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Archives - avril 2019

Jackson v. R. – TCC: Taxpayer’s motion for summary judgment based on a 5 day delay by the Crown dismissed with costs against the taxpayer
30 avril 2019 By Bill Innes
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Précis: Counsel for the taxpayer brought a motion under Rule 21(4) of the Tax Court of Canada Rules (Informal Procedure) for failure by CRA to serve the Reply to the Notice of Appeal within the 5 day period following the filing of the Reply by CRA with the Court pursuant to Rule 6(2). While such motions are technically possible I can never recall one having been granted. This case was no exception. The motion was dismissed with costs of $250 payable within 30 days of the Court’s order, notwithstanding the fact that this was an informal procedure appeal.
Jackson v. R. – TCC: Taxpayer’s motion for summary judgment based on a 5 day delay by the Crown dismissed with costs against the taxpayerPlus >
Kirschke v. R. – TCC: Application to extend time to file objection unnecessary – objection was filed on time
29 avril 2019 By Bill Innes
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Précis: Ms. Kirschke applied for an extension of the time to file notices of objection in respect of reassessments of her HST liability for the periods ending December 31, 2010, December 31, 2011, December 31, 2012, December 31, 2013 and December 31, 2014. She filed a notice of objection to the reassessments on May 24, 2018, almost two years after the date of the reassessments. [Note: There seems to be a typo in paragraph [1] of the Reasons which read “May 24, 2016” not “May 24, 2018”.] Ms. Kirschke had last filed a HST return in 2014. In 2015 she moved to a new address which CRA had on file since she used it on her current income tax returns. The disputed notices of reassessment for HST were sent to her old address. Ms. Kirschke testified that she did not become aware of the reassessments until she received a collection letter in 2018 and that she filed notices of objection shortly thereafter. The Court held that that notices of objection were filed in a timely manner since CRA did not send the reassessment to the last address known to them at the time.
Kirschke v. R. – TCC: Application to extend time to file objection unnecessary – objection was filed on timePlus >
Morrissey v. R. – FCA: Different panel of FCA endorses 45% shared custody test from Lavrinenko
26 avril 2019 By Bill Innes
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Précis: In the decision of Lavrinenko v. The Queen, 2019 FCA 51, blogged on this site another panel of the Federal Court of Appeal endorsed a 45% test for shared custody for the purpose of the Canada Child Tax Benefit and the GST/HST Credit. In Morrissey the presiding panel endorsed the result in Lavrinenko. Thus Ms. Morrissey’s appeal was allowed since her shared custody partner, Mr. Murphy, only had custody for 42.86% of the time. Ms. Morrissey was awarded her costs.
Morrissey v. R. – FCA: Different panel of FCA endorses 45% shared custody test from LavrinenkoPlus >
Lavrinenko v. R. – FCA: Federal Court of Appeal sets 45% floor for “shared custody” rule for the Canada Child Tax Benefit (CCTB) and the GST/HST Credit
25 avril 2019 By Bill Innes
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Précis: “Shared custody parents” are entitled to split the Canada Child Tax Benefit and GST/HST Credits in respect of children whose custody they share on an equal or near equal basis. The courts have long held that “shared custody” does not require and exact 50/50 percentage split. The question on this appeal (and the appeal in Morrissey v. The Queen, 2019 FCA 56 which was released on the same day) was how far the flexibility of “near equal” extends. The taxpayer was unsuccessful in the Tax Court and appealed to the Federal Court of Appeal. Mr. Lavrinenko submitted that he had custody of his child 41% of the time which he argued should suffice for “near equal”. The Court of Appeal found that was not sufficient to establish near equal shared custody. While the precise rule enunciated by the Court is somewhat more complex it seems to boil down to a 45% floor for based on simple mathematical rounding principles. Thus Mr. Lavrinenko’a appeal was dismissed. Although the Crown sought costs the Court of Appeal declined to award any.
Lavrinenko v. R. – FCA: Federal Court of Appeal sets 45% floor for “shared custody” rule for the Canada Child Tax Benefit (CCTB) and the GST/HST CreditPlus >
Plains Midstream Canada ULC v. R. – FCA: Tax Court did not err in denying taxpayer interest deduction claimed
24 avril 2019 By Bill Innes
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Précis: This is an appeal from a decision of the Tax Court blogged earlier on this site. As part of a complex restructuring of Dome Petroleum Limited (Dome Petroleum) and Dome Canada Limited (Dome Canada) in the late 1980’s and early 1990’s, Amoco Canada Petroleum Company Ltd. (the predecessor of the appellant corporation) assumed liability for a $225 million loan payable by Dome Canada to Arctic Petroleum Corporation of Japan in 2030. As consideration for the assumption of such liability Amoco received $17.5 million and additional consideration. In this appeal the taxpayer argued that it was entitled to deduct the difference between $225 million and $17.5 million as a form of interest. Although the original claim was based on a straight-line deduction at trial the appellant reduced its interest deduction claim to $1,043,700 per year. This amount was determined by applying a simple interest rate of 5.964% to the $17.5 million. The original expense claimed had been roughly $4.8 million per year. In characterizing the deduction claimed as simple interest the taxpayer relied upon subsection 16(1) and paragraph 20(1)(c) of theIncome Tax Act. The Court rejected the taxpayer’s “economic substance” argument holding that subsection 16(1) did not operate to convert the difference between $225 million and $17.5 million into an interest expense. In obiter the Court observed that the payment might be an additional element of the cost of the shares of Dome Petroleum acquired by the taxpayer. As a result the appeal was dismissed by the Tax Court. Plains Midstream appealed to the Federal Court of Appeal. The Court of Appeal dismissed the appeal with costs. The panel accepted the analysis of the Tax Court.
Plains Midstream Canada ULC v. R. – FCA: Tax Court did not err in denying taxpayer interest deduction claimedPlus >
Savics v. R. – TCC: Settlement agreement precluded the taxpayer from disputing the inclusion of partnership gains in his income
23 avril 2019 By Bill Innes
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Précis: This case involves some ingenious and complex legal argumentation but boils down to the question whether a Tax Court settlement entered into in 2014 between the taxpayer (and many others) and CRA allowed the taxpayer to claim deductions in 1997 and 1998 from a limited partnership of which he was a member but precluded CRA from adding partnership gains to his income during the same period. CRA reassessed the taxpayer adding such gains to his income and the taxpayer appealed the reassessments again to the Tax Court. The 1997 appeal was quashed on consent for a technical deficiency. The 1998 appeal was dismissed on the basis that the settlement agreement permitted CRA to reassess the taxpayer’s 1998 taxation year to include partnership gains in his income. Accordingly the appeal was dismissed with costs.
Savics v. R. – TCC: Settlement agreement precluded the taxpayer from disputing the inclusion of partnership gains in his incomePlus >
Victoria Five Star Cleaning Ltd. v. R. – TCC: Cleaners were independent contractors and not engaged in insurable or pensionable employment
22 avril 2019 By Bill Innes
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- Bill Innes on Current Tax Cases
- Employment Insurance/CPP
Précis: The appellant provided workers (the Workers) for janitorial services in commercial and residential premises. The sole question before the Tax Court was whether the Workers were independent contractors. The Tax Court held that they were independent contractors, not engaged in insurable or pensionable employment, and allowed the taxpayer’s appeal. There was no order as to costs.
Victoria Five Star Cleaning Ltd. v. R. – TCC: Cleaners were independent contractors and not engaged in insurable or pensionable employmentPlus >
Viterra Inc. v. R. – FCA: FCA declines to interfere with Tax Court’s decision not to permit a Rule 58 determination of statute-barring issue
17 avril 2019 By Bill Innes
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- Bill Innes on Current Tax Cases
- Commodity Tax
Précis: This GST case was blogged in the Tax Court last year on this site. The taxpayer, formerly known as the Saskatchewan Wheat Pool, administered three pension funds during the periods from August 1, 2003 to July 31, 2004 and August 1, 2004 to July 31, 2005. It used the services of investment managers to provide services (the Investment Services) to the funds. CRA reassessed the taxpayer in 2016 allowing investment tax credits on the fees paid to the investment manages but imposing GST on the supply of the Investment Services by the taxpayer to the funds. The taxpayer applied pursuant to Rule 58 for the determination of a question: ... The Tax Court ruled that it did not have enough evidence to answer the question and ruled that the matter should be determined by the trial judge. The taxpayer and the Crown both appealed to the Federal Court of Appeal arguing that the Motion Judge erred in holding he did not have enough evidence to answer the question. The Crown also argued on appeal that the Judge erred in law in his interpretation of the limits on the Minister’s reassessing powers under subsection 298(3) of the Excise Tax Act, in response to a notice of objection, after the expiry of the normal limitation period. The Court of Appeal dismissed the appeal holding that the Motion Judge was owed a high degree of deference in the exercise of his discretion when considering a Rule 58 question. The Crown’s cross-appeal was also dismissed as it was an appeal of the reasons, not the decision. Thus both the appeal and cross-appeal were dismissed without costs.
Viterra Inc. v. R. – FCA: FCA declines to interfere with Tax Court’s decision not to permit a Rule 58 determination of statute-barring issuePlus >
Mammone v. R. – FCA: Minister relied on a new factual basis for the reassessment after the normal reassessment period had expired – Tax Court reversed, appeal allowed.
15 avril 2019 By Bill Innes
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Précis: The taxpayer transferred his pension funds to a new plan in 2009. In 2013 the Minister send a notice revoking the registration of the new plan and reassessed the taxpayer accordingly. In 2017 the Minister concluded that the first notice of revocation was defective and sent a second notice of revocation, retroactive to 2009. The taxpayer appealed unsuccessfully to the Tax Court. The taxpayer then appealed to the Federal Court of Appeal which allowed the appeal, with costs, holding that the 2013 reassessment was statute-barred in that the Minister could not rely upon the purported 2017 notice of revocation.
Mammone v. R. – FCA: Minister relied on a new factual basis for the reassessment after the normal reassessment period had expired – Tax Court reversed, appeal allowed.Plus >
Peerenboom v. R. – TCC: Court did not accept taxpayer’s evidence that he received funds as agent for others
12 avril 2019 By Bill Innes
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Précis: The taxpayer received funds in 2007 and 2008 from a company (“Hive”) which CRA treated as income in his hands. The taxpayer argued that the funds were received by him as agent either for his wife or for a corporation he controlled. The Court rejected the taxpayer’s evidence with the exception of amounts paid to repair the shutters of a condo owned by his wife and rented by Hive (which the principal of Hive admitted had been damaged by one of his employees) ($27,385.00). As there was mixed success there was no order as to costs (subject to the parties’ right to make submissions within 30 days).
Peerenboom v. R. – TCC: Court did not accept taxpayer’s evidence that he received funds as agent for othersPlus >

Archives - avril 2019

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