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Positano v. R. – TCC: Estimate of kilometers driven by an employee was not good enough to support a deduction for a reasonable vehicle allowance

31 août 2018 By Bill Innes

Précis: The taxpayer and his brother both worked for a family company, Positano Paving. The company did snow clearance in the winter. The brothers shared the job of making “snow runs”, i.e., determining where within the “snowbelt” of Barry, Ontario customers required snow clearance. Snow runs were estimated to be between 90 and 100 kilometres. The brothers took snow runs on alternate days. The company paid them each an allowance of $9,100 as an estimate of the mileage they incurred during the winter season. The taxpayer did not report the amount thinking it was deductible in any event. CRA reassessed the taxpayer for 2012 and 2013 including the full amount in his income and not allowing any offsetting mileage expense. The taxpayer appealed to the Tax Court which dismissed his appeal. The Court held that his estimate of mileage expense was not a “reasonable vehicle allowance” and hence not deductible. There was no order as to costs since this was an informal procedure appeal.
Positano v. R. – TCC: Estimate of kilometers driven by an employee was not good enough to support a deduction for a reasonable vehicle allowancePlus >

Canada Without Poverty – CRA to appeal decision of Ontario Superior Court of Justice while changing policy limiting non-partisan charitable activities

30 août 2018 By Bill Innes

Précis: The Ministers of National Revenue and Finance jointly announced on August 15 that they will appeal the decision of the Ontario Superior Court of Justice which held that CRA’s policy with respect to non-partisan political activities by charities violated the Charter’s guarantee of freedom of expression. At the same time, they announced that they will act to allow greater non-partisan political expression by charities within their charitable objectives.
Canada Without Poverty – CRA to appeal decision of Ontario Superior Court of Justice while changing policy limiting non-partisan charitable activitiesPlus >

Armour Group Limited v. R. – FCA: Alleged lease cancellation payment not deductible

10 août 2018 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 taxpayer appealed to the Federal Court of Appeal which affirmed the decision of the Tax Court with costs to the Crown.
Armour Group Limited v. R. – FCA: Alleged lease cancellation payment not deductiblePlus >

Hillman v. R. – TCC: Court declines CRA’s application in RRSP strip cases to have Rule 58(1) determinations in respect of prior prosecutions of the promoters of the RRSP strips

9 août 2018 By Bill Innes

Précis: The taxpayers were all reassessed in respect of what CRA alleged were RRSP strips. The promoters of those strips were convicted in two separate criminal proceedings. CRA sought to have the Court make a determination under Rule 58 either that the taxpayers could not dispute the factual findings in one of the two criminal cases (the Kendall decision) on the basis of the abuse of process doctrine or, in the alternative, that the factual findings in the Kendall decision were prima facie evidence of the facts and conclusions listed in the Crown’s Reply. Justice Russell held that neither of the Crown’s proposed remedies were appropriate uses of Rule 58(1) and dismissed the application with one set of costs to the Appellants in accordance with the Tariff.
Hillman v. R. – TCC: Court declines CRA’s application in RRSP strip cases to have Rule 58(1) determinations in respect of prior prosecutions of the promoters of the RRSP stripsPlus >

Canada Without Poverty v. R. – OSCJ: CRA’s policy limiting non-partisan political activities of registered charities violates the Charter’s guarantee of freedom of expression

7 août 2018 By Bill Innes

Précis: CRA takes the position that a registered charity must confine its non-partisan political activities to not more than 10% of its resources. While it is not entirely clear from the reported decision it seems that the Applicant applied for a declaration invalidating this policy. Justice Morgan granted an immediate Declaration that the interpretation and enforcement by CRA of the “substantially all” requirement in s. 149.1(6.2) of the ITA by limiting to 10% a charitable organization’s use of its resources for political activities, as set out in the CRA Policy Statement, violates s. 2(b) of the Charter and is not saved by s. 1. He also ordered that CRA immediately cease interpreting and enforcing s. 149.1(6.2) in that way.
Canada Without Poverty v. R. – OSCJ: CRA’s policy limiting non-partisan political activities of registered charities violates the Charter’s guarantee of freedom of expressionPlus >

MacDonald v. R. – FCA: An intention to hedge is not a condition for hedging

3 août 2018 By Bill Innes

Précis: This case turned on the treatment of cash settlement payments of $9,936,149 made by Mr. MacDonald on a derivative contract in his 2004-2007 taxation years. Mr. MacDonald treated them as business losses, CRA assessed them as capital losses on a hedge of Bank of Nova Scotia shares owned by him. The Tax Court allowed Mr. MacDonald’s appeal and CRA appealed to the Federal Court of Appeal. The Court of Appeal allowed CRA’s appeal, with costs, holding that the Tax Court had erred in failing to follow the recent Tax Court decision in George Weston Limited v. The Queen, 2015 TCC 42 [George Weston].
MacDonald v. R. – FCA: An intention to hedge is not a condition for hedgingPlus >

Quinco Financial Inc. v. R. – FCA: Interest on a GAAR assessment commences to run on the balance-due date for taxation year involved, not the date the GAAR assessment is issued

2 août 2018 By Bill Innes

Précis: The taxpayer argued unsuccessfully in the Tax Court that interest on a GAAR assessment should not commence to run until the date of the issuance of the assessment. The taxpayer appealed to the Federal Court of Appeal which dismissed the appeal with costs.
Quinco Financial Inc. v. R. – FCA: Interest on a GAAR assessment commences to run on the balance-due date for taxation year involved, not the date the GAAR assessment is issuedPlus >

Fortnum v. R. – TCC: Taxpayer entitled to tax credit on tuition paid for 10 compulsory courses as part of a summer semester foreign MBA program

1 août 2018 By Bill Innes

Précis: The taxpayer pursued a one year MBA program at Notre Dame University in Indiana. At issue was the tuition of $21,577 CAD she paid for the summer semester in 2014. CRA denied the tuition tax credit on the basis that she paid for 10 separate courses in the summer semester and that the foreign tuition tax credit only applied to tuition for “a course”. Smith J. rejected the Crown’s arguments and allowed the taxpayer’s appeal. There was no order as to costs since this was an informal procedure appeal.
Fortnum v. R. – TCC: Taxpayer entitled to tax credit on tuition paid for 10 compulsory courses as part of a summer semester foreign MBA programPlus >

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