Savics v. The Queen (April 2, 2019 – 2019 TCC 71, Sommerfeldt J.).
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.
Decision: The nub of this case, despite the intricate and interesting arguments put forward on behalf of the taxpayer, was a matter of common sense:
 To summarize, the Settlement is premised on the recognition of the existence of the Partnerships, which represents a retreat from the CRA’s original reassessing position, as set out in the 2002 Reassessments. A logical result or inference (i.e., a consequence) of this premise is that the losses and gains allocated by the Partnerships are also to be recognized. In other words, recognizing the gains was a result or consequence of the recognition of the existence of the Partnerships, such that the inclusion of the gains in computing Mr. Savics’ income for 1998 was, for the purposes of paragraphs 1(h), 3(g) and 5(h) of the Minutes and subparagraph (v) on page 2 of each Waiver, a consequential adjustment. It would be inconsistent to recognize the existence of the Partnerships and to deduct the losses allocated by the Partnerships, but not to include the gains allocated by the Partnerships. In other words, including the gains in income was consistent with the recognition of the existence of the Partnerships and the deduction of the losses. Therefore, for the purposes of section 12 of the Minutes and subparagraph (v) on page 2 of each Waiver, the 2014 Reassessment’s inclusion, in computing Mr. Savics’ income for 1998, of the gains allocated to him by the Partnerships for that year does not create a result that is inconsistent with the express terms of the Minutes or with any of the other terms of the Waivers. Furthermore, the inclusion of the gains accords with common sense and is reasonable.
Thus the taxpayer’s appeal was dismissed with costs.