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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 >

Barejo Holdings v. R. – TCC: Notes are “debt” for the purposes of paragraph 94.1(1)(a) of the Act – Barejo, the Neverending Story - Perhaps

24 octobre 2018 By Bill Innes

Précis: This is the third in a series of Barejo cases. In the first decision, issued on November 4, 2015, Boyle J. was asked on a Rule 58 application whether certain instruments were “debt” for the general purposes of the Income Tax Act (the Act). He answered yes. The Appellant was dissatisfied and appealed to the Federal Court of Appeal which dismissed the two consolidated appeals from the Bench on November 29, 2016 on the basis that hearing the appeals: “would serve no useful purpose and give rise to an improper use of judicial resources” [para. [15]]. Both of these decisions were previously blogged on this site. Barejo applied for leave to appeal to the Supreme Court of Canada. That application was dismissed on June 22, 2017 without reasons, and with costs, by a full 9 person panel of the Supreme Court. In this decision Barejo and the Crown asked Boyle J. to rule on whether the same Notes that were at issue in Barejo No. 1 were “debt” for the purposes of paragraph 94.1(1)(a) of the Act. Justice Boyle held that they were “debt” for such purposes. Costs were reserved to the trial judge.
Barejo Holdings v. R. – TCC: Notes are “debt” for the purposes of paragraph 94.1(1)(a) of the Act – Barejo, the Neverending Story - PerhapsPlus >

Laliberté v. R. – TCC: Cirque du Soleil sends its boss over the moon (almost) but CRA is not amused – a reassessment darkens his re-entry

23 octobre 2018 By Bill Innes

Précis: M. Laliberté, the Appellant, is the founder of Cirque du Soleil and in 2009 (the relevant tax year) was its controlling shareholder. In 2009 Cirque paid for M. Laliberté spending 12 days on a trip to and from the International Space Station. While in space he participated in a fund-raising drive for One Drop Foundation/Fondation One Drop (“One Drop”), a charity in support of the availability of clean pure water that is closely allied with Cirque. M. Laliberté reported a $4,000,000 shareholder benefit. CRA was not amused and assessed M. Laliberté for a $41.8 million shareholder benefit representing the entire cost of the space trip. M. Laliberté appealed to the Tax Court arguing that none of the cost should be taxable in his hands. Justice Boyle held that on the very limited evidence before him the most he could allocate to a business portion of the cost of the trip (and therefore not taxable) was 10%. He held that the balance was taxable in the hands of M. Laliberté and awarded costs to the Crown.
Laliberté v. R. – TCC: Cirque du Soleil sends its boss over the moon (almost) but CRA is not amused – a reassessment darkens his re-entryPlus >

Atlantic Packaging v. R. – TCC: Taxpayer did not dispose of all or substantially all of the assets used in an active business – gain on income account

22 octobre 2018 By Bill Innes

Précis: The Appellant sold its tissue business (the Tissue Division) to a competitor, Cascades Canada Inc. in its taxation year ended May 31, 2010. It treated the resulting gain as being a capital gain in reliance upon section 54.2 of the Income Tax Act on the basis that it had disposed of property that consisted of all or substantially all of the assets used in an active business. CRA denied the application of section 54.2 and the Appellant appealed to the Tax Court. The Tax Court denied the appeal holding that the sale did not represent all or substantially all of the assets used by the Appellant’s Tissue Division. Costs were awarded to the Respondent.
Atlantic Packaging v. R. – TCC: Taxpayer did not dispose of all or substantially all of the assets used in an active business – gain on income accountPlus >

R. v. 594710 British Columbia Ltd. – FCA: GAAR applies to partnership loss transaction, reversing TCC

19 octobre 2018 By Bill Innes

Précis: The Appellant was part of a very sophisticated strategy whereby profits within a partnership were, in essence, absorbed, for a fee, by a new corporation brought into the partnership (the new corporation used its own losses to absorb those profits). The Tax Court held that GAAR did not apply to the transaction. The Federal Court of Appeal disagreed and allowed the Crown’s appeal, reserving on the question of costs pending submissions of the parties.
R. v. 594710 British Columbia Ltd. – FCA: GAAR applies to partnership loss transaction, reversing TCCPlus >

Borealis Geopower Inc. v. R. – TCC: SRED grant paid to trust account in 2014 was taxable income in 2014

18 octobre 2018 By Bill Innes

The factual basis for this case is somewhat complex technically ... Notwithstanding that complexity the question boiled down to whether the advance of $528,560.00 from SDTC was taxable in 2014, notwithstanding that it was paid in trust to the Appellant. Justice Campbell concluded that the degree of control exercised by the Appellant over the advance from SDTC was sufficient to bring the advance into income in 2014. As a result the appeal was dismissed. There was no order as to costs since this was an informal procedure appeal.
Borealis Geopower Inc. v. R. – TCC: SRED grant paid to trust account in 2014 was taxable income in 2014Plus >

LPIC v. R. – TCC: Ontario’s insurer of lawyers is not exempt from income tax, despite being owned by the Law Society of Ontario

17 octobre 2018 By Bill Innes

Précis: Lawyers’ Professional Indemnity Company (LPIC) has apparently claimed an exemption from federal income tax pursuant to paragraph 149(1)(d.5) of the Income Tax Act (the Act), as a “public body performing a function of government in Canada” for some time. CRA reassessed its 2013 and 2014 taxation years denying it the exemption. D’Arcy J. agreed with CRA’s position, finding: The Law Society of Ontario (the Law Society) owns in excess of 90% of LPIC’s capital; The Law Society is a public body within the provision of paragraph 149(1)(d.5);but The Law Society did not at the material times perform a function of government in Canada; and dismissed LPIC’s appeal (apart, that is, from a few small concessions made by CRA) with costs to CRA.
LPIC v. R. – TCC: Ontario’s insurer of lawyers is not exempt from income tax, despite being owned by the Law Society of OntarioPlus >

McCartie v. R. – TCC: Rule 58(1) motion denied on issues arising from prior criminal prosecution in which the Appellant was acquitted

16 octobre 2018 By Bill Innes

Précis: The Appellant had been prosecuted for tax evasion. He and his co-accused wife were both acquitted. During the course of the criminal trial certain evidence was ruled inadmissible on the basis of Charter violations. The Appellant moved for a determination of certain questions pursuant to Rule 58(1) of the Tax Court of Canada Rules (General Procedure) (the Rules). Bocock J. dismissed his motion on the basis that the sorts of questions raised were better left to the trier of fact during the course of an actual trial. He awarded costs to the Respondent.
McCartie v. R. – TCC: Rule 58(1) motion denied on issues arising from prior criminal prosecution in which the Appellant was acquittedPlus >

1065438 Alberta Ltd v. R. – TCC: Courier driver was independent contractor for EI/CPP purposes

15 octobre 2018 By Bill Innes

Précis: This case turned on the somewhat simple question of whether a courier drive for the taxpayer, 1065438 Alberta Ltd., was an employee or an independent contractor: [1] 1065438 Alberta Ltd. (the “Company”) appeals the decisions of The Minister of National Revenue (the “Minister”) pursuant to both the Employment Insurance Act (the “Act”) and the Canada Pensions Plan (the “CPP”) that the worker, Salendran Salendran, was an employee of the company for the period from January 1, 2015 to April 30, 2016. The Appellant maintains that Mr. Salendran was an independent contractor. Both Ms. Neema Jani, a 50% owner of the Company, and Mr. Salendran gave evidence of Mr. Salendran’s work as a courier driver for the Company. The Company had contracts with Dynamax for certain delivery services. The Court held that although the relationship had many aspects of a contract of employment on balance they were not sufficient to set aside the intention of the parties to establish an independent contractor relationship.
1065438 Alberta Ltd v. R. – TCC: Courier driver was independent contractor for EI/CPP purposesPlus >

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