Blogue

Rowe v. R. - TCC: Gross Negligence Penalties Affirmed on Fiscal Arbitrator Client

7 juillet 2017 By Bill Innes

Précis: This is a Fiscal Arbitrators case with two twists. Mr. Rowe was a professional accountant (CGA). He claimed the large Fiscal Arbitrators loss in 2009 in order to carry it back to prior taxation years where he had unsuccessfully attempted to claim bogus charitable donations. The only issue in this appeal was whether gross negligence penalties were applicable. Not surprisingly, the Court held that they were and dismissed the appeal. In view of Mr. Rowe’s contrition on the stand, among other factors, the Court did not award costs.
Rowe v. R. - TCC: Gross Negligence Penalties Affirmed on Fiscal Arbitrator ClientPlus >

Grant v. R. - TCC: Court recommends waiver of penalties and interest - unacceptable processing delay by CRA

7 juillet 2017 By Bill Innes

Précis: Mr. Grant was the director of a company, RII Holdings Inc. (“RII”), that went through a long, messy and convoluted bankruptcy proceeding. He attempted to resist liability on the basis of a number of complex defences, including arguing that he had resigned as a director more than two years before the date of the assessment, none of which were accepted by the Court. The Court did take the somewhat unusual step of recommending that the Minister consider waiving penalties and interest because of “unacceptable processing delay on the part of CRA”. As a result the appeal was dismissed but there was no order of costs even though this was a general procedure appeal.
Grant v. R. - TCC: Court recommends waiver of penalties and interest - unacceptable processing delay by CRAPlus >

Liu v. R. - TCC: Court rejects gross negligence penalties on unreported income

6 juillet 2017 By Bill Innes

Précis: Mr. Liu was assessed with respect to unreported income for the 2010 and 2011 taxation years as well as gross negligence penalties in respect of such unreported business income. At or before trial the Crown made substantial concessions on the amount of unreported income. In addition, the Court allowed somewhat modest adjustments to the expenses Mr. Liu was entitled to claim. On balance the Court found that this was not an appropriate case for the imposition of gross negligence penalties and vacated the penalties imposed for 2010 and 2011. Although this was a general procedure case, the Court decided to make no order as to costs.
Liu v. R. - TCC: Court rejects gross negligence penalties on unreported incomePlus >

Grimes v. R. - TCC: Taxpayer awarded 25% of solicitor-client costs on valuation issue

6 juillet 2017 By Bill Innes

Précis: The taxpayer disputed CRA’s valuation of shares owned by a family trust on its deemed disposition date. Ultimately the Tax Court substantially reduced the CRA valuation. In this motion dealing with costs the taxpayer asked for costs in excess of the tariff, i.e., 75% ($155,856.83) of its solicitor-client costs, plus 100% of its disbursements (largely expert witness fees). The Court concluded that this was an appropriate case for costs in excess of the tariff, largely because of the significant monetary success of the taxpayer, but concluded that an award of 25% ($52,000) of its solicitor-client costs, plus 100% of its disbursements was more appropriate.
Grimes v. R. - TCC: Taxpayer awarded 25% of solicitor-client costs on valuation issuePlus >

CRA Announces it will not seek leave to appeal the FCA’s BP Canada Energy decision

8 juin 2017 By Bill Innes

Précis: The decision of the Federal Court of Appeal in BP Canada Energy v. Canada (National Revenue) (March 30, 2017 – 2017 FCA 61, Nöel C.J. (author), Stratas, Boivin JJ.A.) was blogged earlier on this site. The précis read: The Federal Court of Appeal has reversed the Federal Court’s decision that held that corporate taxpayers can be required to produce their internal tax accrual working papers (“TAMPs”). This may be one of the most important cases in several years on the extent of the power CRA has in gathering private tax information compiled by Canadian businesses. The Chief Justice of the Federal Court of Appeal, who is a noted tax expert, has written an intellectually compelling decision. If the Supreme Court grants leave to appeal, which I think highly likely, it is difficult to predict what the Court will do. If I were a betting person, I would be inclined to think that the McLachlin Court, which has always exhibited a balanced, pragmatic approach in tax cases, will accept the analysis of Chief Justice Nöel.
CRA Announces it will not seek leave to appeal the FCA’s BP Canada Energy decisionPlus >

Ferlaino v. R. - FCA: Stock option benefits denominated in US Dollars computed at exchange rate when exercised

25 mai 2017 By Bill Innes

Précis: The taxpayer was granted employee stock options denominated in US dollars. When he exercised the options he reported the benefit based on the exchange rate prevailing at the date of the grant of the options. CRA assessed him with an employment benefit based on the exchange rate prevailing at the date of the exercise of the options. He appealed unsuccessfully to the Tax Court and then appealed to the Federal Court of Appeal. The Court of Appeal dismissed the appeal from the bench, with costs, holding that the Tax Court had made no reviewable error.
Ferlaino v. R. - FCA: Stock option benefits denominated in US Dollars computed at exchange rate when exercisedPlus >

Groves v. R. - TCC: Mother, sole payer of support, cannot claim tax credits for one of two children

24 mai 2017 By Bill Innes

Précis: Ms. Groves and her former spouse had joint custody of the two children of the marriage. They separated in 2011 and under the original Separation Agreement she was to pay child support to her former spouse. Under an amended Separation Agreement executed in 2015 they were each to pay child support. Ms. Groves claimed the Canada Child Tax Benefit in 2014 in respect of one child. CRA denied the claim and Ms. Groves appealed to the Tax Court. The Court held that the case law was clear that where only one parent pays child support the parent paying support is not entitled to the Tax Benefit. Thus the appeal was dismissed. There was no order as to costs since this was an informal procedure appeal.
Groves v. R. - TCC: Mother, sole payer of support, cannot claim tax credits for one of two childrenPlus >

Ngai v. R. - TCC: Taxpayer purchased house as bare trustee for nephew, entitled to New Housing Rebate

23 mai 2017 By Bill Innes

Précis: In March of 2012 Ms. Ngai, a real estate agent, signed an agreement to purchase a condominium along with one of her clients. The client backed out and her nephew, Mr. Ng, took the client’s place. The evidence was that her nephew intended to occupy the condo as his primary residence and that Ms. Ngai was on title (along with her husband, Mr. Kennedy) as a bare trustee. The sale closed in December of 2012. The nephew decided that the commute was too long and put the condo up for lease and then for sale. The agreement of purchase and sale was signed in January of 2013 and the sale closed in February of 2013. Ms. Ngai applied for a New Housing Rebate which CRA refused. She appealed to the Tax Court. The Court accepted her evidence, and that of her nephew, and allowed her appeal. There was no order as to costs since this was an informal procedure appeal.
Ngai v. R. - TCC: Taxpayer purchased house as bare trustee for nephew, entitled to New Housing RebatePlus >

The Armour Group v. R. - TCC: Lease cancellation fee of $2.24 million not deductible

12 mai 2017 By Bill Innes

Précis: In a complex land transaction with the Province of Nova Scotia the taxpayer claimed to have paid $2.24 million by way of set off to cancel a ground lease with the Province under which its wholly-owned subsidiary, Founders Square Limited (“FSL”), was the tenant. FSL acted as a bare trustee for the taxpayer and the taxpayer claimed to deduct the payment made by FSL as a business expense. CRA denied the deduction as being on account of capital, or alternatively, a non-deductible pre-payment of rent. The Tax Court held that the payment was on account of capital and dismissed the appeal with costs to CRA.
The Armour Group v. R. - TCC: Lease cancellation fee of $2.24 million not deductiblePlus >

Heron v. R. - TCC: Limited portions of the Crown’s Reply struck

12 mai 2017 By Bill Innes

Précis: In its Reply the Crown pleaded that the taxpayer had been involved in criminal activity for which he was charged and convicted. The taxpayer moved to strike the impugned portions of the Reply. The taxpayer was modestly successful in that two paragraphs were struck that were pleadings of argument, and not fact. In addition one paragraph detailing the sentence the taxpayer received in the criminal proceeding was struck. The balance of the impugned pleading was not struck. There was no order as to costs.
Heron v. R. - TCC: Limited portions of the Crown’s Reply struckPlus >

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