News of Note

Where an individual has two wills (one of them not being subject to probate) so that the two wills are administered separately, does s. 104(2) apply so that one T3 return is filed for the estates created under both wills?

CRA responded that, even though the wills could be administered separately, the individual would be regarded as having only one estate and thus (since a trust is defined in s. 248(1) to include an estate unless the context otherwise required), there would only be one trust. There being only one trust, the postamble to s. 104(2) could not apply, and only one T3 would be filed for each taxation year.

Neal Armstrong. Summary of 29 November 2022 CTF Roundtable, Q.9 under s. 104(2).

CRA has now published the official version of its responses to the questions posed at the 15 June 2022 STEP Roundtable. For convenience, we provide the links below to these responses and our summaries.

A taxpayer sought the deduction, in a relief application made pursuant to s. 152(4.2), of $195,000 in legal expense incurred by her in otherwise statute-barred years in connection with a human-rights action. CRA initially proposed to allow the requested deduction (and to also include the small related reward in the taxpayer’s income) but then, after the requested response period had expired, changed its view, and rejected the proposed adjustments on the basis that the legal fees did not qualify for deduction under s. 8(1)(b). In rejecting the taxpayer’s claim for judicial review, Strickland J stated:

[T]he Minister’s Delegate had no discretion and was compelled to apply s 152(4.2) of the ITA in accordance with the parameters set out in s 8(1)(b). In assessing the tax liability of a taxpayer, “the Minister generally has no discretion to exercise and, indeed, no discretion to abuse. Where the facts and the law demonstrate liability for tax, the Minister must issue an assessment” (JP Morgan …).

Neal Armstrong. Summary of Carasco v. Attorney General of Canada, 2022 FC 1665 under s. 152(4.2).

Regarding the requirement under the (still) draft rules for an enhanced mineral exploration credit for individuals’ investing in flow-through shares that the required certification by a “qualified engineer or geoscientist” be “completed … no more than 12 months before the time that the agreement is made,” CRA indicated that the prescribed form is in the process of being completed and will be released to the public “very shortly.”

CRA then repeated the guidance on the filing of the required information by letter, pending the release of the form, as described in detail in 2022-0949081E5.

Neal Armstrong. Summary of 29 November 2022 CTF Roundtable, Q.5 under s. 127(9) - flow-through critical mineral mining expenditure.