Regarding the deductibility of automobile expense incurred by an employee, with a fully remote work arrangement, in connection with an occasional visit to the employer’s office from the home office, CRA stated:

[T]raveling between an employee’s home, including a home office, and a regular place of employment (RPE) is generally considered personal travel … .

… In this case, “regular” means there is some degree of frequency or repetition in the employee’s reporting to that particular location in a given pay period, month, or year. … For example, a work location may be considered to be a RPE of an employee even though the employee may only report to work at that particular location on a periodic basis (e.g., once or twice a month) during the year.

CRA noted that Gardner “held that motor vehicle expenses related to an employee’s travel between their home office and the employer’s principal place of business were deductible employment expenses under paragraph 8(1)(h.1)” but indicated that it had not changed its position except “where it can be established that an employee’s circumstances are factually similar to Gardner and all of the requirements in paragraph 8(1)(h.1) and subsection 8(10) … are met.”

Neal Armstrong. Summary of 29 August 2023 CPAC Roundtable Q. 8, 2023-0983051C6 - Automobile Expenses under s. 8(1)(h.1).

The original Crown Reply had stated that the Minister had assessed TPine’s return to disallow a CCA deduction on the basis that the Class 10 and 16 assets in question were included in the same equipment that TPine had sold and for which it had claimed a cost-of-goods sold deduction. TPine appealed the Tax Court’s allowance of an amendment to the Reply (which the Crown sought to justify under s. 152(9)) to include the alternative basis for the assessment that, if TPine was successful in challenging the CCA denial, the TPine cost-of-goods-sold deduction should be reduced by an equivalent amount.

Webb JA indicated that in interpreting the previous version of s. 152(9), the Federal Court of Appeal “has not allowed the Minister to raise a new argument based on a transaction that did not form the basis on which a taxpayer was assessed” (para. 85). Here, that test was not a barrier to the new pleaded basis of assessment. The central allegation of the Minister was that it was “the same equipment that resulted in the CCA claim and in the deduction for the cost of goods sold” (para. 86). Thus the two alternate assessment bases were joined at the hip: if TPine had sold those assets, it followed “that the claim for CCA was a valid claim and no amount should have been claimed for the cost of goods sold” (para. 88); and if it had not sold the assets, it followed that the cost-of-goods sold deduction should be reduced.

Since s. 152(9) permitted the new pleading even under its more restrictive previous version as judicially interpreted, the same result should follow under the current version of s. 152(9) that applied to this amendment. However, in commenting on the current version of s. 152(9), Webb JA stated (at para. 90):

The principles that the Minister cannot appeal an assessment and the Minister cannot reassess beyond the expiration of the normal reassessment period are still valid principles that would need to be taken into account in determining what alternative basis or argument the Minister may advance. In interpreting and applying the previous version of subsection 152(9) of the Act, this Court has also limited an alternative argument to the same transaction that is in dispute. It is not clear how the amendments would alter this principle.

Neal Armstrong. Summaries of TPine Leasing Capital Corporation v. Canada, 2024 FCA 83 under s. 152(4)(a)(i), s. 152(9) and s. 152(1).

Regarding transactions (including non-arm’s length transactions) to crystalize accrued capital gains prior to June 25, 2024, CRA, after referring to the proposed amendments to s. 245, stated:

[T]he 2024 Federal Budget does not contain any limits on the eligibility of capital gains for the current inclusion rate where such gains are realized prior to June 25, 2024 and … the delay in the implementation of the increased inclusion rate is a deliberate policy choice. In light of this … where a taxpayer crystallizes an accrued capital gain prior to the increase in the capital gains inclusion rate, the GAAR would generally not apply to redetermine the inclusion rate in respect of the crystallized capital gain.

However, CRA indicated that GAAR scrutiny might be merited where tax benefits were engaged in addition to avoiding the increased inclusion rate, for example, surplus-stripping transactions.

Neal Armstrong. Summary of 29 April 2024 External T.I. 2024-1016011E5 under s. 245(4).

The Appellant had complete success at trial regarding the ITC methodology it used for its ferry operation. D’Arcy J now made a costs award to the Appellant (of 60% of its counsel’s fees of $1.3 million, plus disbursements and a gross-up for unrecoverable HST) that reflected a substantial enhancement for the improper conduct of Crown counsel.

First, the Crown had resiled from an agreement to follow the decision on two relevant issues in BC Ferries which, when later decided in 2014, favoured the Appellant’s position. The Crown did not agree to be bound by those findings until the eve of trial – and this delay in following BC Ferries caused the Appellant to incur substantial costs.

Second, the Crown had improperly sought to introduce evidence of a CRA auditor through an affidavit rather than through court testimony. Furthermore, the use of the affidavit in this instance had been found by D’Arcy J in his prior decision to be “trial by ambush” and resulted in “trial days being thrown away.”

Third, the Crown submission on costs challenged the above “trial by ambush” finding. D’Arcy J stated:

This is improper; a party should never use cost submissions to question a finding made by the Court in the related appeal.

Further, the Respondent’s submissions indicate that he is prepared to engage in similar offensive behaviour in the future.

Similarly, the Crown submissions improperly and falsely challenged D'Arcy J’s findings that CRA had inappropriately threatened to impose gross negligence penalties on the Appellant.

Neal Armstrong. Summary of Marine Atlantic Inc. v. The King, 2024 TCC 51 under Rule 147(3).