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17 July 2017- 12:56am Club Intrawest – Federal Court of Appeal splits a service in relation to a cross-border vacation home portfolio into two geographic components Email this Content Under the usual approach to applying the GST single-supply doctrine, a Canadian-resident non-share corporation, most of whose members had time share points which entitled them to book stays at Canadian, U.S. and Mexican resort condos beneficially owned by the corporation, would have been found to be receiving its annual fees from them as consideration for a single supply of a service, namely, funding the operating costs of the time share program. This gave rise to a conundrum, as ss. 142(1)(d) and 142(2)(d) respectively deem a supply of a service in relation to real property inside Canada or outside Canada to be made in Canada or outside Canada – so that a single supply here, which would have related to both, would have been deemed to be made both inside and outside Canada. ... Canada, 2017 FCA 151 under ETA s. 142(1)(d) and General Concepts – Agency. ...

2 February 2018- 12:58am FTQ – Tax Court of Canada finds that a “gift” that relieved the taxpayer of an obligation to invest the gifted funds was not a gift Email this Content The corporate taxpayer agreed with the City of Chandler that it would no longer use any loan repayment proceeds received by it from a City-owned corporation- that had failed in an costly attempt to restart a paper mill close to the City – to invest in a prospective replacement economic-development LP to be sponsored by the City, but would instead make a “gift” of the loan repayment proceeds (which ended up totalling $9.3 million) to the City, for which it received charitable receipts. ... Ouimet J found that there was no “gift” and, thus, no s. 110.1(1)(a) deduction, stating: Since the payment of the sums … to the City of Chandler had the effect of freeing the appellant of its obligation to negotiate in good faith to create a limited partnership, the consideration received by the appellant in exchange for such payment was the amount by which that obligation was extinguished. ... The Queen, 2018 CCI 3 under s. 110.1(1)(a) and s. 18(1)(a) – income-producing purpose. ...

CRA denied the taxpayer’s request four years later for a refund of this amount on the grounds that this request had not been made within the required three-year period – and in the resulting 2014 reassessment it in fact denied some deductions/credits that had been initially allowed in its 2009 assessment. A threshold issue was whether the 2014 reassessment had been made pursuant to ITA s. 152(4.2) (also applicable for CPP purposes), which deals with a reassessment made “for the purpose of determining … the amount of any refund.” ... The reassessment was vacated on substantive grounds since a s. 96(1.1) distribution did not satisfy the applicable requirement in s. 14 of the CPP Act that it be “his income for the year from all businesses … carried on by him” (he instead was retired). ...

25 June 2018- 1:23am CIBC – Tax Court of Canada finds that Visa’s fees to CIBC were subject to GST given inter alia that it was not a “person at risk” Email this Content CIBC issued Visa credit cards and utilized a credit card payment system that was operated and managed by Visa Canada. ... The Queen, 2018 TCC 109 under ETA s. 123(1) – supply, asset management service, financial service – s. ... (r.5), Financial Services and Financial Institutions (GST/HST) Regulations, s. 4(2)(b), s. 4(3)(c), s. 4(1) – person at risk. ...

27 June 2018- 11:50pm Rio Tinto Alcan – Federal Court of Appeal finds that fees incurred by a public board in determining to make a bid, as contrasted to implementation, were currently deductible Email this Content Pelletier JA confirmed the distinction between fees relating to acquisition and divestiture transactions of the taxpayer (“Alcan”) that were “incurred as part of Alcan’s decision-making process” (“oversight expenses”) and fees that “were incurred in the course of putting into effect Alcan’s decision once it had been made” (“implementation costs”). ... This entailed accepting the proposition that fees incurred in connection with the advisability of acquiring or spinning-off a whole company qualified as being paid for “advice as to the advisability of purchasing or selling a specific share … of the taxpayer.” ... Rio Tinto Alcan Inc., 2018 FCA 124 under s. 18(1)(b) – capital expenditure v. expense – oversight and investment management, s. 20(1)(bb) and s. 20(1)(g). ...

8 November 2018- 12:00am Atlas Tube – Federal Court finds that CRA could compel disclosure of an EY tax due diligence report discussing uncertain tax filing positions of a target Email this Content The U.S. parent (JMC) of the Canadian taxpayer (Atlas) acquired another Canadian company (LSI), following which some of the pieces of LSI ended up in Atlas’ hands in a post-closing reorganization. ... In rejecting this argument, Southcott J stated: BP is to be read as precluding general and unrestricted access to TAWPs on a prospective basis, outside the context of an audit of particular issues. … … Unlike in BP, the Minister’s request for access to the Report in the present case is made in the context of an active audit of particular issues. ... Atlas Tube Canada ULC, 2018 FC 1086 under s. 231.1(1) and s. 232(1) – solicitor-client privilege. ...

16 November 2018- 1:05pm Callidus Capital – Supreme Court of Canada finds that the deemed Crown statutory trust for unremitted GST/HST lapses on a bankruptcy of the tax debtor Email this Content ETA s. 222(3) provides that payments received by a secured creditor out of property that is subject to the deemed statutory trust under s. 222(1) for collected but unremitted GSTHST is itself subject to a deemed trust in favour of the Crown. ... In the Federal Court of Appeal, the majority had found that, although s. 222(1.1) causes the deemed trust to disappear on bankruptcy, it does not eliminate the liability of a creditor for having received payments prior to bankruptcy that should have been subject to the Crown’s (at that point, still extant) priority under the s. 222(1) deemed trust so that such “personal liability … can be pursued by the Crown in a cause of action independent of any subsequent bankruptcy proceedings.” ... In addition to more textual and technical reasons for this conclusion, he referred to s. 67(2) of the Bankruptcy and Insolvency Act as reflecting that “Parliament put the Crown on the same footing as unsecured creditors” in a bankruptcy – with an exception for employee source deductions, which “is explained by the fact that source deductions are amounts which belong to the employee in question … [and] this money does not belong to the employer anymore.” ...

21 April 2019- 11:41pm Resource Capital Fund IV LP – Full Federal Court of Australia finds that the effecting of a share sale pursuant to an Australian Scheme of Arrangement pointed to an Australian source Email this Content Two Caymans investment LPs with mostly U.S. ... That arrangement took place in Australia, and accordingly, because the scheme was the “proximate” origin of the profits earned, and because of the other connections with Australia summarised by the primary judge … including the location of the mine in Western Australia, those profits had a source in Australia. ... Summaries of Commissioner of Taxation v Resource Capital Fund IV LP [2019] FCAFC 51 under s. 152(1), s. 115(1)(a)((ii) and s. 248(1) – taxable Canadian property – para. ...

In fact, the quality of the sound recording had everything to do with the quality of the physical medium …. ... The distinction between tangible and intangible property also can be significant for GST/HST purposes, e.g., under the place-of-supply rules – and also for the Part XIII distinction between royalties and purchases of goods. ... Agence du revenu du Québec, 2019 QCCQ 1818 under Schedule II – Class 8(j). ...

Based on JAD’s widespread use of misleading backdated records and an untenable taxation theory, an inference of a guilty intent could also have been reasonably drawn. … [T]he only argument potentially available to them was one that was successfully employed in R v Patry, 2018 BCSC 1524 [which stated]:... ... Deacur and Gordon based on a wholly untenable but mistaken belief that their methods were sound does not, however, lead to a conclusion that the prosecution was legally unsound. … [T]he investigation was thorough, fair, objective and competently carried out. ... Canada, 2019 FC 853 under s. 239(1)(c) and General Concepts – Malicious Prosecution. ...