Barrick Gold v. R. - TCC: Profits on gold hedges formed part of gross resource profits

Feb 16, 2017 By Bill Innes

Précis: The only issue in this appeal was whether a profit of roughly $57,000,000 that Barrick earned in closing out gold forward contracts formed part of its gross resource profits. The Minister denied that treatment and Barrick appealed to the Tax Court. The Tax Court in a nutshell held that the profits on the forward contracts “were an integral part of the Appellant’s business of producing and processing gold ore and therefore that the profit that arose from closing out the Contracts were sufficiently connected to those activities to constitute income from that source and therefore are properly part of its gross resource profits in 1998. [para. [40]” As a result the appeal was allowed with costs.
Barrick Gold v. R. - TCC: Profits on gold hedges formed part of gross resource profitsREAD MORE »

Life Choice Ltd. v. R. - TCC: Unconventional formulations of a naturopath are not SRED

Feb 14, 2017 By Bill Innes

Précis: The taxpayer was operated by a naturopathic physician, Dr. Eldon Dahl. At issue were expenses it incurred in developing drugs designed by Dr. Dahl for the purposes of combating very serious diseases, specifically stage IV Cancer, full-blown AIDS and multiple sclerosis. While the taxpayer claimed anecdotal evidence of success, it did not introduce any evidence of research that complied with the normal rules of scientific method. The Tax Court dismissed the appeal on the basis that the pursuit of scientific method was, on the basis on long established jurisprudence, a prerequisite to any SRED claim. There was no order as to costs since this was an informal procedure appeal.
Life Choice Ltd. v. R. - TCC: Unconventional formulations of a naturopath are not SREDREAD MORE »

Société Générale v. R. - FCA: Article XX(2) of Canada-Brazil Treaty gives tax credit on net income, not gross

Feb 09, 2017 By Bill Innes

Précis: Here the taxpayer was arguing that the specific language of the “tax sparing provision” found in Article XXII(2) of the Canada-Brazil Tax Convention provided a tax credit in Canada on the amount of the gross bond interest taxable in Brazil, not the next interest actually taxed in Canada. The Tax Court ruled that the credit only applied to the net income subject to tax in Canada. The Federal Court of Appeal dismissed the appeal from the bench with costs to the Crown both in the Court of Appeal and the Tax Court.
Société Générale v. R. - FCA: Article XX(2) of Canada-Brazil Treaty gives tax credit on net income, not grossREAD MORE »

Joel Theatrical Rigging Contractors (1980) v. R. - Work on theatre curtains not SRED

Feb 06, 2017 By Bill Innes

Précis: This case dealt with whether two projects dealing with the control of theatrical curtains involved SRED. The 2008 project involved designing a mechanism to control the rate of descent of a fire protection curtain; the 2009 project involved designing a manual override mechanism for a stage curtain. The Tax Court applied the well known tests developed by Bowman J. (as he then was) and concluded that the taxpayer failed to prove that the projects, while innovative and creative, “ did not constitute routine engineering, that there was technological uncertainty in respect of the Fire Curtain Project and the Manual Override Project, that the scientific method was followed, and that technological advancements were achieved in respect of each project.” [para. [53]].
Joel Theatrical Rigging Contractors (1980) v. R. - Work on theatre curtains not SREDREAD MORE »

Aitchison Professional Corporation v. R. - TCC: No summary hearing on tax debtor’s transfer of right to invoice

Jan 30, 2017 By Bill Innes

Précis: The taxpayer corporation invoiced for the legal services of its principal, James Aitchison, a lawyer who owed in excess of $2,000,000 to the Crown in unpaid income taxes. CRA assessed the corporate taxpayer pursuant to subsection 160(1) of the Act on the basis that its principal had transferred in excess of $2,000,000 of assets to it at a time when he was indebted to the Crown for unpaid income taxes. The taxpayer corporation applied for the determination of two points of law under Rule 58 of the Tax Court of Canada (General Procedure) Rules.
Aitchison Professional Corporation v. R. - TCC: No summary hearing on tax debtor’s transfer of right to invoiceREAD MORE »

Easy Way v. R. - FCA: Late-filed form not saved by section 32 of the Interpretation Act

Jan 27, 2017 By Bill Innes

Précis: The Tax Court decision in this matter was blogged earlier on this site. Easy Way was denied SR&ED credits in respect of its 2008 taxation year. Put quite simply it filed a Form T2SCH31 (“Schedule 31”) on August 16, 2010 when CRA took the position that the deadline for filing was 46 days earlier, i.e., June 30, 2010.
Easy Way v. R. - FCA: Late-filed form not saved by section 32 of the Interpretation ActREAD MORE »

Robertson v. R. - FCA: Tax Court did not err in opening statute barred years to tax $600,000 in unreported income

Jan 26, 2017 By Bill Innes

Précis: The taxpayer had roughly $600,000 of unreported income from US private corporation stock options in 2006 and 2007, years that would otherwise be statute-barred. CRA assessed on the basis of negligence. The Tax Court upheld the assessment. The Federal Court of Appeal dismissed the appeal from the bench, with costs.
Robertson v. R. - FCA: Tax Court did not err in opening statute barred years to tax $600,000 in unreported incomeREAD MORE »

Boroumand v. R. - FCA: Rejection of hearsay evidence by Tax Court reasonable - appeal dismissed

Jan 26, 2017 By Bill Innes

Précis: This is a classic net worth case where Mr. Boroumand reported aggregate income of roughly $40,000 in the years 2003 to 2007 and was reassessed for additional amounts totalling roughly $3.7 million for the same taxation years. The Tax Court decision dismissing his appeal was blogged earlier on this site. In the Federal Court of Appeal Mr. Boroumand was unsuccessful in arguing that the Tax Court Judge should have admitted hearsay evidence of money transfers, holding that the evidence was too inherently unreliable to meet the business records exception to the hearsay rule.
Boroumand v. R. - FCA: Rejection of hearsay evidence by Tax Court reasonable - appeal dismissedREAD MORE »

Pirart v. R. - TCC: Mixed success on unreported income from drug sales - no order of costs

Jan 25, 2017 By Bill Innes

Précis: This is a report of a motion to reconsider the Tax Court’s decision not to award costs on the earlier trial, which was blogged on this site. Mr. Pirart was assessed unreported income in the amounts of $1,050,000 for 2005, $1,200,000 for 2006, $1,350,000 for 2007, and $1,500,000 for 2008, mostly from an alleged cocaine business; in addition he was assessed for gross negligence penalties on the unreported income. The Tax Court accepted his evidence that the cocaine was the property of his former partner, Wendy Anderson (since deceased), and allowed the appeal with respect to that income.
Pirart v. R. - TCC: Mixed success on unreported income from drug sales - no order of costsREAD MORE »

Lubega-Matovu v. R. - FCA: Appeal of unproven losses dismissed, gross negligence penalties sustained

Jan 25, 2017 By Bill Innes

Précis: This is an appeal of a decision blogged earlier on this site. Mr. Lubega-Matovu was, at the date of the hearing, a retired senior auditor with CRA. In 2006, 2007 and 2008 he claimed business and rental losses that essentially reduced his taxable income to nothing. His wife, Ms. Lukwago, claimed a small amount of business income in those years and also claimed losses from businesses carried on with her husband. Mr. Lubega-Matovu had unsuccessfully appealed assessments of his 2004 and 2005 taxation years before Justice Campbell who found no evidence to substantiate his business activities during the course of a 1 day trial. Similarly, Justice Woods found no evidence of business activities during the course of a 5 ½ day trial.
Lubega-Matovu v. R. - FCA: Appeal of unproven losses dismissed, gross negligence penalties sustainedREAD MORE »

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