Archives - 2018

Posts tagged "Income Tax Act"

Stevenson v. R. – TCC: Divorced taxpayer not entitled to non-refundable tax credits in respect of “net” support payments in respect of child of his former marriage
Sep 14, 2018 By Bill Innes
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Précis: Mr. Stevenson paid support for the child of his former marriage. The payments were netted against notional payments made by his former wife. He claimed child tax credits which were denied by CRA. His appeal to the Tax Court was dismissed without costs holding that the credits were not available in the case of “net” support payments.
Stevenson v. R. – TCC: Divorced taxpayer not entitled to non-refundable tax credits in respect of “net” support payments in respect of child of his former marriageREAD MORE »
Sycheva v. R. – TCC: Appeal of net worth assessments allowed in part to recognize loan repayment
Sep 12, 2018 By Bill Innes
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Précis: The taxpayers, husband and wife, were reassessed on a net worth basis for the 2009-2011 taxation years. The taxpayers made three arguments: 1. The wife, Mrs. Sycheva, had received a gift of $422,000 U.S. in 2005 from the estate of her late parents which the taxpayers kept intact until 2009 and used to cover some of their expenses in the years under appeal. 2. They claimed to have received a loan of $119,000 Cdn. from a Mr. Kogan in January of 2009 which was repaid in cash in 2011. They argued that the repayment was made from the funds saved from the 2005 gift from the estate of Mrs. Sycheva’s parents. 3. They claimed to have received a loan of $123,000 Cdn. from a Mr. Kravchenko in January of 2009 which was repaid in cash in late 2010. Again, they argued that the repayment was made from the funds saved from the 2005 gift from the estate of Mrs. Sycheva’s parents. The Tax Court accepted the evidence of the Kogan loan but rejected the taxpayers’ other two arguments. Since the success on the appeal was split, the Court made no order as to costs.
Sycheva v. R. – TCC: Appeal of net worth assessments allowed in part to recognize loan repaymentREAD MORE »
Rocco Gagliese Productions v. R. – TCC: Amounts paid to composer’s company by Society of Composers, Authors and Music Publishers of Canada (SOCAN) were active business income
Sep 05, 2018 By Bill Innes
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Précis: Rocco Gagliese is a composer and a Writer Member of SOCAN. He carries on his business through a corporation (RGP). Under the rules of SOCAN almost all of the corporate revenue took the form of transfers from SOCAN. CRA reassessed to deny RGP the small business deduction on the basis that the payments from SOCAN were not “active business income”. RGP appealed to the Tax Court which allowed its appeal with costs on the basis that the amounts paid to RGP by SOCAN were income from an active business carried on in Canada.
Rocco Gagliese Productions v. R. – TCC: Amounts paid to composer’s company by Society of Composers, Authors and Music Publishers of Canada (SOCAN) were active business incomeREAD MORE »
Kau v. R. – TCC: Failure to withhold 25% on purchase of real estate from a non-resident – taxpayer’s lawyer failed to make adequate inquiries – appeal dismissed
Sep 04, 2018 By Bill Innes
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Précis: The taxpayer purchased a condominium in June 2011 from a vendor who turned out to be a non-resident of Canada. There was no withholding pursuant to section 116 of the Act on the purchase and CRA assessed the purchaser 25% of the sale price.
Kau v. R. – TCC: Failure to withhold 25% on purchase of real estate from a non-resident – taxpayer’s lawyer failed to make adequate inquiries – appeal dismissedREAD MORE »
Positano v. R. – TCC: Estimate of kilometers driven by an employee was not good enough to support a deduction for a reasonable vehicle allowance
Aug 31, 2018 By Bill Innes
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Précis: The taxpayer and his brother both worked for a family company, Positano Paving. The company did snow clearance in the winter. The brothers shared the job of making “snow runs”, i.e., determining where within the “snowbelt” of Barry, Ontario customers required snow clearance. Snow runs were estimated to be between 90 and 100 kilometres. The brothers took snow runs on alternate days. The company paid them each an allowance of $9,100 as an estimate of the mileage they incurred during the winter season. The taxpayer did not report the amount thinking it was deductible in any event. CRA reassessed the taxpayer for 2012 and 2013 including the full amount in his income and not allowing any offsetting mileage expense. The taxpayer appealed to the Tax Court which dismissed his appeal. The Court held that his estimate of mileage expense was not a “reasonable vehicle allowance” and hence not deductible. There was no order as to costs since this was an informal procedure appeal.
Positano v. R. – TCC: Estimate of kilometers driven by an employee was not good enough to support a deduction for a reasonable vehicle allowanceREAD MORE »
Canada Without Poverty – CRA to appeal decision of Ontario Superior Court of Justice while changing policy limiting non-partisan charitable activities
Aug 30, 2018 By Bill Innes
Categories:
- Bill Innes on Current Tax Cases
- Other
Précis: The Ministers of National Revenue and Finance jointly announced on August 15 that they will appeal the decision of the Ontario Superior Court of Justice which held that CRA’s policy with respect to non-partisan political activities by charities violated the Charter’s guarantee of freedom of expression. At the same time, they announced that they will act to allow greater non-partisan political expression by charities within their charitable objectives.
Canada Without Poverty – CRA to appeal decision of Ontario Superior Court of Justice while changing policy limiting non-partisan charitable activitiesREAD MORE »
Armour Group Limited v. R. – FCA: Alleged lease cancellation payment not deductible
Aug 10, 2018 By Bill Innes
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Précis: In a complex land transaction with the Province of Nova Scotia the taxpayer claimed to have paid $2.24 million by way of set off to cancel a ground lease with the Province under which its wholly-owned subsidiary, Founders Square Limited (“FSL”), was the tenant. FSL acted as a bare trustee for the taxpayer and the taxpayer claimed to deduct the payment made by FSL as a business expense. CRA denied the deduction as being on account of capital, or alternatively, a non-deductible pre-payment of rent. The Tax Court held that the payment was on account of capital and dismissed the appeal with costs to CRA. The taxpayer appealed to the Federal Court of Appeal which affirmed the decision of the Tax Court with costs to the Crown.
Armour Group Limited v. R. – FCA: Alleged lease cancellation payment not deductibleREAD MORE »
Hillman v. R. – TCC: Court declines CRA’s application in RRSP strip cases to have Rule 58(1) determinations in respect of prior prosecutions of the promoters of the RRSP strips
Aug 09, 2018 By Bill Innes
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Précis: The taxpayers were all reassessed in respect of what CRA alleged were RRSP strips. The promoters of those strips were convicted in two separate criminal proceedings. CRA sought to have the Court make a determination under Rule 58 either that the taxpayers could not dispute the factual findings in one of the two criminal cases (the Kendall decision) on the basis of the abuse of process doctrine or, in the alternative, that the factual findings in the Kendall decision were prima facie evidence of the facts and conclusions listed in the Crown’s Reply. Justice Russell held that neither of the Crown’s proposed remedies were appropriate uses of Rule 58(1) and dismissed the application with one set of costs to the Appellants in accordance with the Tariff.
Hillman v. R. – TCC: Court declines CRA’s application in RRSP strip cases to have Rule 58(1) determinations in respect of prior prosecutions of the promoters of the RRSP stripsREAD MORE »
Canada Without Poverty v. R. – OSCJ: CRA’s policy limiting non-partisan political activities of registered charities violates the Charter’s guarantee of freedom of expression
Aug 07, 2018 By Bill Innes
Categories:
- Bill Innes on Current Tax Cases
- Other
Précis: CRA takes the position that a registered charity must confine its non-partisan political activities to not more than 10% of its resources. While it is not entirely clear from the reported decision it seems that the Applicant applied for a declaration invalidating this policy. Justice Morgan granted an immediate Declaration that the interpretation and enforcement by CRA of the “substantially all” requirement in s. 149.1(6.2) of the ITA by limiting to 10% a charitable organization’s use of its resources for political activities, as set out in the CRA Policy Statement, violates s. 2(b) of the Charter and is not saved by s. 1. He also ordered that CRA immediately cease interpreting and enforcing s. 149.1(6.2) in that way.
Canada Without Poverty v. R. – OSCJ: CRA’s policy limiting non-partisan political activities of registered charities violates the Charter’s guarantee of freedom of expressionREAD MORE »
MacDonald v. R. – FCA: An intention to hedge is not a condition for hedging
Aug 03, 2018 By Bill Innes
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Précis: This case turned on the treatment of cash settlement payments of $9,936,149 made by Mr. MacDonald on a derivative contract in his 2004-2007 taxation years. Mr. MacDonald treated them as business losses, CRA assessed them as capital losses on a hedge of Bank of Nova Scotia shares owned by him. The Tax Court allowed Mr. MacDonald’s appeal and CRA appealed to the Federal Court of Appeal. The Court of Appeal allowed CRA’s appeal, with costs, holding that the Tax Court had erred in failing to follow the recent Tax Court decision in George Weston Limited v. The Queen, 2015 TCC 42 [George Weston].
MacDonald v. R. – FCA: An intention to hedge is not a condition for hedgingREAD MORE »

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