When deciding cases relating to tax planning—or the minimization of a taxpayer’s tax burden—judges face the daunting task of reconciling a tension between longstanding common law principles and s.245 of the Income Tax Act, R.S.C., 1985, c.1,  the General Anti-Avoidance Rule (GAAR). On the one hand, Lord Tomlin’s holding in Duke of Westminster that “every [...]

The Supreme Court of Canada has overturned a long line of Federal Court of Appeal cases that had held that registered Indians who earned interest from investments held in financial institutions located on reserve were liable for tax. On the face of it, the decisions of the Federal Court seemed to directly contradict section 87 [...]

Last month, the Federal Court of Appeal, in Antle v. Canada, 2010 FCA 280 [Antle 2010], upheld the Tax Court of Canada decision in Antle v. The Queen, 2009 TCC 465 [Antle 2009], finding that an offshore spousal trust was not valid. Both courts agreed that the primary purpose of the spousal trust was to [...]

You may have heard of the Merchant Law Group Inc., a full-service firm centered in Saskatchewan. It has been involved in numerous class actions, its most famous involving a claim against the government for the residential school abuses suffered by Canada’s First Nations communities. That action was marred by significant controversy surrounding the way in [...]

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 [...]

Do non-resident corporations carrying on business in Canada have to pay a penalty for failing to file an income tax return on time, even though no tax is owed? This question was answered in the affirmative by the Tax Court of Canada (pursuant to s. 162(2.1) of the Federal Income Tax Act, R.S.C. 1985, c. [...]

On March 9th, 2010, the Ontario Court of Appeal released its decision in Danso-Coffey v. Ontario, 2010 ONCA 171. The case deals with an individual who is named a director of a corporation without her consent or knowledge. Danso-Coffey was owned and incorporated by Ms. Danso-Coffey’s brother. Without her knowledge, she was named one of [...]

Earlier this month, the Federal Court of Appeal released its decision in Canada v. J. Hudon Enterprises Ltd., 2010 FCA 37, a case that asks whether, in the context of horse racing, the proportion of prize money awarded to drivers and trainers after a successful performance at the track is subject to GST. Race tracks [...]

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. [...]