Andrei 95 Holdings – Tax Court of Canada finds that legal fees for litigation respecting minority shareholdings were ineligible for input tax credits notwithstanding their being a source of management fees

A private company together with its individual shareholder had a 50% interest in two operating companies from which it earned management fees. Legal fees incurred in connection with negotiations with the other 50% shareholder for either one to buy out the other, and in connection with a lawsuit brought by the other shareholder against them for breach of an agreement not to compete with the operating companies, were found not to be eligible for input tax credits notwithstanding that the two companies were a source of management fees. Paris J focused on the fact that the shares were financial instruments.

Neal Armstrong. Summary of Andrei 95 Holdings Ltd. v. The Queen, 2015 TCC 224 under ETA, s. 169(1).