In recent weeks, the Federal Court of Appeal has sent two cases back to the Tax Court of Canada for rehearing. In GlaxoSmithKline Inc. v. The Queen, 2010 FCA 201 (discussed here), the Court of Appeal found that Rip C.J. erred by misunderstanding the application s. 69(2) of the Federal Income Tax Act, R.S.C. 1985, [...]

In simple terms, when related corporations trade property, services or intangibles across international borders, the outlay is referred to as the transfer price. Pursuant to s. 69(2) of the Federal Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.) (“ITA”), the transfer price must be “reasonable in the circumstances” that would exist if the non-resident [...]

Last month, the Federal Court of Appeal released its judgment in Lehigh Cement Limited v. Canada, 2010 FCA 124. This is the latest decision from the Court of Appeal dealing with the application of the General Anti-Avoidance Rule (“GAAR”) within the Federal Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.) (“ITA”). The appeal court [...]

With the expiration of the personal income tax filing deadline, it is fitting to mark the occasion by discussing the SCC’s recent decision in Montreal (City) v. Montreal Port Authority, 2010 SCC 14, regarding Crown corporation payments in lieu of taxes (PILT) to municipalities. At issue in this case was the scope of two Crown [...]

A fundamental tenet of Canadian tax law, as stated in Commissioners of Inland Revenue v. Duke of Westminster, [1936] A.C. 1 (H.L.), is that a taxpayer is entitled to make any lawful arrangement that he or she sees fit in order to reduce his or her liability to tax. The General Anti-Avoidance Rule (“GAAR”), at s. [...]

The only surprising thing about the recent Supreme Court of Canada decision in Quebec (Revenue) v. Caisse populaire Desjardins de Montmagny, 2009 SCC 49, is that the Quebec Superior Court at first instance found in favour of the Crown in all three cases from which the appeals arose. The issue in C.P. Desjardins de Montmagny [...]

Offshore trusts have become an essential element of successful tax planning. Trusts are used as tax planning vehicles as they are considered a separate legal entity from the individual. Thus, the income and assets of the trust are excluded from the individual’s estate for tax purposes. A previously successful, but now uncertain, strategy had used [...]

In its recent decision in Caisse Populaire Desjardins de L’est de Drummond v. Her Majesty the Queen in Right of Canada, 2009 SCC 29, the Supreme Court considered a controversial topic in insolvency law: federal deemed trusts as they are applicable to payroll deduction. Justice Rothstein, writing for the majority, concurred with the Federal Court of Appeal [...]

As the tax deadline of April 30th for most corporations has passed, some corporations have paid their taxes, others have claimed a refund and others like United Parcel Services (UPS) have paid their taxes and claimed it back as an error. The journey of United Parcel Services v. Canada, 2009 SCC 20, through the hierarchy [...]

Following on the heels of last month’s SCC decision in Lipson v. Canada, Quebec’s Finance Ministry has announced plans to implement further legislative measures to curb aggressive tax planning. Its Working Paper on Aggressive Tax Planning (Document de consultation des planifications fiscales agressives) can be found here. Among its more interesting proposals is the plan [...]