Blogue

Barrick Gold v. R. - TCC: Profits on gold hedges formed part of gross resource profits

16 février 2017 By Bill Innes

Précis: The only issue in this appeal was whether a profit of roughly $57,000,000 that Barrick earned in closing out gold forward contracts formed part of its gross resource profits. The Minister denied that treatment and Barrick appealed to the Tax Court. The Tax Court in a nutshell held that the profits on the forward contracts “were an integral part of the Appellant’s business of producing and processing gold ore and therefore that the profit that arose from closing out the Contracts were sufficiently connected to those activities to constitute income from that source and therefore are properly part of its gross resource profits in 1998. [para. [40]” As a result the appeal was allowed with costs.
Barrick Gold v. R. - TCC: Profits on gold hedges formed part of gross resource profitsPlus >

North Shore Power v. R. - TCC: No ITCs on Credit Memos which were held to be “credit notes”

15 février 2017 By Bill Innes

Précis: The taxpayer paid GST in respect of several contracts with a supplier, Menova. 8 of the contracts were completed, the balance were not. In respect of the uncompleted contracts Menova issued Credit Memos. Subsequently Menova went bankrupt. The Minister treated the Credit Memos as “credit notes” for the purposes of section 232 of the Excise Tax Act (“ETA”), with the result that the taxpayer paid $338,412.50 in HST to Menova, but was allowed ITCs of only $78,620.00 relating to the 8 completed contracts and no ITCs for any of the Cancelled Contracts. The sole issue was whether the disallowed Credit Memos qualified as “credit notes” for the purposes of the ETA.
North Shore Power v. R. - TCC: No ITCs on Credit Memos which were held to be “credit notes”Plus >

9124-0515 Québec v. R - TCC: No ITC’s on $310,000 RV - not used primarily for commercial purposes

15 février 2017 By Bill Innes

Précis: The taxpayer purchased a very expensive recreational vehicle in 2012: [10] On July 2, 2012, the appellant acquired an Itasca-brand vehicle, a 2012 Ellipse, for $310,000. The sales contract indicated that a recreational vehicle had been traded in at a value of $32,400. The sole issue in this appeal was whether the taxpayer acquired the vehicle for use primarily in commercial activities, as required by paragraph 199(2)(a) of the Excise Tax Act (“ETA”).
9124-0515 Québec v. R - TCC: No ITC’s on $310,000 RV - not used primarily for commercial purposesPlus >

Life Choice Ltd. v. R. - TCC: Unconventional formulations of a naturopath are not SRED

14 février 2017 By Bill Innes

Précis: The taxpayer was operated by a naturopathic physician, Dr. Eldon Dahl. At issue were expenses it incurred in developing drugs designed by Dr. Dahl for the purposes of combating very serious diseases, specifically stage IV Cancer, full-blown AIDS and multiple sclerosis. While the taxpayer claimed anecdotal evidence of success, it did not introduce any evidence of research that complied with the normal rules of scientific method. The Tax Court dismissed the appeal on the basis that the pursuit of scientific method was, on the basis on long established jurisprudence, a prerequisite to any SRED claim. There was no order as to costs since this was an informal procedure appeal.
Life Choice Ltd. v. R. - TCC: Unconventional formulations of a naturopath are not SREDPlus >

Société Générale v. R. - FCA: Article XX(2) of Canada-Brazil Treaty gives tax credit on net income, not gross

9 février 2017 By Bill Innes

Précis: Here the taxpayer was arguing that the specific language of the “tax sparing provision” found in Article XXII(2) of the Canada-Brazil Tax Convention provided a tax credit in Canada on the amount of the gross bond interest taxable in Brazil, not the next interest actually taxed in Canada. The Tax Court ruled that the credit only applied to the net income subject to tax in Canada. The Federal Court of Appeal dismissed the appeal from the bench with costs to the Crown both in the Court of Appeal and the Tax Court.
Société Générale v. R. - FCA: Article XX(2) of Canada-Brazil Treaty gives tax credit on net income, not grossPlus >

Canada (National Revenue) v. KPMG LLP - FCt: Court refuses to set aside an ex parte requirement Order

8 février 2017 By Bill Innes

Précis: In 2013 Justice Nöel granted an ex parte application ordering KPMG LLP to produce documentation about certain unnamed persons involved in a tax structure known as the Offshore Company Structure [the “Unnamed Persons Requirement”]. KPMG LLP moved in 2016 before Chief Justice Crampton to cancel or quash that order on the basis of the confidentiality requirement contained in Rule 208 of the Chartered Professional Accountants of Ontario’s Code of Professional Conduct [the “Code”] as well as the fact that the provision of the Income Tax Act in question, subsection 231.2(3),was amended effective June 26, 2013, to eliminate the Court’s ability to issue orders under that provision on an ex-parte basis.
Canada (National Revenue) v. KPMG LLP - FCt: Court refuses to set aside an ex parte requirement OrderPlus >

2252493 Ontario v. R. - TCC: Appellant liable for HST - failed to prove purchaser of real estate a registrant

7 février 2017 By Bill Innes

Précis: The taxpayer sold real property to Mayling Holding Inc. (“Mayling”) by agreement of purchase and sale executed in 2011. The transaction closed in 2012. The taxpayer did not collect and remit HST on the $3,200,000 purchase price. CRA assessed the taxpayer for $416,881.83 (the “HST Amount”) on the basis that Mayling was the recipient of the supply and was not an HST registrant. The taxpayer argued that on the date of closing Mayling held the property for the benefit of one of two possible registrants, “Baziz YYC” or “840 Holdings”.
2252493 Ontario v. R. - TCC: Appellant liable for HST - failed to prove purchaser of real estate a registrantPlus >

By-Pass Ranch Ltd. v. R. - TCC: Taxpayer not engaged in commercial activity - no ITCs

7 février 2017 By Bill Innes

Précis: The taxpayer claimed ITCs totalling roughly $11,000 for the period from April 1, 2007 and June 30, 2011. CRA denied the claim on the basis that it was not supported by documentation and there was no commercial activity by the taxpayer during this period. It also assessed a gross negligence penalty of roughly $3,000. The Court dismissed the appeal holding that the expenses claimed were fictitious and that the taxpayer carried on no commercial activity during the period in question. There was no award of costs since this was an informal procedure appeal.
By-Pass Ranch Ltd. v. R. - TCC: Taxpayer not engaged in commercial activity - no ITCsPlus >

Joel Theatrical Rigging Contractors (1980) v. R. - Work on theatre curtains not SRED

6 février 2017 By Bill Innes

Précis: This case dealt with whether two projects dealing with the control of theatrical curtains involved SRED. The 2008 project involved designing a mechanism to control the rate of descent of a fire protection curtain; the 2009 project involved designing a manual override mechanism for a stage curtain. The Tax Court applied the well known tests developed by Bowman J. (as he then was) and concluded that the taxpayer failed to prove that the projects, while innovative and creative, “ did not constitute routine engineering, that there was technological uncertainty in respect of the Fire Curtain Project and the Manual Override Project, that the scientific method was followed, and that technological advancements were achieved in respect of each project.” [para. [53]].
Joel Theatrical Rigging Contractors (1980) v. R. - Work on theatre curtains not SREDPlus >

Aitchison Professional Corporation v. R. - TCC: No summary hearing on tax debtor’s transfer of right to invoice

30 janvier 2017 By Bill Innes

Précis: The taxpayer corporation invoiced for the legal services of its principal, James Aitchison, a lawyer who owed in excess of $2,000,000 to the Crown in unpaid income taxes. CRA assessed the corporate taxpayer pursuant to subsection 160(1) of the Act on the basis that its principal had transferred in excess of $2,000,000 of assets to it at a time when he was indebted to the Crown for unpaid income taxes. The taxpayer corporation applied for the determination of two points of law under Rule 58 of the Tax Court of Canada (General Procedure) Rules.
Aitchison Professional Corporation v. R. - TCC: No summary hearing on tax debtor’s transfer of right to invoicePlus >

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