ACI - Federal Court of Appeal finds that a common question determination under s. 174 should be handled through joinder of the other taxpayer to the existing appeal

CRA reassessed the taxpayer (ACI) on the basis that a payment of $1.95 million, which another company (AFT) had treated as a deductible management fee but which ACI had treated as a capital receipt from the disposition of a joint venture interest, was fee income to ACI.  Following ACI’s appeal of the reassessment, the Minister brought an application under s. 174 to determine which of the two characterizations was correct.

S. 174(3)(b) provides that where an appeal has already been launched, the Tax Court "may" make an order joining the other party to the appeal.  Pelletier JA found that that was the right thing to do here, rather than having the common question determined in fresh and distinct proceedings.  This gave a tactical advantage to ACI, as it had the effect of preserving the current pleadings (and underlying assumptions) of the Minister, which had potential weaknesses.

Neal Armstrong.  Summaries of ACI Properties v. The Queen, 2014 FCA 45 under ss. 174(3) and 174(1).