Cooper v. R. - TCC: Justice Bocock recuses himself in KPMG tax plan case after CBC report

Mar 15, 2017 By Bill Innes

Précis: In a very rare move Justice Bocock has, of his own motion, recused himself in the Cooper decision which involves a tax plan of KPMG and Dentons which plan has been the subject of considerable adverse publicity. CBC reported that Justice Bocock attended a social function in Madrid sponsored by Dentons as part of the recent IFA Conference there. The Canadian Judicial Council (“CJC”) then opened a preliminary investigation of the matter. Justice Bocock referred the matter back to Chief Justice Rossiter, himself the subject of a CJC preliminary investigation.
Cooper v. R. - TCC: Justice Bocock recuses himself in KPMG tax plan case after CBC reportREAD MORE »

Canadian Forest Navigation v. R. - FCA: Effect of foreign court orders sent back to Tax Court as issue of fact

Mar 14, 2017 By Bill Innes

Précis: The appellant received payments in 2004, 2005 and 2006 from its foreign affiliates. The payments were described as dividends. Subsequently the appellant obtained rectification orders in Cyprus and Barbados declaring such payments not to be dividends but rather transfers that resulted in indebtedness by the appellant to the foreign affiliates in the amount of the transfers. The appellant applied for an order under section 58 of the Tax Court of Canada Rules (General Procedure) that a question of law be determined before the hearing:
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Paletta v. R. - FCA: Appeal from refusal to permit a Rule 58(1) hearing on penalties dismissed from Bench

Mar 09, 2017 By Bill Innes

Précis: The taxpayer applied in the Tax Court for a Rule 58(1) application to determine whether penalties attributable to neglect, carelessness or wilful default were applicable in his tax appeal. Owen J. of the Tax Court refused the application on the basis that the matter was best determined at trial. The taxpayer appealed to the Federal Court of Appeal which dismissed the appeal from the bench, with costs, finding no reversible error in the decision of Justice Owen.
Paletta v. R. - FCA: Appeal from refusal to permit a Rule 58(1) hearing on penalties dismissed from BenchREAD MORE »

Coley v. R. - FC: Judicial review application for taxpayer relief dismissed - CRA decision not unreasonable

Mar 06, 2017 By Bill Innes

Précis: The Applicant, Donald Cooley and Tradelink Stucco & Construction Inc., applied for both income tax relief (penalties and interest) in connection with its 2004 and 2005 taxation years as well as payroll and GST/HST relief (penalties and interest) for the 2009-2014 tax years. Both applications were denied in two letters and the Applicant moved for judicial review. The Court treated the two letters as one decision. The requests for relief were premised on financial distress. In denying the relief sought CRA concluded that there was not sufficient evidence of distress and that the Applicant’s directors did not exercise the reasonable care expected to ensure proper filing and remittances.
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Feizmohammadi v. R. - TCC: Condo held for 75 days not a principal residence

Feb 27, 2017 By Bill Innes

Précis: The taxpayer took closed the purchase of a condo on October 30, 2009, listed it for sale on December 19, 2009 and closed the sale on January 12, 2010. The taxpayer claimed that he and his family took possession of the condo on May 11, 2009 and lived there until it was sold. The Court examined a number of factors, including evidence that seemed to suggest there was no electrical consumption at the condo from July 1, 2009 to December 31, 2009 (or, if there was, someone else paid the bill). On balance the taxpayer did not satisfy the Court that the condo was ever occupied by him or his family as a principal residence and the appeal was dismissed.
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Bailey v. R. - TCC: Penalties for late filing modified in part

Feb 24, 2017 By Bill Innes

Précis: Mr. Bailey was assessed late-filing penalties of $11,817.32 and $710.58 under subsection 162(2) of the Income Tax Act (the “Act”) for his 2010 and 2012 taxation years. The Court affirmed the 2010 penalty on the evidence but in the case of the 2012 penalty held that the Crown did not demonstrate that a demand letter was sent to Mr. Bailey in order to justify a larger penalty under subsection 162(2). The Court however found that the evidence justified a smaller penalty under subsection 162(1) for 2012. Thus the appeal for 2010 was dismissed and the appeal for 2012 was allowed to delete the subsection 162(1) penalty and impose a smaller penalty under subsection 162(1).
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Revcon Oilfield v. R. - FCA: Appeal of compliance order dismissed from the Bench

Feb 23, 2017 By Bill Innes

Précis: The Federal Court issued a compliance order pursuant to section 237.1 of the Income Tax Act. The taxpayer appealed to the Federal Court of Appeal. The Court of Appeal found no error in the original decision but also entertained a new legal argument raised by the taxpayer based on two recent Supreme Court of Canada decisions dealing with the effect of requirements on members of the legal profession. The Court of Appeal rejected the new argument on the basis that the taxpayer, not being a member of the legal profession, was not entitled to benefit from the decisions in question:
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Yu v. R. - TCC: Funds transferred by wife’s sister (and taxpayer’s former wife) not trust funds - subsection 160(1) applied

Feb 21, 2017 By Bill Innes

Précis: The taxpayer received $119,500 in 2010 in four tranches from his wife’s sister, Yan Siang Yu (who was also his former wife). Yan Siang Yu had a large tax debt arising from a net worth assessment of a marijuana grow operation at a Vancouver house on West 53rd Avenue owned by her. The taxpayer argued that the money was placed by his mother-in-law, Jiao Zhen Huang, with his sister-in-law, Yan Siang Yu, for the benefit of his wife and their son when his mother-in-law sold her house on West 46th Avenue in Vancouver.
Yu v. R. - TCC: Funds transferred by wife’s sister (and taxpayer’s former wife) not trust funds - subsection 160(1) appliedREAD MORE »

Helgesen v. R. - FCA: Director did not make out due diligence defence, appeal dismissed from Bench

Feb 21, 2017 By Bill Innes

Précis: Mr. Helgesen was assessed for tax and unremitted payroll deductions pursuant to section 227.1 of the Income Tax Act (the “Act”). He unsuccessfully appealed to the Tax Court attempting to establish a due diligence defence. He appealed to the Federal Court of Appeal which held that he had not made out any reversible error by the Tax Court Judge. The appeal was dismissed from the Bench with costs to the Crown.
Helgesen v. R. - FCA: Director did not make out due diligence defence, appeal dismissed from BenchREAD MORE »

Truong v. R. - TCC: $1.8 million increase in net worth not explained by “Ziploc bags of cash”

Feb 17, 2017 By Bill Innes

Précis: A net worth assessment of the taxpayer revealed a $1.8 million increase in her net worth from 2005 to 2009. She was assessed for both income tax and GST on the unreported income and taxable supplies at issue. She had a variety of explanations for the increase including a particularly amusing story about her brother bringing her Ziploc bags of cash from her boyfriend. The Court was not amused and dismissed the appeals (apart from a $4,800 error in math) and sustained the imposition of gross negligence penalties. Costs were awarded to the Crown subject to the right of the parties to make submissions on costs within 30 days.
Truong v. R. - TCC: $1.8 million increase in net worth not explained by “Ziploc bags of cash”READ MORE »

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