News of Note
Fournier-Giguère – Federal Court of Appeal confirms that individuals deriving a sustained and significant income from full-time poker gambling were engaged in a business
Email this ContentThe three taxpayers, who were friends, were reassessed to include income from their poker gambling (of the type Texas Hold’em without limit) for three to five taxation years (depending on the taxpayer, with none of the years a loss year), falling in the period 2008 to 2012, of $5,241,025 for Mr. D’Auteuil, $3,219,074 for Mr. Bérubé, and $1,450,000 for Mr. Fournier-Giguère.
LeBlanc JA summarized the findings of the Tax Court as follows:
a) The appellants' poker activities were, for them, much more than mere entertainment or a recreational activity;
b) The appellants played poker to earn a living, making them professional poker players;
c) Their poker activities represented their sole source of income (or the main source of income, in the case of Mr. D’Auteuil);
d) The appellants devoted almost all of their time to it, apart from sleeping, eating, and partying;
e) Based on the earnings generated from poker, they had the ability to achieve profits on a consistent and regular annual basis, even though the outcomes of the games could not be predictably controlled;
f) At this level of earnings over such a long period, they could reasonably expect to make a living by playing poker;
g) Despite their unconventional lifestyle, they exhibited the behavior of "serious businessmen": they played to win; they had strategies that they adapted according to table levels and the strength of their opponents; they used software that allowed them to gather information on their opponents' playing trends, track their earnings on gaming sites, and analyze their personal statistics;
h) They adopted objective standards for risk management, risk minimization, and income maximization; and
i) They used their expertise and skills to make a living from poker, a game of chance in which skill plays a significant role.
LeBlanc JA did not find any reversible error in these findings or the Tax Court’s conclusion that their earnings were income from a business.
Neal Armstrong. Summaries of Fournier-Giguère v. Canada, 2025 CAF 112 under s. 40(2)(f) and s. 3(a) – business.
CRA indicates that a municipal bylaw requiring division of an apartment building into condo rental units could preclude access to the purpose-built rental housing (PBRH) rebate
The company acquired an existing single-family house in order to demolish it and construct two identical buildings, each containing four residential units for long-term rental use. It was unclear whether the municipal authority's bylaws required each unit to be strata-titled or whether it was only each of the two buildings that was required to be strata-titled.
Regarding the first alternative, CRA noted that a "multiple unit residential complex" (MURC) did not include a condominium complex, whose definition relevantly referred to a residential complex that contained more than one residential condominium unit. Accordingly, there would be no eligibility for the PBRH rebate.
Under the second alternative, each building could qualify as a MURC, so that the PBRH rebate would be available if the other requirements were satisfied.
Neal Armstrong. Summary of 13 August 2024 GST/HST Interpretation 247663 under Real Property (GST/HST) Regulations, s. 4(2).
CRA indicates that "actual eligible use percentage" of a carbon capture project should be based on the end “use” (i.e., capture) of the carbon
Aco owned and operated a facility to capture carbon dioxide emissions from its industrial facilities. The captured carbon was then transported through the pipeline of Bco, for delivery to the carbon sequestration hub of Cco. However, significant unanticipated fugitive emissions of the captured carbon occurred on the pipeline, which constituted an “ineligible use” of the captured carbon as defined in s. 127.44(1).
In this context, how was the "actual eligible use percentage" computed under s. 211.92(1) in respect of Aco’s CCUS project? CRA indicated that in its view it was “the end use of captured carbon that should be used in quantifying the amount of captured carbon in both eligible and ineligible use” for purposes of such definition.
As a result, “Aco would be required to use measurements of the end use of its captured carbon” (presumably in the hands of Cco). However, as the unanticipated fugitive emissions occurred within Bco’s pipeline transportation network, “Aco may be able to avail itself of the relief provided in subsections 211.92(6) and (7) … because such emissions would likely be due to extraordinary circumstances outside of the control of Aco.”
Neal Armstrong. Summary of 25 March 2025 External T.I. 2024-1039131E5 under s. 211.92(1) - "actual eligible use percentage".
We have translated 6 more CRA interpretations
We have translated a further 6 CRA interpretations released in July of 2000. Their descriptors and links appear below.
These are additions to our set of 3,227 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 24 ½ years of releases of such items by the Directorate. These translations are subject to our paywall (applicable after the 5th of each month).
CRA rules that the back-to-back loan rule in s. 90(7) precluded the application of s. 90(6) to “upstream” loans made by a CFA to specified debtors
A non-resident subsidiary of Canco (“CFA”) had used the proceeds of loans received from third-party banks and through bonds issued in its country of residence to make loans under the same terms and conditions (i.e., tenor, interest rate, and currency) as the 3rd-party bank or bond borrowings, plus cross-charged guarantee fees, directly to Finco 1 and Finco 2, which were non-resident “sisters” of Canco and CFA, i.e., Finco 1 and Finco 2 were “grandchild” or “greatgrandchild” subsidiaries of the non-resident parent of Canco. Thus (before considering s. 90(7)), Finco 1 and Finco 2 were “specified debtors” in respect of Canco. In most cases, each such 3rd-party was opened on the same day as the subsequent on-loans to the Fincos, although in a few cases, there was a gap of up to 13 days.
Canco will sell all of its shares of CFA to Canco’s foreign parent for cash consideration equal to their fair market value and elect under s. 93(1) to the extent of any capital gain.
CRA effectively ruled that the back-to-back rule in s. 90(7) deemed the actual loans from the third-party lenders to CFA, and by CFA to the Fincos not to exist and deemed those third party lenders to have made their loans directly to the Fincos on the same terms as the (actual) loans to the Fincos by CFA. Accordingly, s. 90(6) would not apply to require any inclusion in Canco’s incomes in respect of CFA’s loans to the Fincos.
Neal Armstrong. Summaries of 2024 Ruling 2024-1027391R3 under s. 90(7) and s. 90(8)(a).
Kane – Quebec Superior Court states it was bound by horizonal stare decisis to follow a declaration of unconstitutionality in another Superior Court decision under appeal
The applicants in this case were Mohawks who were charged under s. 42 of the Excise Act for failure to pay duty on tobacco products. In Montour, Bourque, J. had found that s. 42 was constitutionally inapplicable to the Mohawks in that case, who had also failed to pay duty on tobacco products:
- by reason of the circumstances of the case before her warranting a departure from the framework developed in Van der Peet ([1996] 2 S.C.R. 507) in respect of Aboriginal rights - so that the applicants' participation in the tobacco trade should be considered protected by an Aboriginal right to freely trade; and
- by reason of an inferred meta-treaty (the Covenant Chain) having been unjustifiably breached by s. 42 because the Crown had not discussed tobacco-related issues with the Mohawks prior to the passage of the Excise Act.
Here, Royer, JSC, found that no circumstances had been established before him justifying a departure from the Van der Peet framework, so that he continued to be bound by vertical stare decisis, i.e., the Montour decision respecting Aboriginal rights could not be followed. However, the finding in Montour respecting treaty rights was subject to the doctrine of horizontal stare decisis (i.e., the requirement to follow prior decisions of the same court in the province) given inter alia that no court had made a finding one way or the other, prior to Montour, as to the effect, if any, of the Covenant Chain.
Accordingly, he was bound to follow Montour and declare that s. 42 was constitutionally inoperative in respect of the applicants before him. Before rejecting the submission of the Attorneys General that the Montour decision was not binding because it was under appeal, he stated that it was not for him to determine that Montour was “plainly wrong” as alleged and that “the effect of a declaration of unconstitutionality has always been immediate unless the effect is suspended by the court.”
Neal Armstrong. Summary of R. v. Kane, 2024 QCCS 5012 under General Concepts – Stare decisis.
CRA finds that the four-unit requirement for the purpose-built rental housing rebate must be satisfied by one building
One of the requirements for the purpose-built rental housing (PBRH) rebate is that there be a multiple-use residential complex (MURC) containing a minimum of four “qualifying residential units” (as defined in s. 256.2(1)), each with separate kitchens, baths, and private living areas. CRA considered that this requirement would be satisfied if there were two adjoining duplexes (each with two such units) with a shared wall, because there therefore would be one residential complex. On the other hand, if there were two adjoining duplexes on a single plot of land without much physical interconnection between the two structures, each would constitute a separate building rather than forming a single MURC, so that the 4-units-in-one-residential-complex requirement would not be satisfied.
If CRA had wished to reach the opposite conclusion in the second situation, it perhaps could have applied s. 33(2) of the Interpretation Act (references to the singular include the plural) to find that one plot of land with two buildings on it constituted a residential complex.
Neal Armstrong. Summary of 3 September 2024 GST/HST Interpretation 247914 under Real Property (GST/HST) Regulations, s. 4(2)(a) and summary of 14 August 2024 GST/HST Interpretation 247708 under Real Property (GST/HST) Regulations, s. 4(2)(a).
Income Tax Severed Letters 11 June 2025
This morning's release of four severed letters from the Income Tax Rulings Directorate is now available for your viewing.
Shopify – Federal Court indicates that it would pare back a CRA unnamed-person requirement (if not already invalid for vagueness) because it would require 8 person-years to respond
The Minister issued a requirement to Shopify pursuant to s. 231.2 for information identifying listed particulars for all Canadian-resident merchant customers of Shopify. The requested particulars were more extensive than in the companion 2025 FC 968 case (re a treaty-based request). The Ministers sought judicial authorization of such requirement pursuant to s. 231.2(3).
Régimbald J found that although the target group would have been “ascertainable” if the requirement had been restricted to Canadian "merchants," it was unclear (due to contradictory CRA wording) whether the requirement also extended to persons, whether individual or business entities, associated with Shopify accounts. This had the effect of "rendering the target group unduly vague and diffuse, and leaving Shopify in a conundrum as to what to provide in response to the [requirement]”.
Although the request for authorization thus failed on s. 231.2(3)(a) grounds, for completeness, Régimbald J. went on to consider (i) s. 231.2(3)(b) (re verifying compliance under the ITA) and (ii) whether it would have been appropriate for him to exercise his residual discretion to restrict or deny the request for authorization.
Regarding (i), the potential inclusion in the requirement of persons associated with Shopify accounts (described above) violated s. 231.2(3)(b) because the Minister's evidence did not identify any intent to verify the compliance of those additional individuals and business entities with any duty or obligation under the ITA.
Regarding (ii), Shopify had brought uncontradicted evidence that complying with the requirement would take eight person-years of work. Accordingly, the proposed requirement was "disproportional," and he indicated that he would have been inclined to authorize a more limited requirement in similar terms to what was proposed in the companion case, i.e., limited to the total sales revenues and a limited list of identifying particulars.
Neal Armstrong. Summary of Canada (National Revenue) v. Shopify Inc., 2025 FC 969 under s. 231.2(3).
Shopify – Federal Court finds that s. 231.2(3)(b) currently did not authorize unnamed person requirements pursuant to treaty information-exchange Articles
Shopify was a Canadian corporation providing a software platform for online e-commerce transactions. After receiving a request from the Australian Tax Office (ATO) for such information pursuant to Article 21 of the Canada-Australia Treaty (the “Convention”) a year previously, the Minister issued a requirement to Shopify pursuant to s. 231.2 of the ITA (and s. 289(3) of the ETA) for information identifying listed particulars for all merchant customers of Shopify who had revenues from sales to customers located in Australia. The Ministers sought judicial authorization of such requests pursuant to the “unnamed persons” provisions of s. 231.2(3) (and s. 289(3) of the ETA).
Régimbald J noted that, although s. 231.2(1) granted the Minister the authority to obtain information or documents regarding named persons for purposes relating to the administration or enforcement of the Act or a “listed international agreement” such as the Convention, in the case of a requirement regarding unnamed persons, s. 231.2(3)(b) instead only referred to the verification of compliance by a person or persons in a group with any obligation under the Act, i.e., there was no mention of any listed international agreement.
This was telling. For instance, it seemed “highly unlikely that Parliament would refer to ‘this Act’ twice within section 231.2 and assign a different meaning to each reference”. Furthermore, a refusal to exchange information on the basis of s. 231.23(b) was consistent with Article 21 of the Convention, which did not impose on the Minister an obligation to carry out measures at variance with Canadian law.
Although it was not necessary for him to do so, Régimbald J went on to consider whether the requirement satisfied the stipulation in s. 231.2(3)(a) that the referenced group be “ascertainable.” In this regard, he stated:
As long as the identities of those within the target group can be readily made exact or determined with sufficient precision by the Court and the third party, the Minister will have met the legislative precondition in paragraph 231.2(3)(a) and identified a sufficiently clear “ascertainable” group. On the evidence adduced, that is the case here.
He further indicated that it would not be appropriate for the Court to exercise its residual discretion in favour of not compelling the disclosure (if disclosure had not already been precluded on the s. 231.2(3)(b) grounds). It did not matter that Shopify Ireland and Shopify Singapore might be in possession and control of some of the requested information, as such information could be accessed in Canada by Shopify itself. Furthermore, if Shopify could not provide a response within the 45 days stipulated in the requirement, the Court retained jurisdiction to extend the time to respond on motion from Shopify.
Thus, the requirement would have been authorized if the amendment to add “listed international agreements” to s. 231.2(3)(b) had been already implemented.
Neal Armstrong. Summary of Canada (National Revenue) v. Shopify Inc., 2025 FC 968 under s. 231.2(3).