The taxpayer, a retired businessman living in Barbados, sought to challenge, through judicial review, information requests made by CRA (who was reviewing his residency status) to other countries’ tax authorities. After he had requested the certified record contemplated by Federal Court Rules 317 and 318), he was contacted by a journalist inquiring about the application. The taxpayer immediately obtained a judicial provisional confidentiality order, and launched an application for a declaration that the material communicated in accordance with Rule 318 did not form part of the public court file, but was rather akin to documents produced on discovery so as to be subject to an implied undertaking of confidentiality. Pamel J concluded that there were significant differences between discovery procedures and the communication of the certified record, and that the latter was not subject to the implied undertaking rule. Pamel J referred in numerous places in his reasons to the “open court” principle, including the statement by the Supreme Court in Sierra Club that “[t]he link between openness in judicial proceedings and freedom of expression has been firmly established by this Court,” and further stated:

Section 26 of the FCR is clear. The open court principle allows any person to inspect a court record and any annex "that is available to the public" … .

While the general rule is that documents in a court file or annex are public, not all documents in the court file or annex are necessarily "available to the public". Documents or material that are treated as confidential under a rule of law or that are subject to a confidentiality order of the Court continue to be treated as confidential and are designated as such at the time of filing with the Court, identifying the relevant rule of law or court order, if any (s. 152(1) FCR). Otherwise, the FCR do not provide a mechanism for recognizing the confidentiality of documents "in the possession of the Registry".

The taxpayer also unsuccessfully argued that making the certified record public as a matter of course violated section 8 of the Charter.

Pamel J dismissed the motion to declare the entire certified record confidential. However it remained open to the taxpayer to make a motion for a confidentiality order in accordance with the Sierra Club principles.

Neal Armstrong. Summaries of Rémillard v. Canada (Revenu national), 2020 CF 1061 under Federal Court Rules, s. 318(1) and s. 26(1) and Charter, s. 8.

A broker (Lockwood) whose business included brokering deals for junior resource companies earned an up-front fee for brokering a farm-in deal for a client (LEO) in 2010. Its fee included a component that was payable in the form of 833,333 shares of LEO (which the payment agreement stated had a “deemed value” of $250,000 in total) when LEO had earned an interest in the subject resource property by having made the targeted exploration or development expenditures. However, in June 2011, LEO was taken over by a second company (AOI - which happened to be the other party to the farm-in deal) under a plan of arrangement. Lockwood brought an action to receive shares of AOI (based on the exchange ratio under the plan of arrangement) in lieu of the promised shares of LEO, and in June 2012, it was agreed that it would receive a smaller number of shares of AOI in full satisfaction of its claim. Lockwood disposed of these shares during the balance of the same (2012) taxation year.

Lockwood submitted that this fee component should have been recognized by it in its 2010 rather than 2012 taxation year in the amount of $250,000 and that the excess of the proceeds received by it in 2012 over this amount was a capital gain. St-Hilaire J instead found that:

• This fee did not become receivable, and was not to be recognized as income, in 2010, as “its right to receive this compensation cannot be said to have been ‘absolute and under no restriction’” in 2010.
• Had it been received, the payment of the LEO shares would have been a payment to Lockwood for services rendered and, hence, would have been business income.
• Since the AOI shares received in 2012 under the settlement replaced the LEO shares, the AOI shares, valued on the settlement date, were received for services rendered, so that such value was business income to Lockwood in its 2012 taxation year.
• This amount recognized as the consideration for Lockwood’s services “thus becomes the adjusted cost base of the AOI shares received in 2012. That is the amount that the taxpayer gave up to acquire the shares”.
• Thus, the proceeds for the AOI shares received in excess of that ACB was a capital gain.

Neal Armstrong. Summaries of Lockwood Financial Ltd. v. The Queen, 2020 TCC 128 under s. 12(1)(b) and s. 54 – ACB.

ETA Sched. VI, Pt. V, s. 6.3 zero-rates “a supply made to a non-resident person that is not registered [for GST/HST purposes] of … a service of refining a metal to produce a precious metal.”

An Australian GST provision effectively zero-rated a supply of “precious metal” (relevantly defined as gold, in an investment form, of at least 99.5% fineness) if it was the “first supply of that precious metal after its refining by … the supplier”. The Australian Commissioner argued that an Australian company did not qualify as refining gold “scrap” purchased by it (which was generally of at least 99.99% fineness, but nevertheless was scrap gold because it was not in investment form) because its mooted refining was of gold that thus already exceeded the statutory threshold of 99.95% fineness.

In rejecting this submission, the Full Court stated:

The ordinary meaning of the word “refining” … and the statutory context suggest that the word “refining” in s 38-385 is referring to a process by which metal is brought to a finer state or form. It may be accepted that, as the Commissioner submits, this is concerned with increasing the metallic fineness of the metal. But this does not require that the process be directed towards increasing the metallic fineness of the metal above the requisite standard of fineness (99.5% in the case of gold). …

[E]ven if …the primary objective of these processes was to provide quality assurance (rather than to increase the metallic purity), the processes nevertheless constituted “refining” in the sense outlined above.

Neal Armstrong. Summaries of ACN 154 520 199 Pty Ltd (in liquidation) v Commissioner of Taxation [2020] FCAFC 190 under ETA Sched. VI, Pt. V, s. 6.3 and s. 123(1) – precious metal.

Where a major construction project (other than of a rental building) is expected to extend beyond three years, the adverse impact of the available-for -use rules on potential capital cost allowance claims in the third and subsequent years often can be ameliorated by making a s. 13(29) election. The wording of the election form (which likely will be amended in this regard) seems to suggest that the election must be made annually, starting generally with the third year.

CRA has clarified that this is incorrect – the election need only be made once (generally with the return for the project’s third taxation year).

Neal Armstrong. Summary of 1 October 2020 Internal T.I. 2019-0821651I7 under s. 13(29).