Superior Plus – Federal Court of Appeal confirms that a taxpayer which was assessed under GAAR for a loss shifting transaction was entitled to see the correspondence between CRA and Finance on the subsequently-introduced s. 256(7)(c.1)

When the Superior Plus Income Fund was converted into a public corporation, the chosen corporate vehicle was a public corporation ("Old Ballard") with substantial losses. The transactions were engineered so that there was no acquisition of control of Old Ballard by a group of persons (unless the former income fund unitholders were factually regarded as a group) and so that the former Ballard shareholders and the old assets were removed from Old Ballard.

CRA assessed inter alia under GAAR. The Federal Court of Appeal has now confirmed the finding of Hogan J below that the taxpayer (whose position includes that s. 256(7)(c.1) was originally considered as an "extension" rather than a "clarification" of the loss-streaming rules) is entitled to disclosure of a wide range of documents (and answers to questions) relating to the policy deliberations (not just the final recommendations of the GAAR Committee) that preceded the GAAR assessment of the taxpayer, and respecting CRA cajoling Finance into introducing s. 256(7)(c.1) in response to this transaction. Noël CJ stated that "information pertaining to the policy of the Act, even where it is not taxpayer specific, can be relevant on discovery."

Noël CJ also appears to have found that production by a taxpayer of a particular piece of written legal advice received by it does not entail a waiver of solicitor-client privilege for all its other written legal advice unless allowing the selective disclosure would produce "unfairness and inconsistency."

Neal Armstrong. Summaries of The Queen v. Superior Plus Corp., 2015 FCA 241, under s. 245(4) and s. 232 – solicitor-client privilege.