Blogue

Morrison v. R. – TCC: The last charitable tax shelter bites the dust (maybe?)

15 novembre 2018 By Bill Innes

Précis: Since the Klotz decision (2004 TCC 147) the Tax Court has lived through a seemingly never-ending series of charitable gift cases. Morrison may well be the last. The plan involved an alleged donation in kind of pharmaceuticals to a registered charity. The unusual wrinkle was that the donors did not purchase the pharmaceuticals, rather they acquired them as beneficiaries of a discretionary trust thus circumventing the anti-avoidance rules put in place when these plans first surfaced. Unfortunately for Mr. Morrison the Tax Court found that, on the facts, he never acquired title to the pharmaceuticals and therefore never made a gift of them. He was however entitled to the cash donated to the charity since the Tax Court held that there was no obligation to make a cash donation in order to participate in the plan. No costs were awarded in the Morrison appeal since he was partially successful. In the companion Eisbrenner appeal the cash was not at issue and his appeal was dismissed with costs.
Morrison v. R. – TCC: The last charitable tax shelter bites the dust (maybe?)Plus >

Lavalee v. R. – TCC: Taxpayer not a “shared-custody” parent because she had custody 57.29% of the time as opposed to her former spouse who had custody 42.71% of the time

14 novembre 2018 By Bill Innes

Précis: The taxpayer was denied full Canada Child Benefits on the basis that she and her former spouse were “shared-custody” parents. CRA made that determination on the basis that she had custody 57.29% of the time as opposed to her former spouse who had custody 42.71% of the time. The statutory test was whether custody was shared on “an equal or near equal basis”: paragraph 122.6(b) of the Act. Russell J. found that using a ratio of 57.29/42.71 the taxpayer had custody of the children 34% more than her former spouse. He found that such an overage failed to meet the “near equal” test and that CRA had applied the test incorrectly. Accordingly, he allowed Ms. Lavalee’s appeal, without costs.
Lavalee v. R. – TCC: Taxpayer not a “shared-custody” parent because she had custody 57.29% of the time as opposed to her former spouse who had custody 42.71% of the timePlus >

Akanda Innovation Inc. v. R. – FCA: Interests of justice favoured extending time to apply to set aside default Judgments – decision of Tax Court set aside

13 novembre 2018 By Bill Innes

Précis: The amounts at issue in this appeal were large: [3] Akanda was reassessed to deny scientific research and experimental development expenditures in excess of $6 million and related investment tax credits in excess of $1.5 million collectively for its 2007, 2008, 2009 and 2010 taxation years. After a rather convoluted history the appeals were dismissed by the Tax Court for failure to appear at a status hearing. The taxpayer retained new counsel who moved for an extension of time to bring an application to set aside the default judgments as well as moving to set aside the default judgements. The Tax Court denied the motion for an extension of time on the dual bases that the respondent would be prejudiced and that there was no reasonable explanation of the delay in bringing the application. The Court of Appeal found that there was no evidence of prejudice to the respondent and that the interests of justice favoured granting the extension of time. The matter was referred back to the Tax Court for a determination whether the default judgments should be set aside. Upon agreement of the parties Akanda was ordered to pay $5,000 in costs to the Crown.
Akanda Innovation Inc. v. R. – FCA: Interests of justice favoured extending time to apply to set aside default Judgments – decision of Tax Court set asidePlus >

Dicks v. R. – TCC: Monthly payments to a former spouse for investment purposes were not deductible as “spousal support”.

12 novembre 2018 By Bill Innes

Précis: Mr. Dicks paid $2,400 ($200 per month) to his former spouse in 2015 pursuant to a written separation agreement: [4] With respect to any $200 monthly payments, paragraph 8 of the agreement provides, under the heading “Mutual Fund”, that, The husband agrees that he will make a contribution to an investment of the wife’s choice in the wife’s name in the amount of $200 per month, commencing January 15, 2012 until such time as the husband reaches the age of 60. He sought to deduct the payments as spousal support and CRA denied the deduction on the basis that they were not “support” payments. Mr. Dicks appealed to the Tax Court which denied his appeal, holding that the payments were not to satisfy “alimentary needs”. There was no order as to costs since this was an informal procedure appeal.
Dicks v. R. – TCC: Monthly payments to a former spouse for investment purposes were not deductible as “spousal support”.Plus >

Ross v. R. – TCC: Five payments by lobster fisherman to former spouse were deductible as periodic spousal support payments

9 novembre 2018 By Bill Innes

Précis: Mr. Ross, a lobster fisherman, agreed to make 5 payments to his former spouse: $20,000.00 upon signing a separation agreement on November 26, 2015, a transfer in kind of a 2011 Jeep worth $22,000.00 in December 2015 and 3 further payments by cheque: $4,000.00 on December 8, 2016, $3,000.00 on December 16, 2016 and $3,000.00 on December 31, 2016. [Para. [2]] CRA allowed the last three payments made in 2016 but denied the 2015 payments on the basis that they were not periodic payments for the maintenance of a former spouse. Bocock J. allowed the appeal on the basis that the payments were periodic and tailored to meet the taxpayer’s occupation as a lobster fisherman where the bulk of his income was earned in late fall and early winter with no income earned in the balance of the year. Mr. Ross was awarded costs of $150.00.
Ross v. R. – TCC: Five payments by lobster fisherman to former spouse were deductible as periodic spousal support paymentsPlus >

R. v. Gerbro Holdings Company - FCA: CRA’s appeal dismissed from the bench – Income from offshore funds not attributable under section 94.1 of the Income Tax Act (the Act)

8 novembre 2018 By Bill Innes

Précis: In 2016 Associate Chief Justice Lamarre of the Tax Court of Canada (2016 TCC 173) allowed the taxpayer’s appeal from reassessments including in its income for 2005 and 2006, pursuant to section 94.1 of the Act, income from offshore funds in which it had invested. The Crown appealed to the Federal Court of Appeal which dismissed its appeal from the Bench with costs.
R. v. Gerbro Holdings Company - FCA: CRA’s appeal dismissed from the bench – Income from offshore funds not attributable under section 94.1 of the Income Tax Act (the Act)Plus >

MNR v. Iggillis Holdings – SCC: Leave to appeal denied on issue of Advisory Common Interest Privilege

7 novembre 2018 By Bill Innes

Précis: The Supreme Court of Canada has declined to grant leave to appeal the decision of the Federal Court of Appeal in Iggillis Holdinds Inc. v. Canada (National Revenue), 2018 FCA 51, which upheld a claim of Advisory Common Interest Privilege, reversing a decision of the Federal Court.
MNR v. Iggillis Holdings – SCC: Leave to appeal denied on issue of Advisory Common Interest PrivilegePlus >

Phénix v. R. – TCC: Taxpayer’s failure to report dividend income did not amount to gross negligence – penalty removed

6 novembre 2018 By Bill Innes

Précis: The appellant operated a fair sized business (turnover of roughly $10,000,000 annually) through a corporation. He was normally remunerated by a combination of salary and dividends in amounts determined by his internal and external accountants. In 2013 he omitted to report a dividend he received. CRA assessed gross negligence penalties pursuant to subsection 163(2) of the Income Tax Act. Boyle J. found that the circumstances did not amount to gross negligence and directed that the penalty be removed.
Phénix v. R. – TCC: Taxpayer’s failure to report dividend income did not amount to gross negligence – penalty removedPlus >

Archives - novembre 2018

Archives