News of Note
CRA indicates that a deemed trust (e.g., under s. 149(5)) is not subject to Sched. 15 reporting if it satisfies the historical s. 150(1.1)(b) T3 filing exception
Email this ContentWhere a deemed trust pursuant to s. 149(5) arises over the property of a non-profit organization (NPO), for example, a bank account, would the deemed trust be required by Reg. 204.2(1) to submit a Sch. 15 with its T3 return for each year?
CRA indicated that, based on its understanding that a deemed trust is not an express trust, s. 150(1.2) would not override the exemption in s. 150(1.1)(b) from filing a T3 return if the deemed trust had no Part I tax payable for the year (for example, if pursuant to s. 149(5)(f), its property income was under $2,000) and there were no relevant dispositions in the year. If the deemed trust was required to file a T3 return because the s. 150(1.1)(b) exemption did not apply, then it would indeed be required by Reg. 204.2(1) to include a Sched. 15. However, since the deemed trust does not have a settlor or beneficiaries, it would not need to complete that part of the Schedule 15 – but it would, however, be required to report the trustee of the deemed trust referred to in s. 149(5)(b) or (c).
Perhaps the point of interest is that, on its face, Reg. 204.2(1) appears to require any trust to file Sched. 15 if it is not subject to one of the exceptions listed in ss. 150(1.2)(a) to (o) – so that the Regulation does not seem to explicitly acknowledge the s. 150(1.1)(b) filing exemption. Thus, CRA may implicitly be acknowledging the principle (see, e.g., Auer and McNeeley), that a regulation cannot override or undercut a provision of the Act.
Neal Armstrong. Summary of 27 August 2025 External T.I. 2025-1057461E5 under Reg. 204.2(1).
Boylu – Tax Court of Canada finds that an Uber driver was self-employed
Friedlander J. found that although the Uber app governed many crucial aspects of the taxpayer’s activities as an Uber driver, including access to the market, the pricing of rides, and payment, the taxpayer nonetheless (on the basis of the “very limited” evidence) should be treated as an independent contractor rather than an Uber employee given his complete control over his car and its hours of driving, and as to whether or not to use another ride sharing service. This meant that his fares for the assessed years (2015 and 2016) were subject to HST subject to the small supplier exclusion.
The Justice pleadings had implicitly misinterpreted the exclusion (by treating the taxpayer as having ceased to be a small supplier at the particular point in 2015 at which the $30,000 threshold was exceeded for that year), so that, to be procedurally fair, Friedlander J treated him as being a small supplier throughout 2015. Accordingly, only the fares charged after January 2016 were subject to HST. It did not matter that, given the way the Uber app operated, he had no practical ability to collect HST on his fares. (A subsequent amendment effectively excluded Uber etc. drivers from being small suppliers.)
Neal Armstrong. Summaries of Boylu v. The King, 2025 TCC 192 under ETA s. 123(1) – service - (c), s. 148(1), s. 240(1.1) and Input Tax Credit Information (GST/HST) Regulations, s. 2(a).
Income Tax Severed Letters 24 December 2025
This morning's release of five severed letters from the Income Tax Rulings Directorate is now available for your viewing.
Hillcore – FC finds CRA’s verbal “courtesy response,” rejecting refunding of a GST credit which it had already set-off, years before, against an ITA debt, instead was a reviewable decision
After issuing GST reassessments of the applicant (“Hillcore”) in August 2017, CRA garnished funds totalling approximately $0.9 million (the “seized funds”) on account of the total GST debt of $1.7 million . However, in July 2020, CRA vacated the reassessments. Instead of returning the seized funds to Hillcore, along with the balance of over $1.7 million credited to its GST account, CRA applied the full ($1.7 million plus) against Hillcore's larger income tax debt. Hillcore was informed of this action through notices of reassessment showing those GST credits being transferred to its income tax account.
In October 2023, Hillcore sent a letter to CRA Collections requesting the return of the seized funds. Hillcore essentially made what Ferron J characterized as “a strong argument that the Minister could not exercise its discretion under the ITA to issue a set-off of the Seized Funds because, as per the ETA, the Minister had the obligation to return the Seized funds.”. A CRA collections officer refused Hillcore's request by phone conversation. The officer did not identify or provide a copy of the policies consulted, and refused to provide written reasons. Hillcore filed an application for judicial review of this “decision” (which the Attorney General instead characterized as a mere “courtesy response”) within 30 days under s. 18.1(2) of the Federal Courts Act.
Ferron J indicated that Hillcore could have challenged the set-off decision made in July 2020 either by filing an application for judicial review or by filing a notice of objection. That said, the October 2023 letter specifically requested a refund of the seized funds on the above novel basis and did not challenge the entirety of the 2020 set-off decision. As such, the letter addressed a different issue than the 2020 set-off decision (as was recognized by the collections officer) and, thus, the officer’s rejection response was a fresh exercise of discretion which could now be judicially reviewed.
As this fresh verbal “Decision … provided minimal reasoning and no supporting details” and “was clearly not justified, transparent nor intelligible,” it was unreasonable. The matter was referred back to the Minister for redetermination.
Neal Armstrong. Hillcore Financial Corp. v. A.G. (Canada), 2025 FC 2009 under Federal Courts Act, s. 18.1(2).
CRA confirms that the s. 110.6(15)(a)(i) valuation rule extends to the ss. 83.1(2.31) and (2.32), and the s. 110.63, rules
CRA confirmed that s. 110.6(15)(a)(i) (regarding the valuation of a life insurance policy at its cash surrender value) applied for purposes of the requirement in ss. 84.1(2.31) and (2.32) that the subject shares be qualified small business corporation shares (QSBC shares) and for the purposes of the draft definition in s. 110.63(1) of a “qualifying Canadian entrepreneur incentive property,” being a property that, at the time of disposition, is a share that would be a QSBC share.
However, as the definition of QSBC share and small business corporation were not relevant to the determination of whether a disposition of a share of a subject corporation was a “qualifying business transfer” under the s. 248(1) definition for purposes of the employee ownership trust rules, the deeming rule in s. 110.6(15)(a)(i) did not apply for such purposes.
Neal Armstrong. Summaries of 18 September 2025 Roundtable, 2025-1067931C6 - CLHIA 2025 - Q.2 under s. 84.1(2.31)(b)(iii), s. 110.63(1) - “qualifying canadian entrepreneur incentive property” - (a) and s. 248(1) - “qualifying business transfer”.
CRA indicates that unrealized loss on crypto held as an adventure could be realized through burning
CRA indicated that where a taxpayer purchased crypto assets as an adventure in the nature of trade rather than as part of a regular business and the crypto became obsolete and declined to a nil or nominal market value, the taxpayer could generally realize the accrued loss - notwithstanding that it could not by virtue of s. 10(1.01) value such inventory at FMV - by “burning” it, e.g., transferring it to a burn address.
Neal Armstrong. Summary of 10 April 2025 External T.I. 2025-1050641E5 under s. 10(1.01).
We have translated 6 more CRA interpretations
We have translated a further 6 CRA interpretations released in December of 1999. Their descriptors and links appear below.
These are additions to our set of 3,406 full-text translations of French-language Technical Interpretation and Roundtable items (plus some ruling letters) of the Income Tax Rulings Directorate, which covers all of the last 26 years of releases of such items by the Directorate. These translations are subject to our paywall (applicable after the 5th of each month).
Gaitanis – Tax Court of Canada finds that there could be no frustration of a qualifying purchase intent if the taxpayer never had that intent
In 2014, the appellant became a co-purchaser with his niece of a single-unit residential complex (the “property”) in order to assist with the financing of its purchase.
By virtue of the then-current version of ETA s. 262(3), each of them was required to satisfy the s. 254(2)(b) requirement of acquiring the property as a place of residence of that individual or a relation, in order to generate the $24,000 Ontario new housing rebate. The appellant did not satisfy this test since, at the time of entering into the purchase agreement, his intent was for the property to be acquired as the primary place of residence of his niece and not of him, and she was not a relation. She was not a relation because inter alia ITA s. 251(6)(a) stated that persons are connected by blood relationship if one is the child or other descendant of the other or one is the brother or sister of the other.
Bodie J rejected a submission of the appellant that a frustrating event excused his failure to comply with s. 254(2)(b), namely that they were unable to arrange permanent mortgage financing of the property and, accordingly, were forced to sell the property before they occupied it: there could not be considered to have been frustration of an intent of the appellant to acquire the property as a primary place of residence of him or a relation because he did not have such requisite intent at the time of signing the purchase agreement.
Neal Armstrong. Summary of Gaitanis v. The King, 2025 TCC 186 under ETA s. 254(2)(b).
Brown – Tax Court of Canada confirms that interest on an s. 160(1) reassessment accrues from the time of the original s. 160(1) assessment
In 2010, the taxpayer was assessed under s. 160(1) in respect of transfers to her by a corporation in 2005 and 2006. in 2020 she was reassessed pursuant to a consent to judgment to reduce the assessed amounts to agreed amounts, with interest on such agreed amounts running from the dates of the original s. 160(1) assessments.
Spiro J. confirmed that the arrears interest had indeed accrued from the 2010 dates of the original s. 160(1) assessments. Although the taxpayer’s counsel had correctly cited Abrahams for the proposition that once such reassessments were sent to the taxpayer in 2020, they were the only assessments in existence, this did not affect the 2010 balance due dates that had been established on the date of the original s. 160(1) assessments.
Furthermore, s. 160(1)(e) did not constitute an overarching aggregate liability limit so as to prevent the assessment of arrears interest over and above the lesser of the two amounts referred to in s. 160(1)(e). Indeed, as noted in 1455257, the effect of 2013 amendments was to confirm that interest accrued from the date of original assessment under s. 160(1).
Neal Armstrong. Summary of Brown v. The King, 2025 TCC 184 under s. 160(2).
GST/HST/UHT Severed Letters February 2025
This afternoon's release of eight severed letters from the Excise and GST/HST Rulings Directorate, including Underused Housing Tax (UHT) interpretations (identified by them as their February 2025 release), is now available for your viewing.
Neal H. Armstrong editor and contributor