Blogue

MacDonald v. R. – SCC: Supreme Court grants taxpayer leave to appeal in hedge transaction case – is intention an element of a hedge?

9 avril 2019 By Bill Innes

Précis: The Supreme Court of Canada granted the taxpayer leave to appeal a decision of the Federal Court of Appeal blogged on this site last year. The Federal Court of Appeal held that intention did not form part of hedge transactions for income tax purposes. The Supreme Court will now revisit that finding.
MacDonald v. R. – SCC: Supreme Court grants taxpayer leave to appeal in hedge transaction case – is intention an element of a hedge?Plus >

European Staffing Inc. v. R. – TCC: Taxpayer was a placement agency for EI and CPP purposes – employees were subject to EI and CPP withholding

4 avril 2019 By Bill Innes

Précis: The taxpayer provided workers for its clients and paid those workers itself, passing the cost on to its clients as part of its fees. It did not withhold EI or CPP in connection with these workers. CRA assessed the taxpayer on the basis that it was a placement agency within the provision of the EI and CPP legislation and thus subject to EI and CPP withholding. The Court accepted CRA’s position and dismissed the taxpayer’s appeals.
European Staffing Inc. v. R. – TCC: Taxpayer was a placement agency for EI and CPP purposes – employees were subject to EI and CPP withholdingPlus >

L'Écuyer v. R. – TCC: Tax Court accepts taxpayer’s evidence that a condo was his primary place of residence thus entitling him to a New Housing Rebate

2 avril 2019 By Bill Innes

Précis: CRA rejected the taxpayer’s claim that he had purchased a new condo for use as his primary place of residence and therefore was entitled to a New Housing Rebate of GST on the unit. Among other things CRA pointed to the low usage of electricity in the condo suggest that he did not really occupy it as a primary place of residence. The Tax Court accepted the taxpayer’s evidence that he travelled a great deal on business dealing with several pharmacies that he owned and did not use air conditioning at all in the warmer months. Thus the Court allowed the appeal, but without costs since this was an informal procedure appeal.
L'Écuyer v. R. – TCC: Tax Court accepts taxpayer’s evidence that a condo was his primary place of residence thus entitling him to a New Housing RebatePlus >

Kniazev v. R. – TCC: Real estate salesman loses bid for New Housing Rebate for two houses, each sold shortly after closing.

28 mars 2019 By Bill Innes

Précis: The taxpayer, a real estate agent, applied for the New Housing Rebate on two properties: 266 Sloss Court, Newmarket, Ontario; Closed – September 2014; Sold March 2015 314-95 North Park Road, Thornhill, Ontario; Closed – May 2014; Sold August 2014 The Court rejected his evidence that he intended to use each house as his primary place of residence and concluded that he was simply flipping the properties to earn profit. His appeal was dismissed. There was no order as to costs since this was an informal procedure appeal.
Kniazev v. R. – TCC: Real estate salesman loses bid for New Housing Rebate for two houses, each sold shortly after closing.Plus >

Bayrack v. R. – TCC: No child support deduction where taxpayer paid a net amount to his former spouse

27 mars 2019 By Bill Innes

Précis: The taxpayer and his former spouse agreed to a consent order which provided that the taxpayer would pay a net amount (the net being calculated in accordance with the Federal Child Support Guidelines) to his former spouse for child support. He claimed a deduction for child support in 2014 pursuant to subsection 118(5.1) of the Income Tax Act (the Act) on the basis that he alleged that the effect of the netting out was that both he and his former spouse paid child support. The consent order was varied in both 2016 and 2017 in an attempt to comply with the provisions of subsection 118(5.1). The Tax Court rejected the claim for a deduction in 2014 on the authority of the decision in Verones v. The Queen, 2013 FCA 69, 2013 DTC 5061 which held that such a set-off (netting out) did not meet the requirements of subsection 118(5.1). Thus the appeal was dismissed, but without costs since this was an informal procedure appeal.
Bayrack v. R. – TCC: No child support deduction where taxpayer paid a net amount to his former spousePlus >

Brooks v. R. – TCC: Tax Court has very limited jurisdiction to grant Charter relief for the exercise of civil audit powers

25 mars 2019 By Bill Innes

Précis: CRA moved to strike portions of the taxpayer’s pleadings: [2] The Respondent submits that it is plain and obvious that these paragraphs should be struck for several reasons. First, the Respondent contends that the Notice of Appeal pleads allegations, pertaining to the conduct of officials at Canada Revenue Agency (“CRA”), which are irrelevant to the correctness of a taxpayer’s assessment. Second, the Notice of Appeal also contains allegations pertaining to violations of the Appellant’s rights under sections 7 and 8 of the Canadian Charter of Rights and Freedoms (the “Charter”) resulting from the exercise of civil audit powers used to gather records and information, which the Respondent argues disclose no reasonable cause of action and have no reasonable prospect of success. Third, the Appellant seeks to vacate the reassessments pursuant to section 24 of the Charter but there has been no violation of his rights under sections 7 or 8 of the Charter. The taxpayer’s counsel argued that the Supreme Court had changed the law in this area in the Conway decision and that he should be allowed to proceed with his claim of Charter violations: ... The Tax Court rejected the taxpayer’s expansive interpretation of the Conway decision and allowed the Crown’s motion to strike with costs to CRA fixed in the amount of $1,000 payable forthwith.
Brooks v. R. – TCC: Tax Court has very limited jurisdiction to grant Charter relief for the exercise of civil audit powersPlus >

Mikhail v. R. – TCC: Mixed bag on the taxation of Pharma rebates to pharmacy

21 mars 2019 By Bill Innes

Précis: Mr. Mikhail and his wife were the shareholders of 1526818 Ontario Inc., carrying on business as Queenslake Pharmacy, (the Corporation). CRA conducted a targeted audit of the pharmacy industry. As a result, Mr. Mikhail filed amended returns for 2010 and 2011 and his wife filed amended returns for 2012 and 2013. Those returns reported the unreported income of the Corporation in each of those year taking the form of rebates (the Rebates) from drug suppliers and manufacturers. The Mikhails and the Corporation each appealed their reassessments for those years, the main point being the argument that the Corporation should not be taxed on the same income reported by the individual shareholders. A lesser point at issue was the quantum of the Rebates. The Court held that the Corporation, not the Mikhails, was taxable on what it termed In-Kind Rebates (traveller’s cheques, gift cards and prepaid credit cards) since they were used in the Corporation’s business and not appropriated by the Mikhails. Other non-cash Rebates were taxable only in the hands of the Mikhails, not the Corporation. The Court accepted that the cash rebates were placed in the Corporation’s cash register and were reported as income of the Corporation. The Court accepted the CRA’s assumptions as to the amount of the Rebates. There was no order as to costs.
Mikhail v. R. – TCC: Mixed bag on the taxation of Pharma rebates to pharmacyPlus >

Rooke v. M.N.R. – TCC: Teaching/research assistantships at University of Waterloo were insurable and pensionable employment

19 mars 2019 By Bill Innes

Précis: This decision involved EI and CPP appeals by Mr. Rooke who claimed that teaching/research assistantships he received at the University of Waterloo did not amount to insurable and pensionable employment. Justice Campbell rejected his arguments and dismissed the appeals.
Rooke v. M.N.R. – TCC: Teaching/research assistantships at University of Waterloo were insurable and pensionable employmentPlus >

A & D Precision Limited v. R. – TCC: Taxpayer achieves mixed success in SRED claims

18 mars 2019 By Bill Innes

Précis: This decision is similar to the Concept Danat case blogged recently on this site, with the exception that the numbers involved are bigger and the work was being done for a third party customer. The taxpayer claimed SRED expense in connection with 4 specific projects. Two projects were abandoned before trial. The Court found that 2/3 of the projects described as Matteo lathes involved normal engineering and lacked the innovation necessary to qualify for SRED treatment while the remaining 1/3 did qualify for SRED treatment. The fourth project did have the requisite element of innovation and the appeal was allowed in in full respect of it. There was no order as to costs in light of the mixed success. Nevertheless it was largely a good day for the taxpayer which made, I understand, about a 70% recovery of the amounts it chose to take to trial.
A & D Precision Limited v. R. – TCC: Taxpayer achieves mixed success in SRED claimsPlus >

Roy v. R. – TCC: RRSP over-contributions not eliminated by loss on investments in RRSP

18 mars 2019 By Bill Innes

Précis: The taxpayer had over-contributed to his RRSP commencing in 2006. By 2012 he had lost much of his investments and closed the RRSP account. In 2013 his initial assessment indicated that he had a deduction limit of $3,298 for 2013 and $23,439 of unused RRSP contributions available for 2014. By a subsequent notice of reassessment CRA notified the taxpayer this his unused RRSP contributions for 2013 were limited to $2,000 and reassessed 2013, 2014 and 2015 consequentially. He appealed these reassessments. The taxpayer also applied for and received in 2015 relief in respect of his prior over-contributions.
Roy v. R. – TCC: RRSP over-contributions not eliminated by loss on investments in RRSPPlus >

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