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High-Crest v. R. – TCC: Taxpayer not entitled to ITC’s

11 décembre 2017 By Bill Innes

Précis: The taxpayer operated a nursing home in Springhill, Nova Scotia. Most of the beds were underwritten by the Nova Scotia Department of Health (“NS Health). The taxpayer agreed with NS Health to build an extension for 20 additional beds. It received payments from NS Health that were to be used both for construction and to provide services to the residents of the facility. Since the taxpayer did the construction work it was regarded as a self-supply. It claimed input tax credits based on the value of the completed property. The input tax credits exceeded the amount of the output tax reported by the Appellant on the self‑supply. CRA denied the claim on the basis of section 191.1 of the Excise Tax Act which “prevents an overall net tax refund on the self‑supply by increasing the value of the addition for the purpose of computing the tax on the self‑supply” [para. 10]. The amount at issue was roughly $300,000.
High-Crest v. R. – TCC: Taxpayer not entitled to ITC’sPlus >

Hogg v. R. – TCC: Gross negligence penalties upheld in case of false business loss claim

7 décembre 2017 By Bill Innes

Précis: This is another in a long line of cases where the taxpayer unsuccessfully claimed fictitious business losses and was assessed gross negligence penalties. Mr. Hogg’s appeal to the Tax Court was dismissed. He know what business losses were and he did not have any. There was no order for costs.
Hogg v. R. – TCC: Gross negligence penalties upheld in case of false business loss claimPlus >

R. v. 407 ETR Concession – FCA: Policing services on Highway 407 were “municipal services” for GST/HST purposes

6 décembre 2017 By Bill Innes

Précis: The sole issue in this case was whether policing services provided by the Ontario Provincial Police along Highway 407 in Ontario were exempt “municipal services” for GST/HST purposes. The taxpayer claimed that they were exempt “municipal services” and was successful in the Tax Court. The Crown appealed to the Federal Court of Appeal. The Court of Appeal affirmed the decision of the Tax Court, dismissing the Crown’s appeals, with costs.
R. v. 407 ETR Concession – FCA: Policing services on Highway 407 were “municipal services” for GST/HST purposesPlus >

Lavrinenko v. R. – TCC: 40% does not qualify as “near equality” in shared custody situation

5 décembre 2017 By Bill Innes

Précis: Mr. Lavrinenko had shared custody of his son S along with his former spouse. CRA denied his claim for the Canada Child Tax Benefit and the Goods and Services Tax Credit /Harmonized Sales Tax Credit (the “Credits”) on the basis that he did not have custody of S on an equal or nearly equal basis with his former spouse. He appealed to the Tax Court. Justice Paris dismissed his appeal on the basis that his claim of 40% (or slightly less) custody of S did not meet the statutory requirements for the Credits since he and his former spouse did not share custody of S on an equal or nearly equal basis. There was no order as to costs as this was an informal procedure appeal.
Lavrinenko v. R. – TCC: 40% does not qualify as “near equality” in shared custody situationPlus >

Abdalla v. R. – TCC: Tax Court declines to set aside waivers

1 décembre 2017 By Bill Innes

Précis: The Crown moved to quash the appeals of Ms. Abdalla and 26 other taxpayers on the basis that each of them had executed an Agreement to be Bound and Waiver of Objection and Appeal Rights (the “Waiver”) in respect of a lead appeal known as Mariano v. The Queen, 2015 TCC 244. In Mariano the Court found that the donation plan at issue was a sham and dismissed the appeal. In Abdalla the taxpayers argued that the Waiver was ineffective for a variety of reasons. The Court rejected the various reasons proffered by the taxpayers and quashed their appeals, with costs to the Crown.
Abdalla v. R. – TCC: Tax Court declines to set aside waiversPlus >

Zara v. R. – TCC: 40% of time with shared custody parent amounted to “near equality”

1 décembre 2017 By Bill Innes

Précis: This is another in a long line of cases dealing with shared custody parents and their entitlement to child tax benefits. The test to be applied is whether the parent claiming the benefits had “near equality” of time spent having custody of the child. Justice Boyle found that on the facts of this case 40% (or perhaps slightly more) amounted to “near equality” and allowed Mr. Zara’s appeal. There was no order as to costs since this was an informal procedure appeal.
Zara v. R. – TCC: 40% of time with shared custody parent amounted to “near equality”Plus >

Dingman v. R. – TCC: Court rejects “leased employee” scheme as sham

23 novembre 2017 By Bill Innes

Précis: Mr. Dingman got involved in a “leased employee” scheme under which he assigned all of his income from services to Dannea Business Services Inc. (“Dannea”). Dannea maintained an account from which Mr. Dingman was able to draw the funds (less a 7% commission). Mr. Dingman reported no income from employment or business income in the years under appeal. CRA included the amounts paid to Dannea in his income and imposed gross negligence penalties. The Tax Court upheld CRA’s reassessments and dismissed Mr. Dingman’s appeal with costs of roughly $5,000.
Dingman v. R. – TCC: Court rejects “leased employee” scheme as shamPlus >

Kassa v. R. – TCC: Home health care service provider entitled to reasonable car expenses

22 novembre 2017 By Bill Innes

Précis: Ms. Kassa worked as a home health care service provider which required her to have the use of a car to drive to visit her clients. She claimed various deduction including roughly $10,000 per year in car expenses. CRA denied her claims and she appealed three taxation years to the Tax Court. The Court allowed her appeal in part. She was entitled to a reasonable allowance for car expenses which worked out to roughly 40% of the amount she had claimed.. Although this was an informal procedure appeal the Court took the unusual step of awarding Ms. Kassa her costs.
Kassa v. R. – TCC: Home health care service provider entitled to reasonable car expensesPlus >

Univar Holdco Canada v. R. – FCA: FCA rejects Tax Court’s odd interpretation of GAAR

14 novembre 2017 By Bill Innes

Précis: This case dealt with the application of the general anti-avoidance rule (the “GAAR”) to certain transactions that would otherwise allow a non-resident person, immediately following an arm’s length acquisition of control of a Canadian corporation, to extract surplus from that corporation (which had accumulated prior to its acquisition of control) without triggering a dividend under section 212.1 of the Income Tax Act (the “Act”).
Univar Holdco Canada v. R. – FCA: FCA rejects Tax Court’s odd interpretation of GAARPlus >

Plains Midstream v. R. – TCC: Assumption of debt did not give rise to interest expense

23 octobre 2017 By Bill Innes

Précis: 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 the Income Tax Act.
Plains Midstream v. R. – TCC: Assumption of debt did not give rise to interest expensePlus >

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