Gray v. R. - TCC: Gross negligence penalties sustained in another Fiscal Arbitrators case

Apr 06, 2016 By Bill Innes

Précis: Yet another Fiscal Arbitrators case involving a false business loss claim - this time by an 85 year old taxpayer. The gross negligence penalty was sustained.
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Muir v. R. - FC: Taxpayer bid for judicial review of taxpayer relief application dismissed

Apr 05, 2016 By Bill Innes

Précis: Mr. Muir filed his 2005 tax return in 2011 and was assessed penalties and interest. His application to CRA for taxpayer relief was refused and he applied to the Federal Court for judicial review. The taxpayer’s claims that CRA was partially responsible for the delay in processing the return were rejected. Similarly the Court concluded that his argument based on financial hardship was without merit. The application was dismissed with costs of $500 awarded to the Crown.
Muir v. R. - FC: Taxpayer bid for judicial review of taxpayer relief application dismissedREAD MORE »

Shevchyk v. R. - TCC: Notwithstanding unusual facts taxpayer entitled to Canada Child Tax Benefit

Apr 05, 2016 By Bill Innes

Précis: This case concerned the appellant’s entitlement to the Canada Child Tax Benefit (“CCTB”) during the months of May and June of 2013. Mr. Shevchyk had a series of very serious accidents as well as a dispute with his oldest daughter, the upshot of which was that although he continued to support all three children they did not live with him during the period of his convalescence. CRA took the position that he was not entitled to CCTB’s for the three children because his oldest daughter had moved out and, CRA claimed, the Children’s Aid Society had taken custody of the two younger children. The Tax Court concluded that Mr. Shevchyk did not lose custody of the younger children and that he supported them and his oldest daughter throughout the period under appeal. As a result the appeal was allowed.
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Urquhart v. R. - FCA: Car salesman’s expenses allowed in part, reversing Tax Court

Apr 04, 2016 By Bill Innes

Précis: Mr. Urquhart acted as a sales manager and commission salesman for a car dealership. His evidence was that he was required to bear some expenses in connection with the commission income he earned selling cars. The Tax Court rejected his evidence. The Federal Court of Appeal reversed the Tax Court in part holding that certain of his expenses were deductible. Since there was mixed success on the appeal there was no order as to costs.
Urquhart v. R. - FCA: Car salesman’s expenses allowed in part, reversing Tax CourtREAD MORE »

Tse-Lam v. R. - TCC: Assessment of undisclosed foreign rental income upheld

Apr 04, 2016 By Bill Innes

Précis: The taxpayer failed to disclose rental income in 2006, 2007 and 2008 arising in Hong Kong from a trust connected with the estate of her late mother. In 2010 she filed, through her accountant, a voluntary disclosure and was assessed tax and interest but not penalties. She appealed the assessment to the Tax Court, essentially arguing that the amounts should not be taxable in Canada. The Tax Court dismissed the appeal with costs fixed conditionally at $250.
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Buhler Versatile Inc. v. R. - TCC: Taxpayer ordered to produce documents previously disclosed

Mar 28, 2016 By Bill Innes

Précis: This is a decision on an interlocutory matter arising out of an SRED credit appeal. During the course of pre-appeal negotiations with CRA the taxpayer provided CRA with a letter together with 5 binders of documents (which were referred to in the letter). The taxpayer did not list the binders in its list of documents and declined to produce the binders on discovery. The Tax Court ordered the production of the 5 binders and the taxpayer appealed that decision to the Federal Court of Appeal. The Court of Appeal dismissed the appeal from the bench, with costs.
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M. Soutar Décor 2000 Ltd. v. R. - TCC: Subsection 160(1) transferee assessment upheld

Mar 24, 2016 By Bill Innes

Précis: This is an unusual case. The principal of the corporate taxpayer, Michael Soutar, received the help of his father, Ronald Soutar, in 2001 to guarantee a portion of the corporate bank debt. By 2007 the guarantee took the form of a $75,000 GIC deposit. Ronald died in February 2007 and the bank realized on the GIC deposit in June of 2007. Ronald’s estate had an income tax debt at that time in the amount of roughly $20,000 arising from his 2002 and 2005 taxation years. CRA assessed the corporate taxpayer for Ronald’s unpaid tax on the basis that the transfer in 2007 by the bank realization of the GIC deposit was a benefit for the purposes of subsection 160(1) of the Income Tax Act (the “Act”) (i.e., reducing the outstanding corporate bank debt).
M. Soutar Décor 2000 Ltd. v. R. - TCC: Subsection 160(1) transferee assessment upheldREAD MORE »

ACSIS HER Inc. v. R. - TCC: Taxpayer awarded 95% of costs since the date of settlement offer

Mar 24, 2016 By Bill Innes

Précis: The taxpayer was completely successful after a three day trail in which the taxpayer appealed the disallowance of SRED credits. The taxpayer had made two settlement offers which the Crown treated in a dismissive fashion:
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TDL Group Co. v. R. - FCA: Court of Appeal allows TDL appeal on deduction of interest

Mar 23, 2016 By Bill Innes

Précis: In a case blogged earlier on this site I reported that the Tax Court denied TDL Group Co. the deduction of interest on a large loan ($234 million) for a period of 7 months in 2002 on the basis that the funds (which were used to purchase shares of a US subsidiary) were ultimately used to advance an interest free loan to Wendy’s International Inc. (“Wendy’s”), the group parent. The loan to Wendy’s was interest free because of concerns about US state taxes and the thin capitalization rule in Canada. Those concerns were resolved and in November of 2002 the loan was restructured to make it interest bearing. CRA allowed the deduction of interest by TDL commencing in November but denied it for the preceding 7 months.
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Kokanee Placer Ltd. v. R. - TCC: Court sustains penalty for failure to file electronically

Mar 23, 2016 By Bill Innes

Précis: The Minister imposed a $1,000 penalty upon the taxpayer for failure to file electronically (the taxpayer was a “prescribed corporation” which was required to file electronically under the provisions of the Income Tax Act (the “Act”)). The taxpayer argued that no penalty could be imposed since no tax was payable for that taxation year. The Court rejected this argument and also found that the taxpayer had not successfully raised a due diligence defence.
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