allowed in part. There was no order as to costs since this was an informal procedure appeal.
Shenanigans Media v. R. – TCC: Taxpayer allowed small portion (roughly 10%) of disallowed expensesPlus >
Ahmad v. R. – TCC: Denial of GST Rebate referred back to Minister for reconsideration
11 octobre 2017 By Bill Innes
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Précis: The taxpayer and his cousin agreed to purchase a condominium in 2011 where they intended to reside. When the transaction closed in 2013 their plans had changed and the taxpayer was working in Saskatoon and his cousin had gone to Pakistan to pursue his education. They placed the property for sale but were unsuccessful. They rented the property to unrelated parties for three years after which it was sold. The taxpayer was denied a New Housing Rebate (NHR) and, subsequently, a New Residential Rental Property Rebate (NRRPR). He appealed the NHR to the Tax Court but did not file an objection or appeal in respect of the NRRPR claim.
Ahmad v. R. – TCC: Denial of GST Rebate referred back to Minister for reconsiderationPlus >
The 100th Anniversary of the Income Tax Act in Canada
3 octobre 2017 By Taxnet Pro
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- Federal Income Tax
On September 20, 2017, the Canadian Tax Foundation and Osgoode Hall Law School presented the Income Tax War Act Centenary event, celebrating the 100th anniversary of the Income Tax Act in Canada.
The 100th Anniversary of the Income Tax Act in Canada Plus >

Archives - octobre 2017

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