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Inowal Transport Ltd. v. R. - TCC: Workers not engaged in insurable employment

24 février 2017 By Bill Innes

Précis: The issue was whether 4 workers were engaged in contracts of service with the appellant corporation in 2014. In the case of 2 of the workers, they were related to the appellant corporation, so there was a secondary issue of whether the agreement were substantially similar to contracts of employment that would have been entered into if they had been dealing at arm’s length with the appellant.
Inowal Transport Ltd. v. R. - TCC: Workers not engaged in insurable employmentPlus >

Bailey v. R. - TCC: Penalties for late filing modified in part

24 février 2017 By Bill Innes

Précis: Mr. Bailey was assessed late-filing penalties of $11,817.32 and $710.58 under subsection 162(2) of the Income Tax Act (the “Act”) for his 2010 and 2012 taxation years. The Court affirmed the 2010 penalty on the evidence but in the case of the 2012 penalty held that the Crown did not demonstrate that a demand letter was sent to Mr. Bailey in order to justify a larger penalty under subsection 162(2). The Court however found that the evidence justified a smaller penalty under subsection 162(1) for 2012. Thus the appeal for 2010 was dismissed and the appeal for 2012 was allowed to delete the subsection 162(1) penalty and impose a smaller penalty under subsection 162(1).
Bailey v. R. - TCC: Penalties for late filing modified in partPlus >

Revcon Oilfield v. R. - FCA: Appeal of compliance order dismissed from the Bench

23 février 2017 By Bill Innes

Précis: The Federal Court issued a compliance order pursuant to section 237.1 of the Income Tax Act. The taxpayer appealed to the Federal Court of Appeal. The Court of Appeal found no error in the original decision but also entertained a new legal argument raised by the taxpayer based on two recent Supreme Court of Canada decisions dealing with the effect of requirements on members of the legal profession. The Court of Appeal rejected the new argument on the basis that the taxpayer, not being a member of the legal profession, was not entitled to benefit from the decisions in question:
Revcon Oilfield v. R. - FCA: Appeal of compliance order dismissed from the BenchPlus >

Andrews v. R. - TCC: Driving service not a “transportation service” - not zero-rated for GST/HST

23 février 2017 By Bill Innes

Précis: Mr. Andrews operated Canadian Auto, a sole proprietorship. Canadian auto arranged for drivers to transport cars from the US to Canada on a seasonal basis, typically where there was a medical emergency involving the owner or operator of the vehicle. The cars were driven under their own power and not towed or otherwise transported. Mr. Andrews claimed that his supplies were zero-rated “transportation services”. CRA maintained that they were “driver services” (not a term defined in the Excise Tax Act but one found in some CRA literature) and not zero-rated. The Tax Court agreed with CRA.
Andrews v. R. - TCC: Driving service not a “transportation service” - not zero-rated for GST/HSTPlus >

Yu v. R. - TCC: Funds transferred by wife’s sister (and taxpayer’s former wife) not trust funds - subsection 160(1) applied

21 février 2017 By Bill Innes

Précis: The taxpayer received $119,500 in 2010 in four tranches from his wife’s sister, Yan Siang Yu (who was also his former wife). Yan Siang Yu had a large tax debt arising from a net worth assessment of a marijuana grow operation at a Vancouver house on West 53rd Avenue owned by her. The taxpayer argued that the money was placed by his mother-in-law, Jiao Zhen Huang, with his sister-in-law, Yan Siang Yu, for the benefit of his wife and their son when his mother-in-law sold her house on West 46th Avenue in Vancouver.
Yu v. R. - TCC: Funds transferred by wife’s sister (and taxpayer’s former wife) not trust funds - subsection 160(1) appliedPlus >

Helgesen v. R. - FCA: Director did not make out due diligence defence, appeal dismissed from Bench

21 février 2017 By Bill Innes

Précis: Mr. Helgesen was assessed for tax and unremitted payroll deductions pursuant to section 227.1 of the Income Tax Act (the “Act”). He unsuccessfully appealed to the Tax Court attempting to establish a due diligence defence. He appealed to the Federal Court of Appeal which held that he had not made out any reversible error by the Tax Court Judge. The appeal was dismissed from the Bench with costs to the Crown.
Helgesen v. R. - FCA: Director did not make out due diligence defence, appeal dismissed from BenchPlus >

Truong v. R. - TCC: $1.8 million increase in net worth not explained by “Ziploc bags of cash”

17 février 2017 By Bill Innes

Précis: A net worth assessment of the taxpayer revealed a $1.8 million increase in her net worth from 2005 to 2009. She was assessed for both income tax and GST on the unreported income and taxable supplies at issue. She had a variety of explanations for the increase including a particularly amusing story about her brother bringing her Ziploc bags of cash from her boyfriend. The Court was not amused and dismissed the appeals (apart from a $4,800 error in math) and sustained the imposition of gross negligence penalties. Costs were awarded to the Crown subject to the right of the parties to make submissions on costs within 30 days.
Truong v. R. - TCC: $1.8 million increase in net worth not explained by “Ziploc bags of cash”Plus >

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 >

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