Foote v. R. - TCC: Professional investment advisor’s personal trades were on income account

May 01, 2017 By Bill Innes

Précis: Mr. Foote spend his entire career in the investment business rising to the co-head of institutional trading for a large Canadian full-service brokerage firm. In 2009 he treated all of his personal trading (with the exception of short positions) as being on capital account (roughly a gain of $550,000). CRA assessed him as a trader and he appealed to the Tax Court. The evidence was simply overwhelming that Mr. Foote was a trader and not an investor. His multiple transactions and short trading times essentially shone a neon light on his activities. While his counsel obviously put up a very good fight, to an objective observer the result was inevitable. The appeal was dismissed with costs.
Foote v. R. - TCC: Professional investment advisor’s personal trades were on income accountREAD MORE »

Freitas v. R. - TCC: Amount paid to retired accountant not a “retiring allowance” and subject to CPP contributions

Apr 25, 2017 By Bill Innes

Précis: Mr. Freitas retired from Deloitte & Touche LLP on May 31, 2007. He received a distribution from Deloitte in 2008 which he thought was a retiring allowance and therefore not subject to CPP contributions. He was reassessed by CRA in respect of CPP contributions on the amount and appealed to the Tax Court. The Tax Court held that the disputed amount was not a retiring allowance and therefore was subject to CPP contributions. Mr. Freitas was also unsuccessful in an attempt to introduce new evidence after the conclusion of the hearing. Accordingly his appeal was dismissed. There was no order as to costs since this was an informal procedure appeal.
Freitas v. R. - TCC: Amount paid to retired accountant not a “retiring allowance” and subject to CPP contributionsREAD MORE »

McKenzie v. R. - TCC: Distribution from US IRA of taxpayer’s deceased mother taxable

Apr 24, 2017 By Bill Innes

Précis: Ms. McKenzie received roughly $22,000 from the US IRA of her late mother, who had been a resident of the United States prior to her death (and not a resident of Canada). CRA assessed the amount as income pursuant to clause 56(1)(a)(i)(C.1) of the Income Tax Act (the “Act”). Counsel for Ms. McKenzie argued that an alternative method of taxation applied and that the position contended by CRA would result in double taxation (under each of section 56 and section 70) within the provision of paragraph 248(28)(a) of the Act. The Court rejected both arguments.
McKenzie v. R. - TCC: Distribution from US IRA of taxpayer’s deceased mother taxableREAD MORE »

CBS Canada Holdings Co. v. R. - FCA: Affidavit tendered on motion not hearsay evidence - appeal allowed

Apr 24, 2017 By Bill Innes

Précis: The taxpayer filed an affidavit by a Ms. Toaze, a lawyer for the taxpayer (not a lawyer acting as counsel in the proceedings but a member of the same firm), in a motion to enforce a settlement agreement with CRA. The Crown moved to strike the affidavit. The Tax Court Judge held that the affidavit was hearsay and exercised her discretion to exclude it. The taxpayer appealed to the Federal Court of Appeal. The Court of Appeal held that the Tax Court Judge erred in excluding the affidavit and allowed the appeal with costs both in the Court of Appeal and in the Tax Court.
CBS Canada Holdings Co. v. R. - FCA: Affidavit tendered on motion not hearsay evidence - appeal allowedREAD MORE »

Dicosmo v. R. - FCA: Taxpayer’s failure to plead statute-barring fatal to his appeal

Apr 21, 2017 By Bill Innes

Précis: The taxpayer appealed from a decision of the Tax Court denying him certain employment expenses and not permitting him to raise a defence of statute-barring which he had not pleaded (two other grounds of appeal were abandoned). The Federal Court of Appeal found the he had not demonstrated any reviewable error on the denial of employment expenses. With respect to statute-barring, the law was clear: it had to be pleaded. As a result the appeal was dismissed from the bench with costs.
Dicosmo v. R. - FCA: Taxpayer’s failure to plead statute-barring fatal to his appealREAD MORE »

Biles Estate v. R. - FC: Court refuses order of mandamus to compel CRA to comply with alleged agreement

Apr 20, 2017 By Bill Innes

Précis: This decision involved two applications for judicial review by the same taxpayer. They were heard together. The taxpayer sought an order of mandamus to compel CRA to comply with the terms of an alleged agreement (the “Proposal”) to settle a tax dispute. The Federal Court found that the taxpayer had failed to demonstrate that there in fact was any enforceable agreement with respect to the Proposal. In any event CRA’s conduct was not unreasonable under the circumstances. Both applications were dismissed with costs.
Biles Estate v. R. - FC: Court refuses order of mandamus to compel CRA to comply with alleged agreementREAD MORE »

Struck v. R. - FCA: Taxpayer cannot appeal a consent judgment

Apr 17, 2017 By Bill Innes

Précis: Mr. Struck was assessed in respect of the disposition of shares and real property to his son. He appealed to the Tax Court. Subsequently he entered a settlement with the Crown which specified the amounts of both the gain on the disposition of the shares and the real property. His appeal to the Federal Court of Appeal was ultimately confined to his allegation that he was entitled to a reserve on the disposition of real property under section 40 which was not allowed on the consent judgment. The Court of Appeal held that he was not entitled to appeal from the consent judgment where he had agreed on the amount of the gain on the real property and had not claimed any amount for a reserve on that settlement. As a result the appeal was dismissed with costs.
Struck v. R. - FCA: Taxpayer cannot appeal a consent judgmentREAD MORE »

Aeronautic Development Co. v. R - TCC: Taxpayer controlled de facto by non-resident - no ITCs for SRED

Mar 24, 2017 By Bill Innes

Précis: The taxpayer claimed refundable SRED investment tax credits (ITCs) in 2009, 2010 and 2011 in connection with the prototyping and certification of an amphibious aircraft known as the Seawind. CRA denied the ITCs on the basis that the taxpayer was under the de facto control of Mr. Richard Silva, who is a non-resident of Canada. Shortly prior to trial CRA added a new argument based on an allegation that the taxpayer was under the de jure control of Seawind Development Corporation (“Seawind Corp.”), a corporation legally controlled by Mr. Silva. The Court rejected the de jure control argument both because it was pleaded too late and on the evidence adduced.
Aeronautic Development Co. v. R - TCC: Taxpayer controlled de facto by non-resident - no ITCs for SREDREAD MORE »

Peach v. R. - TCC: Taxpayer allowed modest business expenses upon reconsideration after FCA appeal

Mar 24, 2017 By Bill Innes

Précis: At trial Justice Bocock dismissed the taxpayer’s appeal both on the issue of rental losses and expenses from a financial consulting business. That decision was sustained in the Federal Court of Appeal on the issue of rental losses but reversed on the consulting business and remitted back to the Tax Court for a determination of the reasonableness of the expenses claimed. Justice Bocock made that determination on the basis of the trial record and additional submissions of the parties. He allowed somewhat less than half of the amounts at issue. Costs were awarded to Mr. Peach on the informal procedure Tariff, subject to the right of the parties to make further submissions within 30 days.
Peach v. R. - TCC: Taxpayer allowed modest business expenses upon reconsideration after FCA appealREAD MORE »

Wolsey v. R - TCC: Taxpayer’s delays result in cost award against him - twice the Tariff

Mar 21, 2017 By Bill Innes

Précis: Mr. Wolsey’s appeal was dismissed for failure to appear at a status hearing. He moved to set aside that dismissal and the motion was heard over a period of 4 days (August 23 and 24 and September 15 and 16, 2016) and dismissed on October 24, 2016. The Court asked for submissions on costs. Mr. Wolsey did not make any submissions. The Crown asked for costs equal to twice the Tariff plus disbursements. After reserving for several months Justice Graham awarded the Crown what it had asked for, $19,689.
Wolsey v. R - TCC: Taxpayer’s delays result in cost award against him - twice the TariffREAD MORE »

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