Wise v. R. – TCC: Improvements made by tenant corporation to leased building did not result in taxable shareholder benefits to shareholder who owned the building

Oct 16, 2019 By Bill Innes

Précis: The taxpayer was the sole owner of a building the she leased to Wise Victoria Mortgages Inc. (“WVM”), a corporation of which she and her son were the principal shareholders. WVM had a 5 year lease on the business portion of the building with an option to renew for a further 5 years. The lease commenced in 2010 with a base rent of $2,200 per month. WVM made extensive renovations on the building amounting to a total of $457,663 in 2011 and a further $164,005 in 2012. CRA included these amounts in the taxpayer’s income as shareholder benefits. The Court allowed the appeal, holding that there was no evidence of the increase in value of the building, if any, at the end of the lease by virtue of the renovations. Costs were awarded to the taxpayer in accordance with Tariff B.
Wise v. R. – TCC: Improvements made by tenant corporation to leased building did not result in taxable shareholder benefits to shareholder who owned the buildingREAD MORE »

Chen v. R. – TCC: Cost of harvesting and storing stem/cord cells from birth of taxpayer’s child not an allowable medical expense credit

Oct 15, 2019 By Bill Innes

Précis: The taxpayer sought a medical expense credit of $5,720 for the cost of harvesting and storing stem/cord cells from the birth of her child. The Tax Court denied the claim on the basis that the taxpayer adduced no evidence that the procedure was done on the advice of the taxpayer’s obstetrician.
Chen v. R. – TCC: Cost of harvesting and storing stem/cord cells from birth of taxpayer’s child not an allowable medical expense creditREAD MORE »

Meerman v. R. – FCA: No reversible error by trial judge in allowing cross-examination of taxpayer on association with Paradigm Education Group

Jun 28, 2019 By Bill Innes

Précis: The taxpayer did not report slightly more than one million dollars of income during the period 2006-2011. He was assessed on this income (which included opening otherwise statute-barred years) and gross negligence penalties were imposed. The taxpayer, who was self-represented, claimed that the amounts in questions were not taxable income, but rather proceeds of a “non-commercial personal endeavour” [para. [4]]. The Tax Court Judge dismissed his appeal and he appealed to the Federal Court of Appeal on a number of grounds, all of which were rejected. Thus the appeal was dismissed with costs fixed in the amount of $1,700 inclusive of disbursements and applicable taxes.
Meerman v. R. – FCA: No reversible error by trial judge in allowing cross-examination of taxpayer on association with Paradigm Education GroupREAD MORE »

Rasmussen v. R. – TCC: No relief for taxpayer on capital portion of Australian pension payments

Jun 27, 2019 By Bill Innes

Précis: The taxpayer immigrated to Canada from Australia. He received pension payments from his former Australian employer and sought to deduct the capital element contributed by him (for which he was never entitled to a deduction under Australian tax law). The Tax Court dismissed the appeal holding that on the basis of established precedent Canadian tax law did not permit a carve out of the capital element of pensions. There was no order as to costs since this was an informal procedure appeal.
Rasmussen v. R. – TCC: No relief for taxpayer on capital portion of Australian pension paymentsREAD MORE »

Kibalian v. R. – FCA: Federal Court of Appeal sets aside costs order by Tax Court for failure of natural justice

Jun 25, 2019 By Bill Innes

Précis: The taxpayer appealed reassessments for the 2006-2010 taxation years. The Tax Court, of its own motion, awarded $7,500 in costs against the taxpayer in pre-trial proceedings and subsequently dismissed the taxpayer’s appeal (or, possibly, appeals – it is not clear from the decision) for failure to pay the outstanding costs award. The Court of Appeal found that the Tax Court violated the rules of natural justice and set aside that portion of the Tax Court order directing the payment of $7,500 in costs. The taxpayer did not seek costs in the Court of Appeal and none were awarded.
Kibalian v. R. – FCA: Federal Court of Appeal sets aside costs order by Tax Court for failure of natural justiceREAD MORE »

Abreo v. R. – TCC: One of the last software charitable donation cases fails based on the Court finding the software had very little value

Jun 17, 2019 By Bill Innes

Précis: As most readers are aware the early 2000’s saw a raft of charitable donation in kind cases involving art, medicine, software, etc. Virtually all failed because the Courts held that the values attached to the gifts were inflated. This is one of the remnants of those lines of cases. One category of donation was of “Lotus Smart Suite” (“LSS”) from Systelligence Systems Inc. (“Systelligence”); the donation receipts claimed were for $600 per program. The Minister allowed $120 per program, i.e., what the participants in the donation plan had paid. The Court accepted the Crown’s evidence that the software was unlicensed and unauthorized by Lotus. Accordingly, the taxpayers had not adduced evidence to refute the donation amount used by CRA. In the case of the Blue and Purple Collection CD-ROMs donated in 2002 and 2003 the Court similarly found that the value was far less than the donation receipts claimed. Thus the Court dismissed all of the appeals. The Court however declined to award costs against the taxpayers since they had followed the Informal Procedure process in launching and pursuing their appeals.
Abreo v. R. – TCC: One of the last software charitable donation cases fails based on the Court finding the software had very little valueREAD MORE »

Wilson v. R. – FCA: Tax Court dismisses appeal on procedural grounds – Court of Appeal upholds Tax Court

Jun 13, 2019 By Bill Innes

Précis: The Tax Court struck portions of the taxpayer’s Notice of Appeal and gave him 60 days to file an amended Notice of Appeal, which he failed to do. The Tax Court then ordered the taxpayer to file a compliant Notice of Appeal within 60 days. The taxpayer filed an amended Notice of Appeal and the Tax Court Judge concluded that the amended Notice of Appeal did not comply with the two preceding orders and dismissed the taxpayer’s appeal. The Federal Court of Appeal (per curiam) held that while dismissing an appeal on procedural grounds was a “severe remedy” there was “no palpable and overriding error of fact or mixed fact and law and no error of law by the Tax Court” so as to permit the Court of Appeal to allow the appeal [para. [25]]. Thus the appeal was dismissed with costs.
Wilson v. R. – FCA: Tax Court dismisses appeal on procedural grounds – Court of Appeal upholds Tax CourtREAD MORE »

Goheen v. R. – FCA: Crown not required to amend pleadings to rely upon evidence disclosed by discovery of taxpayer – no reversible error

May 22, 2019 By Bill Innes

Précis: The taxpayer claimed a US $30,000 charitable donation which CRA denied on the basis of absence of donative intent and imposed gross negligence penalties. During discoveries of the taxpayer it appeared that US $30,000 was subsequently deposited in the same account from which the alleged donation was made. The Crown relied upon that evidence at trial and the Tax Court dismissed the taxpayer’s appeal. The taxpayer appealed to the Federal Court of Appeal arguing, in part, that the Crown should have amended it pleadings if it intended to rely upon the US $30,000 deposit to support the disallowance of the alleged gift. The Court of Appeal dismissed the appeal from the bench holding that the deposit was simply evidence of the taxpayer that was relied upon by the Crown to support its assessing position, i.e., absence of donative intent. Costs were awarded to the Crown.
Goheen v. R. – FCA: Crown not required to amend pleadings to rely upon evidence disclosed by discovery of taxpayer – no reversible errorREAD MORE »

Trower v. R. – TCC: Amounts of dividends paid without proper corporate authority not taxable in the hands of former director/shareholder

May 16, 2019 By Bill Innes

Précis: The taxpayer and her estranged spouse were shareholders and directors of Cove BD Inc. (Cove). They separated in the Fall of 2015. The taxpayer ceased to be a director and shareholder of Cove on October 2, 2016 (or, possibly, September 30, 2016). In February of 2017 her husband caused Cove to declare retroactive dividends of $50, 342 payable to the taxpayer in 2016 (representing a taxable amount of $58,900). CRA assessed her in respect of the alleged dividends and she appealed to the Tax Court. The Tax Court Judge found that Cove could not legally pay dividends to the taxpayer in respect of the period of 2016 in which she was a director and shareholder without her concurrence, which she had not given. Accordingly the appeal was allowed. The parties were to bear their own costs.
Trower v. R. – TCC: Amounts of dividends paid without proper corporate authority not taxable in the hands of former director/shareholderREAD MORE »

Burton v. R. – TCC: Insufficient evidence of binding legal agreement to permit deduction of support payments in 2013

May 14, 2019 By Bill Innes

Précis: The taxpayer sought to deduct spousal support payments made in 2013. CRA allowed deductions for payments made in 2014 and 2015 on the basis that a finalized separation agreement was entered into in 2015 since under the provisions of the Income Tax Act deductions were permitted in “the year and previous year” in which the agreement was reached. CRA denied the deduction for 2013 on the basis that no binding separation agreement was reached in either 2013 or in 2014. The taxpayer appealed to the Tax Court which agreed with CRA’s position and dismissed the taxpayer’s appeal, but without costs since this was an informal procedure appeal.
Burton v. R. – TCC: Insufficient evidence of binding legal agreement to permit deduction of support payments in 2013READ MORE »

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