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Archives - October 2019

Crocket v. R. – TCC: Taxpayer entitled to deduct losses from rental property – Court finds predominant intention was to earn a profit
Oct 28, 2019 By Bill Innes
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Précis: The taxpayer deducted operating losses from “a vacation rental home, owned by the Appellant’s mother but rented by the Appellant, located in Tulameen, British Columbia. The amounts of claimed losses in issue were $28,938.34 in 2013 and $25,903.43 in 2014.” [Para. 1]. The taxpayer was self-represented. The Court found that the taxpayer’s predominant purpose was to earn a profit from the rental property and accordingly allowed him to deduct the losses in full. There was no order as to costs since this was an informal procedure appeal.
Crocket v. R. – TCC: Taxpayer entitled to deduct losses from rental property – Court finds predominant intention was to earn a profitREAD MORE »
2237065 Ontario Inc. v. R. – TCC: Incorporated truck driver subject to HST – not an “interlining carrier”
Oct 24, 2019 By Bill Innes
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Précis: During calendar 2011 and 2012 the taxpayer worked as an interline truck driver for Dhatt Transfreight Service Inc. (“Dhatt”). He incorporated because Dhatt required him to do so. He drove Dhatt’s trucks during the period (although he later acquired his own truck). Dhatt advised him that his services were zero-rated and he confirmed this in a call with CRA. CRA assessed HST and he appealed to the Tax Court. The Tax Court dismissed the appeal. During the periods in question he provided driving services not freight transportation services. There was no order as to costs since this was an informal procedure appeal.
2237065 Ontario Inc. v. R. – TCC: Incorporated truck driver subject to HST – not an “interlining carrier”READ MORE »
1717398 Ontario Inc. O/A Lost Forest Park v. R. – TCC: Corporate income did not meet the threshold to qualify for small business deduction
Oct 23, 2019 By Bill Innes
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Précis: The taxpayer operated a RV/Mobile Home campsite from April to October and, for a fee, campers could keep their RV/Mobile Home on site during the off-season. The taxpayer earned campsite fees, storage fees and, later, fees as a dealer of mobile units. The Court found that the campsite activity did not cross the threshold from property income to income from the provision of services. As a result, the taxpayer was a specified investment business (SIB) not entitled to the small business deduction (SBD). The appeal was therefore dismissed with costs.
1717398 Ontario Inc. O/A Lost Forest Park v. R. – TCC: Corporate income did not meet the threshold to qualify for small business deductionREAD MORE »
Georgeson Shareholder Communication Canada Inc. v. R. – TCC: Too much uncertainty about the application of financial services provisions to allow judgment for the taxpayer under section 170.1 of the TCC Rules in GST/HST appeal
Oct 22, 2019 By Bill Innes
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The taxpayer operated a business of “asset reunification”:... It did not charge GST/HST in respect of its services to the share issuer or the shareholders. The taxpayer’s position was that the services it rendered to the shareholders were tax exempt and it did not charge anything for services rendered to the share issuers. Moreover it claimed that the admissions contained in the Crown’s pleadings were sufficient to entitle it to judgement under section 170.1 of the Tax Court of Canada Rules (General Procedure). The Crown took the position that there was too much ambiguity about the application of the financial services rules to this type of structure to entitle the taxpayer to summary judgment. The Tax Court agreed with the Crown’s position and dismissed the taxpayer’s motion, with costs.
Georgeson Shareholder Communication Canada Inc. v. R. – TCC: Too much uncertainty about the application of financial services provisions to allow judgment for the taxpayer under section 170.1 of the TCC Rules in GST/HST appealREAD MORE »
Tedesco v. R. – FCA: Discontinuance of appeal by general partner does not preclude the limited partners from continuing their appeals
Oct 21, 2019 By Bill Innes
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Précis: On a motion of the Crown, the Tax Court struck the appeals of the limited partners of TSI I Limited Partnership (TSI) after the general partner filed a notice of discontinuance on behalf of TSI. The limited partners appealed to the Federal Court of Appeal which allowed the appeal with one set of costs in both the Tax Court and the Court of Appeal.
Tedesco v. R. – FCA: Discontinuance of appeal by general partner does not preclude the limited partners from continuing their appealsREAD MORE »
Younis v. R. – TCC: Taxpayer self-supplied residence which he constructed and then occupied – therefore was subject to HST on the self-supply
Oct 18, 2019 By Bill Innes
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Précis: The taxpayer was assessed on the basis of self-supply on a residence which he constructed and then occupied. He argued that the property was supplied to a third party before he entered into a lease to occupy the property. The Court did not accept the evidence of a prior sale and dismissed the appeal without costs (this was an informal procedure appeal).
Younis v. R. – TCC: Taxpayer self-supplied residence which he constructed and then occupied – therefore was subject to HST on the self-supplyREAD MORE »
Wallens v. R. – TCC: Court rejects taxpayer’s motor vehicle, accounting and home office expenses claims (in excess of what was allowed by the Crown)
Oct 17, 2019 By Bill Innes
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Précis: The taxpayer, an employee who sold advertising, claimed substantial motor vehicle and home office expenses ($5,427 and $6,207, respectively) as well as accounting fees of $734. CRA disallowed the accounting fees and reduced the motor vehicle and home office expenses to $2,895. At trial the Crown increased the allowable motor vehicle and home office expenses to $664 and $4,874, respectively. The Tax Court denied the accounting fees and declined to award any additional motor vehicle or home office expense beyond those conceded by the Crown. This was an informal procedure appeal and there were no costs awarded.
Wallens v. R. – TCC: Court rejects taxpayer’s motor vehicle, accounting and home office expenses claims (in excess of what was allowed by the Crown)READ MORE »
Wise v. R. – TCC: Improvements made by tenant corporation to leased building did not result in taxable shareholder benefits to shareholder who owned the building
Oct 16, 2019 By Bill Innes
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Précis: The taxpayer was the sole owner of a building the she leased to Wise Victoria Mortgages Inc. (“WVM”), a corporation of which she and her son were the principal shareholders. WVM had a 5 year lease on the business portion of the building with an option to renew for a further 5 years. The lease commenced in 2010 with a base rent of $2,200 per month. WVM made extensive renovations on the building amounting to a total of $457,663 in 2011 and a further $164,005 in 2012. CRA included these amounts in the taxpayer’s income as shareholder benefits. The Court allowed the appeal, holding that there was no evidence of the increase in value of the building, if any, at the end of the lease by virtue of the renovations. Costs were awarded to the taxpayer in accordance with Tariff B.
Wise v. R. – TCC: Improvements made by tenant corporation to leased building did not result in taxable shareholder benefits to shareholder who owned the buildingREAD MORE »
Chen v. R. – TCC: Cost of harvesting and storing stem/cord cells from birth of taxpayer’s child not an allowable medical expense credit
Oct 15, 2019 By Bill Innes
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Précis: The taxpayer sought a medical expense credit of $5,720 for the cost of harvesting and storing stem/cord cells from the birth of her child. The Tax Court denied the claim on the basis that the taxpayer adduced no evidence that the procedure was done on the advice of the taxpayer’s obstetrician.
Chen v. R. – TCC: Cost of harvesting and storing stem/cord cells from birth of taxpayer’s child not an allowable medical expense creditREAD MORE »

About the Author

(Back to Bill Innes on Current Tax Cases)

William (Bill) Innes has practiced in the areas of tax litigation, taxation and estates and trusts since 1975. His practice includes all aspects of dispute resolution in taxation matters under both federal and provincial legislation, but with a special emphasis on appeals under the Income Tax Act (Canada). In addition, Bill acts as counsel in matters of estate and trust law and serves as an advisor to large charitable and non-profit institutions on issues of trusts, estates and taxation. He frequently appears as counsel before the Tax Court of Canada, the Federal Court and the Federal Court of Appeal.

For advice on tax litigation matters contact Bill:

WILLIAM I. INNES

email: william.innes@williaminnes.ca
416-869-2204
www.williaminnes.ca

Please click here to email us your questions or comments about the Tax Insight Blog.

Bill is listed and recognized in the 2020 edition of Best Lawyers in Canada; Lexpert/ROB Special Edition 2020 – Canada’s Leading Litigation Lawyers; 2020 Canadian Legal Lexpert Directory - Consistently Recommended - Litigation - Corporate Tax; and Canadian Who’s Who.

Bill is also AV Peer and Judicial Review Rated according to Martindale-Hubbell (Preeminent), its highest level of professional ranking.

Bill is a member of the Editorial Boards of the Canadian Tax Journal and Tax Litigation and a past member of the Editorial Boards of the CCH Canadian Tax Reporter and the CCH Annotated Income Tax Act.

Bill is the author or co-author of several legal texts and numerous articles, including:

Tax Evasion, William I. Innes. (Scarborough, Ont.: Carswell, 1995 - Looseleaf).

The essential GAAR manual: policies, principles and procedures. William I. Innes, Patrick J. Boyle, Joel A. Nitikman. (Toronto: CCH Canadian, 2006).
Charities, non-profits and philanthropy under the Income Tax Act, William I. Innes, Patrick J. Boyle. (Toronto: CCH Canadian: Fraser Milner Casgrain, 2006).
Federal tax practice, William Innes & Brendan Bissell, (Toronto: CCH Canadian, 2007).

Bill was a member of the International Academy of Estate and Trust Law from 1992 to 2012.