Cases
Tusk Exploration Ltd. v. Canada, 2018 FCA 121
The taxpayer, a Canadian exploration company, unsuccessfully argued that it was not subject to Part XII.6 tax on Canadian exploration expenses...
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| Tax Topics - Income Tax Act - Section 211.91 - Subsection 211.91(1) | Part XII.6 tax was payable on CEE purportedly renounced on a look-back basis to NAL shareholders | 515 |
| Tax Topics - Income Tax Act - Section 69 - Subsection 69(1) - Paragraph 69(1)(a) | double taxation can result from non-arm’s length transactions such as under s. 69(1) | 301 |
| Tax Topics - Income Tax Act - Section 66 - Subsection 66(12.6) | only a PBC can renounce | 61 |
Bakorp Management Ltd. v. Canada (National Revenue), 2016 FCA 74
After noting (at para. 23) that the interpretation advanced by the taxpayer would have the effect of generating the accrual of refund interest to...
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| Tax Topics - Income Tax Act - Section 187 - Subsection 187(2) | overpayment of Part IV tax for a subsequent year did not cut off interest for its underpayment in the previous year before application of the overpayment by CRA | 395 |
Imperial Oil Ltd. v. Canada, 2004 DTC 6702, 2004 FCA 361, rev'd 2006 SCC 46
After finding that the taxpayer was entitled to deduct 75% of the difference between the Canadian- dollar equivalent of a U.S. dollar debenture at...
Holder v. Canada, 2004 DTC 6413, 2004 FCA 188
The taxpayer designated an elected amount of $50,010 in an election under s. 110.6(19) in respect of shares that were non-qualifying real property...
Kruco Inc. v. The Queen, 2001 DTC 668 (TCC), aff'd 2003 FCA 284
A proposed adjustment of the Minister to the safe income of a corporation from which the taxpayer received a deemed dividend, which entailed the...
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| Tax Topics - Income Tax Act - Section 152 - Subsection 152(1) | 81 | |
| Tax Topics - Income Tax Act - Section 55 - Subsection 55(2) | safe income included phantom income mandated to be included in income by the ITA | 208 |
| Tax Topics - Statutory Interpretation - Interpretation Bulletins, etc. | 81 |
MNR v. Chrysler Canada Ltd., 92 DTC 6346, [1992] 2 CTC 95 (FCTD)
S.4(4) precluded the value of shares being taxed as income from employment in both the year of transfer of the shares to a trust (under s. 7(1))...
R. v. Inland Revenue Commissioners, ex parte Woolwich Equitable Buildings Society, [1990] BTC 490 (HL)
After referring (p. 500) to the "presumption against double taxation" and the "presumption that income tax, being an annual tax is payable only on...
Robertson v. The Queen, 90 DTC 6070, [1990] 1 CTC 114 (FCA)
Before going on to find that the amount of a non-statutory stock option benefit effectively was taxable at the time of exercise, notwithstanding...
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| Tax Topics - Income Tax Act - Section 6 - Subsection 6(1) - Paragraph 6(1)(a) | only quantifiable benefit from non-s. 7 option grant arose at exercise time | 218 |
Canadian Pacific Ltd. v. The Queen, 88 DTC 6265, [1988] 1 CTC 429 (FCA)
Mahoney J. suggested that it was contrary to the scheme of the Act for the taxpayer to receive $17.6 million as a tax-free grant toward the cost...
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| Tax Topics - Income Tax Act - Section 13 - Subsection 13(7.1) | 37 |
The Queen v. Thyssen Canada Ltd., 87 DTC 5038, [1987] 1 CTC 112 (FCA)
The denial (by virtue of s. 18(4)) of the deduction for interest paid by the taxpayer to a non-resident, where that interest was subject to...
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| Tax Topics - Income Tax Act - Section 10 - Subsection 10(1) | 54 | |
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(4) | 46 |
Bye v. Coren, [1985] BTC 7 (HC), aff'd [1986] BTC 330 (C.A.)
"There is ... no rule that the same sum cannot be subject to two separate taxes. Whether it is so subject is a matter of construction of the...
Furniss v. Dawson, [1984] BTC 71 (HL)
An "element of double taxation exists whenever a shareholder sells at a profit his shares in a company which has itself realized a capital asset...
The Queen v. Robichaud, 83 DTC 5265, [1983] CTC 195 (FCTD)
A husband and wife were unsuccessful in claiming each other as dependants.
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| Tax Topics - Income Tax Act - Section 118 - Subsection 118(1) - Paragraph 118(1)(a) | 60 |
Gillespie v. The Queen, 82 DTC 6334, [1982] CTC 378 (FCA)
The purpose of s. 63(4) (since repealed) was found to be preventing both a man and a woman from obtaining deductions from income for the same...
Noranda Mines Ltd. v. The Queen, 82 DTC 6212, [1982] CTC 226 (FCTD), aff'd 85 DTC 5001, [1984] CTC 659 (FCA)
An argument that the phrase "taxable income earned in the year" should be interpreted as referring to taxable income before the deduction of any...
IRC v. Garvin, [1981] 1 WLR 793 (HL)
It was stated, obiter, that "I can see a powerful argument being mounted to the effect that, if a receipt falls to be treated as income and taxed...
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| Tax Topics - General Concepts - Estoppel | 50 |
R. v. Malloney’s Studio Ltd., 79 DTC 5124, [1979] CTC 206, [1979] 2 S.C.R. 326
"Mutuality of tax treatment of parties to the same transaction, or even the avoidance of double taxation have never been principles with which...
Quebec North Shore Paper Co. v. The Queen, 78 DTC 6426, [1978] CTC 628 (FCTD)
The court found that the Crown's method of computing the taxpayer's income during a year in which it changed its method of adjusting for...
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| Tax Topics - Income Tax Act - Section 10 - Subsection 10(2) | 125 |
Perrault v. The Queen, 78 DTC 6272, [1978] CTC 395 (FCA)
The treatment of a single payment under different provisions of the Act as income in the hands of two taxpayers may result from an unfortunate...
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| Tax Topics - Income Tax Act - Section 15 - Subsection 15(1) | dividend satsified share purchase consideration | 114 |
| Tax Topics - Income Tax Act - Section 56 - Subsection 56(2) | 48 | |
| Tax Topics - Income Tax Act - Section 84 - Subsection 84(2) | business continued "on a reduced scale" | 54 |
Denison Mines Ltd. v. Minister of National Revenue, 74 DTC 6525, [1974] CTC 737, [1976] 1 S.C.R. 245
Costs of removing ore were deductible in computing the taxpayer's profit. Since "no single disbursement can be reflected twice in the accounts",...
F.S. Securities, Ltd. v. C.I.R. (1964), 41 TC 688 (HL)
"[D]ouble taxation in itself is not something which is beyond the power of the Legislature to provide for when constructing its tax scheme ......
Minister of National Revenue v. Trans-Canada Investment Corporation Ltd., 55 DTC 1191, [1955] CTC 275, [1956] S.C.R. 49
In his dissenting reasons, Rand J., in finding that the intercorporate dividend deduction in s. 27(1) of the 1948 Act was not available to the...
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| Tax Topics - Income Tax Act - Section 112 - Subsection 112(1) | dividend-received deduction flowed through an investment trust | 115 |
| Tax Topics - Statutory Interpretation - Expressio Unius est Exclusio Alterius | 39 |
See Also
101139810 Saskatchewan Ltd. v. The Queen, 2017 TCC 3
An individual (Case) held his 1/3 shareholding in a small business corporation through a personal holding company (8231) which also held 1/3 of...
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| Tax Topics - Income Tax Act - Section 55 - Subsection 55(2.1) - Paragraph 55(2.1)(b) | s. 55(2) assessment of corporate tax on bad butterfly confirmed notwithstanding same accrued gain reported at individual shareholder level | 489 |
| Tax Topics - Income Tax Act - Section 55 - Subsection 55(5) - Paragraph 55(5)(f) | 55(5)(f) designation may be made after assessment under s. 55(2) | 278 |
Létourneau v. The Queen, 2010 DTC 1098 [at 3020], 2009 TCC 614 (Informal Procedure)
By operation of 96(1.1)(b), which applies notwithstanding any other provision of the Act, "allowances" received by a retired partner from his...
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| Tax Topics - Income Tax Act - Section 118 - Subsection 118(7) | 122 |
Beament et al. v. Minister of National Revenue, 70 DTC 6130, [1970] CTC 193, [1970] S.C.R. 680
In finding, in his concurring reasons for judgment, that the contractual right of beneficiaries of an estate to enforce an agreement for the...
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| Tax Topics - General Concepts - Fair Market Value - Shares | deceased's shares valued based on terms of agreement binding the deceased | 169 |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Property | 100 | |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Property | 56 |
Consoltex Inc. v. R., 97 DTC 724, [1997] 2 CTC 2846 (TCC)
Bowman TCJ. found that because the cost of expenditure by the taxpayer on yarn qualified as SR&ED for purposes of s. 37 of the Act, those costs...
Pezzelato v. The Queen, 96 DTC 1285 (TCC)
In obiter dicta, Bowman TCJ. accepted a submission that if the taxpayer were taxable under s. 80.4(1)in its 1988 taxation year in respect of...
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| Tax Topics - General Concepts - Res Judicata | 126 | |
| Tax Topics - Income Tax Act - Section 6 - Subsection 6(1) - Paragraph 6(1)(a) | 163 |
Attis v. MNR, 92 DTC 1128, [1992] 1 CTC 2244 (TCC)
The exclusion in s. 15(2) for payments made as part of a series of loans or other transactions and repayments does not apply where there is a...
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| Tax Topics - Income Tax Act - Section 15 - Subsection 15(2.6) | no series of loans and repayments where practice of repaying shareholder advances out of dividends and bonuses | 131 |
Pat Marcantonio v. Minister of National Revenue, 91 DTC 917, [1991] 1 CTC 2702 (TCC)
After finding that the Minister had properly reassessed the taxpayer to increase his income pursuant to s. 69(1)(a) by the amount of charges made...
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| Tax Topics - Income Tax Act - Section 69 - Subsection 69(1) - Paragraph 69(1)(a) | 133 |
Administrative Policy
18 July 2018 Internal T.I. 2018-0766441I7 - Article XXIX(5) and 91(5)
A Canadian resident (and US citizen) had an agreement with the Canadian Competent Authority under Art. XXIX(5) of the Canada-US Treaty, by virtue...
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| Tax Topics - Income Tax Act - Section 91 - Subsection 91(5) | revocation of a Treaty S Corp. agreement with CASD resulted in double taxation of the S Corp income when now dividended to Canada | 363 |
| Tax Topics - Treaties - Income Tax Conventions - Article 29 | agreement with CASD terminated when S Corp. ceased to be fiscally transparent | 207 |
2016 Ruling 2016-0661071R3 - Whether s. 80 or s. 143.4 applies
CRA found that, given that s. 80 applied in year of forgiveness of unpaid interest under a CCAA Plan, and in light of the rule of statutory...
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| Tax Topics - Income Tax Act - Section 143.4 - Subsection 143.4(4) | s. 80 rules prevailed in a CCAA compromise over the contingent amount (s. 143.4) rules | 320 |
| Tax Topics - Income Tax Act - Section 143.4 - Subsection 143.4(2) | s. 80 prevailed over s. 143.4 | 110 |
4 March 2015 External T.I. 2014-0562151E5 F - Frais de psychothérapie dépense d'entreprise
After finding that psychotherapy expenses potentially could be deducted in computing income of a professional practice, CRA stated:
The fact that...
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| Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(a) - Income-Producing Purpose | “but for” test applied to determine deductibility/potentially creditable item can instead be expense | 188 |
10 October 2014 APFF Roundtable Q. 21, 2014-0538091C6 F - 2014 APFF Roundtable, Q. 21 - Impact of the Descarries Case
CRA indicated respecting any potential double taxation arising from the applicability of both s. 84(2) and (3) to a surplus stripping transaction...
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| Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) | Descarries failed to recognize scheme against indirect surplus stripping | 750 |
| Tax Topics - Income Tax Act - Section 84 - Subsection 84(2) | Descarries failed to recognize breadth of s. 84(2) | 572 |
30 October 2014 External T.I. 2013-0488881E5 - Upstream Loan
As a result of a wind-up of a 2nd tier FA following a s. 90(6) loan to Canco, there technically would be a double income inclusion to Canco...
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| Tax Topics - Income Tax Act - Section 40 - Subsection 40(3) | notional s. 40(3) gain does not generate surplus | 70 |
| Tax Topics - Income Tax Act - Section 90 - Subsection 90(6) | no double inclusion following FA creditor wind-up or for 2nd loan in series | 121 |
| Tax Topics - Income Tax Act - Section 90 - Subsection 90(9) | notional election and double taxation issues | 1332 |
| Tax Topics - Income Tax Regulations - Regulation 5901 - Subsection 5901(1.1) | notional Reg. 5901(1.1) election | 30 |
| Tax Topics - Income Tax Regulations - Regulation 5901 - Subsection 5901(2) - Paragraph 5901(2)(a) | 90-day rule unavailable | 28 |
| Tax Topics - Income Tax Regulations - Regulation 5901 - Subsection 5901(2) - Paragraph 5901(2)(b) | notional Reg. 5901(2)(b) election | 31 |
| Tax Topics - Income Tax Regulations - Regulation 5907 - Subsection 5907(1) - Underlying Foreign Tax | notional UFT disproportionate election | 37 |
11 March 2014 Internal T.I. 2013-0513221I7 F - Stock options
Publico determined to grant stock options to its directors and consultants, as a result of which a private corporation ("Corporation"), that had...
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| Tax Topics - Income Tax Act - Section 15 - Subsection 15(1) | double income inclusion under s. 56(2) or (4) to consulting corporation, and under s. 15(1) to its shareholder, where consultant's options issued directly by client to shareholder | 113 |
| Tax Topics - Income Tax Act - Section 56 - Subsection 56(2) | s. 56(2) benefit where corporation implicitly consented to consultant's options being issued by client directly to its shareholder | 170 |
| Tax Topics - Income Tax Act - Section 56 - Subsection 56(4) | implicit transfer by corporation when stock options earned by it were issued directly by its client to its shareholder | 175 |
| Tax Topics - Income Tax Act - Section 9 - Timing | no s. 9(1) income inclusion from consultant being granted stock options until exercise | 226 |
| Tax Topics - General Concepts - Fair Market Value - Options | stock options with no in-the-money value could have nil FMV | 134 |
| Tax Topics - Income Tax Act - Section 52 - Subsection 52(1) | s. 15 benefit due to shareholder receipt of stock options earned by corporation added to the ACB of the exercised shares | 165 |
31 August 2011 External T.I. 2011-0415891E5 F - Increase in stated capital, stock dividends -55(2)
CRA will construe paragraph 55(2)(c) so that the amount deemed not to be a dividend is not taxed as a capital gain twice. Paragraph 55(2)(c) will...
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| Tax Topics - Income Tax Act - Section 55 - Subsection 55(2) - Paragraph 55(2)(c) | capital gain recognized under s. 55(2)(c) not recognized a second time on sale of the shares | 185 |
23 April 2009 External T.I. 2008-0301241E5 F - Fiducie d'invest. à participation unitaire-75(2)
CRA indicated that, although s. 75(2) technically could apply to a real estate unit trust established on commercial terms, it very well might not...
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| Tax Topics - Income Tax Act - Section 75 - Subsection 75(2) | s. 75(2) generally not applied to commercial unit trust where single class of units subscribed for on FMV terms | 277 |
| Tax Topics - Income Tax Act - Section 53 - Subsection 53(2) - Paragraph 53(2)(h) - Subparagraph 53(2)(h)(i.1) | CRA could extend IT-369R, para. 10 to avoid ACB reductions to unit trust units where s. 75(2) applies | 301 |
29 August 2005 External T.I. 2005-0125811E5 F - Actions prescrites: 6204(1)b) du Règlement
On the day before a third party acquired all of the shares of a Canadian-controlled private corporation (CCPC), two directors of its directors...
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| Tax Topics - Income Tax Regulations - Regulation 6204 - Subsection 6204(1) - Paragraph 6204(1)(b) | likelihood that employees’ stock option shares would be immediately repurchased meant they were not prescribed shares | 124 |
2003 Ruling 2003-0028033 - LEASE-BARGAIN PURCHASE OPTION
A lease is amended to add an option to purchase and to increase the annual lease payment by an amount that would be in excess of the fair market...
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| Tax Topics - Income Tax Act - Section 49 - Subsection 49(3) | 159 |
29 April 2003 External T.I. 2003-00646
Allocations made to the spouse of a retired partner pursuant to s. 96(1.1) would, depending on the circumstances, also be included in the income...
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| Tax Topics - Income Tax Act - Section 56 - Subsection 56(4) | 38 | |
| Tax Topics - Income Tax Act - Section 96 - Subsection 96(1.1) | 38 |
26 March 2003 External T.I. 2003-0008795 - EMPLOYEE STOCK OPTION DEEMED DIVIDEND
Contrary to a previous position, CCRA has concluded that s. 248(28) does not preclude the application of s. 84(3) on the redemption of shares even...
24 May 2002 External T.I. 2002-0123225 F - REER DONNE EN GARANTIE
After noting that where an RRSP provides a secured guarantee of a loan to the annuitant, the fair market value of the property given as security...
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| Tax Topics - Income Tax Act - Section 146 - Subsection 146(10) | inclusion under s. 146(10) for secured guarantee not limited to loan value, and ousts application of s. 146(8) if payment made by RRSP pursuant to guarantee | 162 |
| Tax Topics - Income Tax Act - Section 146 - Subsection 146(8) | generally no double taxation under s. 146(8) on payout on guarantee if property’s value previously included under s. 146(10)/ gross-up for source deduction purposes | 190 |
14 May 2002 Internal T.I. 2001-0109517 F - SECTION DE LA LOI248(28)
Holding companies made interest-bearing advances to a partnership (the S.E.N.C.) CRA proposed to disallow the interest deduction to the S.E.N.C....
11 April 2001 External T.I. 1999-0007005 - DEEMED DIVIDENDS ON MARK-TO-MARKET SHARE
The following example was provided respecting a preferred share held by a financial institution whose paid-up capital (and apparently, redemption...
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| Tax Topics - Income Tax Act - Section 142.5 - Subsection 142.5(1) | 57 |
21 November 2000 External T.I. 2000-0056495 - double taxation
A Canadian resident corporation lends money to a foreign affiliate which, in turn, lends money to non-affiliated and non-resident corporations. In...
10 August 2000 External T.I. 2000-0016875 - SAR DISPOSITION, SHARES
"Where an employee has income from employment under paragraph 7(1)(a) related to the disposition, by virtue of subsection 7(1.1), of shares and a...
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| Tax Topics - Income Tax Act - Section 7 - Subsection 7(3) - Paragraph 7(3)(a) | 36 | |
| Tax Topics - Income Tax Act - Section 84 - Subsection 84(3) | 83 |
12 November 1992 Memorandum (Tax Window, No. 27, p. 7, ¶2330)
S.4(4) cannot be invoked to open up a year for reassessments that is statute-barred where an expense that relates to that year was claimed by a...
11 June 1991 T.I. (Tax Window, No. 4, p. 8, ¶1297)
Under the proposed version of s. 4(4), interest to which s. 18(4) applied in a previous year will not be required to be included in income under...
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| Tax Topics - Income Tax Act - Section 80 - Subsection 80(4) | 19 |
11 September 89 T.I. (February 1990 Access Letter, ¶1109)
There is no provision in the Act permitting a shareholder/manager to reduce the amount of salary received by him to the extent that such salary is...
86 C.R. - Q.39
In the absence of abuse, RC will not tax the same amount twice.
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| Tax Topics - Income Tax Act - Section 67 | 42 |
85 C.R. - Q.6
"Normally it is the Department's practice not to assess the same income twice."
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| Tax Topics - Income Tax Act - Section 56 - Subsection 56(2) | 17 |
84 C.R. - Q.46
A deemed dividend arising on the redemption of shares that are inventory will be excluded from the shareholder's s. 9 gain.
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| Tax Topics - Income Tax Act - Section 54 - Proceeds of Disposition - Paragraph (j) | 17 |
81 C.R. - Q.3
On the conversion of debt of an insolvent corporation into share capital, RC will not apply both ss.69(1)(a) and 80.
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| Tax Topics - Income Tax Act - Section 69 - Subsection 69(1) - Paragraph 69(1)(a) | 52 |
IT-369R "Attribution of Trust Income to Settlor"
An amount which has been attributed to a person under s. 75(2) normally will be excluded from the income of the beneficiaries and the trust.
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| Tax Topics - Income Tax Act - Section 75 - Subsection 75(2) | 108 |
IT-462 "Payments Based on Production or Use"
In situations where ss.12(1)(a) or (b) can be applied in addition to paragraph 12(1)(g), RC will normally apply only the former provisions to...
Articles
Kevin Kelly, Sona Dhawan, "Share Repurchase Programs", Canadian Tax Highlights, Vol. 26, No. 6, June 2018, p. 9
An investment dealer holds a share of an issuer with a paid-up capital of $15, an original cost to it of $40 and a fair market value of $100. It...
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| Tax Topics - Income Tax Act - Section 112 - Subsection 112(5.2) | 352 |