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28 April 2025- 1:41am CRA indicates that the granting of power of attorney over shares would not change the shares’ ownership for purposes of the s. 120.4 – excluded share definition Email this Content An adult child, who was over 24 and a “specified individual,” received a distribution of 10% of the common shares of a CCPC from a family trust, of which his father (a “source individual”) was one of the two trustees, then he granted his father a power of attorney (POA) regarding those common shares, pursuant to which his father could exercise all rights attached to those shares except as expressly excepted. ... Summary of 12 March 2025 External T.I. 2025-1053231E5 under s. 120.4(1) – excluded share – (b). ...

12 December 2016- 12:24am Fairmont/Jean Coutu – Supreme Court of Canada appears to find that rectification to fix tax problems is limited to fixing badly implemented tax plans rather than fixing bad plans Email this Content In reversing Juliar, Brown J indicated in Fairmont that rectification only “allows a court to achieve correspondence between the parties’ agreement and the substance of a legal instrument intended to record that agreement, when there is a discrepancy between the two,” whereas in Juliar, the substance of the agreement was for the exchange of shares for a promissory note rather than shares, so that the purported rectification there was of the agreement itself rather than in the instrument recording the parties’ agreement. ... Fairmont Hotels Inc., 2016 SCC 56 under General Concepts – Rectification and Statutory Interpretation – Interpretation Act, s. 8.1; summaries of Jean Coutu Group (PJC) Inc. v. Canada (A.G.), 2016 SCC 55 under General Concepts – Rectification and Statutory Interpretation – Interpretation Act, s. 8.1. ...

At that time, the taxpayer was deemed by s. 256(9) to have no longer had legal control of the subsidiary from the beginning of that day – and the taxpayer also was dealing with the subsidiary at arm’s length as a factual matter at that time, given that a WTC nominee had taken charge as director and officer of the subsidiary two days’ previously, as requested by it for its commercial (albeit, ineffectual) purposes. ... In this regard, Owen J stated: [I]n my view the words “consideration given for the property”, when read in the context of the entire subsection, can only mean consideration given by the transferee for the property regardless of who receives that consideration. … Owen J then turned to the Crown’s GAAR position, which was that there was an abusive avoidance of s. 160, having regard to the proposition that s. 160 would have applied to the taxpayers if they had instead received the Property as a dividend on their shares. ... The Queen, 2021 TCC 24 under s. 160(1), Reg. 1102(1)(c), s. 245(1) – tax benefit, s. 245(3) and General Concepts – Onus. ...

29 July 2021- 11:05pm Canada North – Supreme Court of Canada finds that a CCAA court can order a super-charge that has priority over a s. 227(4.1) deemed trust Email this Content The Crown challenged an order of the Alberta judge in CCAA proceedings regarding the Canada North group of companies that “priming charges” pursuant to s. 11 of the CCAA for counsel fees, costs of the monitor and financing charges of an interim lender would rank in priority to all other security interests and charges, arguing that this priority was contrary to s. 227(4.1). ... She also stated: [C]ourts should still recognize the distinct nature of Her Majesty’s interest and ensure that they grant a charge with priority over the deemed trust only when necessary. … In the concurring reasons of Karakatsanis J (writing for herself and another Justice), she agreed that s. 227(4.1) does not satisfy the requirements for a trust, and seemed to emphasize the importance of giving breadth to the discretion of a CCAA judge under s. 11 of the CCAA in order to “further the remedial objectives of the CCAA ” and given that at the end of the day the final CCAA order should provide for payment of the source deduction amounts. ... Canada North Group Inc., 2021 SCC 30 under s. 224(4.1), General Concepts – Ownership, Statutory Interpretation – Interpretive/Definition Provisions and Interpretation Act, s. 8.1. ...

The fact that CRA had not assessed the initial three quarters may have precluded 353 from being able to require CRA to allow the ITC claims for those quarters pursuant to s. 296(2) – see Pawlak. Régimbald J essentially found that CRA was justified in not assessing the initial three quarters on the basis that the related ITCs claims were barred by s. 296(4)(b) – but did not discus the “trumping” of this provision by s. 296(2). ... Canada (Attorney General), 2024 FC 1090 under ETA s. 296(4)(b), s. 123(1) – registrant, s. 238(1), Interpretation Act, s. 32, Federal Courts Act, s. 18.1(2). ...

14 December 2024- 10:58pm Martin – Tax Court of Canada finds that 100% of contributions made to the RCAs of US athletes were exclusions only from their Canadian-source income Email this Content The taxpayers (Russell Martin and Joshua Donaldson), who performed 40% of their duties in Canada rather than the US, agreed with the Toronto Blue Jays that a portion of their total package would take the form of annual contributions to a retirement compensation arrangement (RCA). ... However, Gagnon J agreed with the taxpayers that such an arrangement would not meet the requirements of an RCA and would instead likely constitute a salary deferral arrangement (SDA). – whereas here the taxpayers had substantiated the existence of an RCA by obtaining an actuarial report to support the amount of contributions necessary to provide them with a reasonable pension on retirement. ... The King, 2024 TCC 153 under s. 115(1)(a)(i), s. 248(1) – SDA, s. 5(1) and s. 207.5(1) – refundable tax. ...

Selections – a US Court of Appeal finds that the reciprocal and fentanyl-trafficking tariffs are unlawful Email this Content Because it is of general interest, we have provided a link to the V.O.S. ... The IEEPA authorized the president to take any of a specified long list of actions, including “to regulate … importation”, in response to a declared national emergency arising from “an unusual and extraordinary threat … to the national security, foreign policy, or economy of the United States.” ... Here, “[t]he invocation of IEEPA to impose tariffs on nearly every country in the world is undoubtedly a significant departure from … previous invocations” of presidential power regarding tariffs; and the clear congressional authorization therefor was lacking (and similarly regarding the fentanyl tariffs). ...

9 May 2018- 11:12pm Barr – Tax Court of Canada finds that broker fees paid to locate purchasers of a private company were HST-taxable Email this Content The sole individual shareholder retained two brokers for the sale of his company or its assets. ... They did not undertake to find a purchaser for the shares as contrasted to the assets – and, in fact, when they found the ultimate purchaser, that purchaser initially made an offer for the assets (at which point the brokers dropped out of the picture) and, only later, was a share sale negotiated. ... The Queen, 2018 TCC 86 under ETA s. 123(1) – financial service – para. ...

5 June 2018- 12:09am Iberville Developments – Tax Court of Canada finds that the starting ACB of a partnership interest was determined exclusively under s. 97(2)(b) Email this Content All you gotta do to offset the capital gain from a property sale is run the sale through a new partnership. ... Thus, it did not matter whether the taxpayer was issued additional units on the drop down – all it continued to have was a partnership interest with a nil cost, and with an ACB as increased only as contemplated under s. 97(2)(b) (i.e., to $20 in the above example). ... S. 97(1) does not explicitly deal with adjustments to the cost or ACB of a partnership interest – but Boyle J nonetheless helpfully stated that “subsection 97(1) … would be the specific rule which would provide that a transferor partner’s cost of their partnership interest is fair market value.” ...

3 July 2018- 12:50am Pomerleau – Federal Court of Appeal finds that GAAR applied to converting soft ACB (generated from crystallizing the capital gains deduction) into pseudo-hard ACB under s. 53(1)(f.2) for use in extracting surplus Email this Content To simplify the facts somewhat by ignoring transactions in which the taxpayer accessed tax attributes of his sister, the taxpayer wanted to extract $2M from a family corporation, and was willing to do so on a basis that resulted in him receiving a deemed dividend of $1M provided that he was able to extract the other $1M tax free by using the previous step-up of the ACB of the shares of him (and his sister) to $1M using the capital gains deduction. ... To this end, subparagraph 84.1(2)(a.1)(ii) requires going beyond the ACB of the shares concerned – or of the shares for which they are substituted – and enquiring as to the source of the funds which constituted them in order to ascertain if they were subjected to tax. … This rationale was circumvented by the plan implemented by the appellant. ...