Category: Tax

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Legal Resurrection: Tax Appeals and Dissolved Corporations

In the height of tax season, corporations are reminded that regardless of their dissolved status, the government will always get its due. Dissolution does not offer protection against a tax assessment, and second, the dissolved status of a corporation must be addressed before a court is able to hear a corporation’s legal appeal.

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Butler v Canada : Tax Filing Guidelines for Workplace Compensation Claims

Facts of the Case In the case of Butler v Canada, 2016 FCA 65 [Butler] Mr. Butler appealed a decision made last January at the Tax Court of Canada, where he was required to repay the Old Age Security Pension (“OASP”) approximately $3000. Mr. Butler received a lump sum award under Nova Scotia’s Workers’ Compensation Act, SNS 1994-95, c 10 (“The Act”). The Worker’s Compensation Board of Nova Scotia had issued a T5007 slip for Mr. Butler for his OASP, but he failed to include it as an additional income when filing his taxes. He alleged that the reason for...

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Out in the Cold: No Protection with Tax Shelters?

Every year, Canadians can be found searching for ways to avoid paying the Canadian Revenue Agency (“CRA”) more than they absolutely have to in taxes. Many of us work hard for our money and do not want to give it up so easily. In a progressive tax system like Canada, the more you earn the more you are taxed. This reality creates an opportunity for tax avoidance vehicles to effectively market themselves to the public. With tax season looming, the Federal Court of Appeal (“FCA”) has issued a clear warning: when it comes to the use of certain tax shelters,...

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SCC Denies Charter Protection to Tax Adviser Hit with a Huge Monetary Penalty

The Supreme Court of Canada’s (“SCC”) decision in Guindon v Canada, 2015 SCC 41 [Guindon] has been eagerly awaited by lawyers in the area of taxation. It deals with a relatively new provision in the Income Tax Act, RSC 1985, c 1 (5th Supp), s. 163.2, that allows third parties, such as tax advisers or promoters of tax deduction schemes, to be penalized for helping a taxpayer make “a false statement.” Bogus charitable donation schemes, in particular, have been a growing problem for the tax authorities. Julie Guindon is a lawyer who was also the head of a small charity...

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Blackmore v The Queen: Separate Tax Treatment of Communal Religious Organizations Not Available to Polygamous Mormon Group

Section 143 of the Income Tax Act (ITA), colloquially known as the “Hutterite rule”, provides for the separate tax treatment of communal religious organizations that satisfy the definition of a “congregation” as defined in subsection 143(4). This section was enacted in response to litigation undertaken by a number of Hutterite colonies in 1977. Following its enactment, it was not until this year that this rather obscure section (unknown even to many tax professionals) of the ITA was subject to litigation.. In Blackmore v The Queen, 2013 TCC 264, a decision released by the Tax Court of Canada on August 21,...

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The Supreme Court Redefines Taxable Consideration: Daishowa-Marubeni International Ltd. v. Canada

The Supreme Court’s decision in Daishowa-Marubeni International Ltd. v. Canada, 2013 SCC 29, addressed the question of how much tax was owed by a forestry company on the sale of land with environmental reclamation obligations.  It will be of considerable economic significance for all types of resource industries.  This can be divined from the range of interveners in the case, prominent among them the Canadian Association of Petroleum Producers.

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Imperial Tobacco v The Queen: A Lose-Lose Situation? Deduction for Amounts Paid to Employees for Stock Options Refused

It is not common for TheCourt.ca to comment on tax cases. Tax decisions often seem complicated and, unless you are an accountant, a corporate executive or a tax lawyer, they seem removed from your daily life. At face value, the case of Imperial Tobacco Canada Limited v The Queen, 2011 FCA 308 [Imperial Tobacco] is about whether amounts paid to employees for stock options in the course of going from a public to private company can be deducted as a corporate expenditure on income account. But it is more than that. Together with 2010 federal budget changes, the case may have...

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At the Court: Moldowan Revisited and Learning Disability Human Rights Claim Considered at the SCC

Between a Hoof and a Hard Place John Craig is a Toronto lawyer with a successful practice in securities, M&A, and mining law. In his spare time, he breeds and raises horses. Although his income is largely derived from his position as a partner at Cassels Brock, his horse breeding activities have been defined as “farming” for the purposes of s.31(1) of the Income Tax Act, which covers losses from farming where the main source of income is not from farming. This dispute arose when the Minister of National Revenue restricted the deductions that Mr. Craig could claim in 2000...

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At the Court: Jury Vetting Disclosure and Tax Shelters

Jury on Trial Ibrahim Yumnu, convicted of first degree murder with two others in December 2005, will have one last opportunity to appeal his conviction of life sentence to the Supreme Court on March 14. The Court will decide whether there should be a new trial. Yumnu and the two others failed to have the Ontario Court of Appeal overturn the decision. The Appellants, Mr. Duong and Mr. Cardoso, were convicted of being parties to the hired hit on Dung Ton and his wife. The Crown alleges that Duong wanted Ton, his partner in a large scale marijuana business, dead...

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Appeal Watch: Obonsawin and Klymchuk Denied Leave to Appeal

Supreme Court Denies Leave in Indian Act GST Exemption Case The Supreme Court will not reconsider whether an Aboriginal’s interest in employment contracts can be considered “property” for the purposes of tax exemption under the Indian Act. In Roger Obonsawin v Her Majesty the Queen, 2010 TCC 222, the Tax Court of Canada determined that the appellant’s failure to collect GST owed by his clients for services he provided to them was not justified by his exemption from paying tax on personal property pursuant to section 87(1)(b) of the Indian Act, RSC 1985, c I-5. The Federal Court of Appeal (2011...