Rio Tinto Alcan v. R. - TCC: Tax Court allows pre-commitment investment banker fees

Jul 25, 2016 By Bill Innes

Précis: At issue in this appeal were roughly $100 million in expense claims in two related transactions: one acquisition transaction in 2003 and one disposition in 2004. The claims involved many different types of expenses, but the bulk (roughly $50 million) represented fees paid to investment bankers. The Tax Court held that the fees paid prior to the transactions having been the subject of a commitment to proceed were deductible as “Oversight Expenses” since the taxpayer was aggressively involved in the pursuit of increased shareholder value on a continuous basis. Costs are under reserve pending submissions from the parties.
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Lemieux v. R. - FCt: Application for judicial review allowed where underlying CRA record incomplete

Jul 25, 2016 By Bill Innes

Précis: The taxpayer applied for relief of late filing penalties for his 2007 to 2011 taxation years based on evidence of depression stemming from the deaths of his wife, brother and sister-in-law. The application was allowed by CRA for the 2007 to 2010 taxation years but denied for 2011. Mr. Lemieux applied to the Federal Court for judicial review. The Court found a contradiction in the record as to whether Mr. Lemieux had submitted medical evidence with respect to 2011; moreover the evidence in dispute had been destroyed by CRA. The Court quashed the decision and remitted it back to CRA for redetermination by another decision-maker. There was no order as to costs.
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Peach v. R. - FCA: Tax Court reversed on reasonableness of business expenses

Jul 04, 2016 By Bill Innes

Précis: The Minister disallowed certain rental and business expenses claimed by the taxpayer. He appealed to the Tax Court which dismissed his appeal. The Federal Court of Appeal, in a decision delivered from the bench, dismissed his appeal on the rental expenses but...
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Kruger v. R. - FCA: Court of Appeal upholds Tax Court decision denying SRED credits

Jun 28, 2016 By Bill Innes

Précis: This is somewhat of an oddball case involving entitlement to refundable SRED credits. The taxpayer was owned as to 51% (through an intermediary corporation) by Kruger Inc. (“Kruger”) and as to 49% by SGF Rexfor Inc. (“SGF”) (a company owned by the Government of Quebec). It was common ground that if...
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Russell v. R, - TCC: Appeal of “non-taxer” struck

Jun 07, 2016 By Bill Innes

Précis: Mr. Russell was a “non-taxer” who claimed that his income as a naturopathic doctor was not subject to tax based on a variety of gibberish arguments. His wife filed a similar appeal. Both notices of appeal were struck by the Tax Court without leave to amend. Both Mr. Russell and his wife and the Crown were given time to make written submissions as to costs.
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Cocos v. R. - TCC: Court allows limited deductions for business operated from home - penalties upheld

Jun 06, 2016 By Bill Innes

Précis: Ms. Cocos operated an industrial chemical supply business of 9119-5594 Québec inc. (“Valsol”) from her home. CRA denied essentially all of the expenses claimed by Valsol in its 2006, 2007, 2008 and 2009 taxation years and treated the amounts as benefits to Ms. Cocos. CRA also imposed gross negligence penalties. Ms. Cocos appealed to the Tax Court. The Court allowed a limited amount of the deductions at issue but sustained the imposition of gross negligence penalties. There was no order as to costs since this was an informal procedure appeal.
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Helgesen v. R. - TCC: Passive investor/director did not exercise due diligence

Jun 03, 2016 By Bill Innes

Précis: Mr. Helgesen was a 50% shareholder and one of two directors of 1072519 Alberta Ltd. (the “Corporation”) which operated an OK Tire franchise . The other shareholder and director, Mr. Pyle, ran the Corporation’s day to day operations and his wife acted as corporate bookkeeper. CRA assessed Mr. Helgesen for roughly $200,000 in unremitted source deductions and GST. The Tax Court rejected Mr. Helgesen’s “due diligence” defence holding that he “did not exercise the degree of care, diligence and skill that a reasonably prudent person would have exercised in comparable circumstances” [para. [32]]. As a result the appeal was dismissed with costs.
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Gaboury v. R. - TCC: Interest paid to judge on compensation settlement taxable

Jun 03, 2016 By Bill Innes

Précis: Ms. Gaboury was a Court of Québec judge since 1996. In 2008 she received a retroactive salary payment of $153,375, as well as a sum of $25,473.02 from the government of Québec. She contended that the sum of $25,473.02 was not taxable. The Tax Court disagreed and found that the amount was either in the nature of interest or taxable as interest under the surrogatum principle. The Tax Court also found that the payment was not compensation for a tort. Thus the appeal was dismissed. There was no order as to costs since this was an informal procedure appeal.
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Samson v. R. - TCC: Penalties for failure to disclose foreign property sustained

May 26, 2016 By Bill Innes

Précis: Mr. Samson and his wife, Ms. Hilliard, owned property in the United States worth more than $100,000 which they did not report in their 2008 to 2011 income tax returns. They were each assessed $2,500 penalties under subsection 162(7) for each of the years 2008 through 2011 for failing to file forms T1135 in respect of their foreign property by the end of April of the following year as required by section 233.3 of the Income Tax Act (Canada) (the “Act”). [para. [1]]
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DeGennaro v. R. - TCC: Another Fiscal Arbitrator type case down in flames

May 25, 2016 By Bill Innes

Précis: This is another in the long line of Fiscal Arbitrator type decisions. Mr. DeGennaro unsuccessfully attempted to claim roughly $700,000 in business losses and was assessed a gross negligence penalty of roughly $100,000. His appeal of the penalty was dismissed, with costs to the Crown.
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