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10 December 2018- 11:30pm Placer Dome – High Court of Australia finds that $6B in goodwill for accounting purposes largely did not exist for tax purposes Email this Content Whether the acquisition by Barrick Gold of Placer Dome triggered Western Australia stamp duty of A$55 million on the lands in Western Australia of an Australian subsidiary of Placer Dome turned on whether, on a global consolidated basis, the value of all of Placer Dome's land (defined to include mining tenements and improvements) equalled or exceeded 60% of the value of all its property. ... In rejecting the proposition that sufficient value could thus be assigned to the goodwill to avoid a conclusion that Placer Dome did not exceed the 60% threshold, the plurality stated: Murry [(1998) 193 CLR 605] did not broaden the legal concept of goodwill to include sources which did not generate or add value (or earnings) to the business by attracting custom. … [A]t the acquisition date, there were no sources of goodwill that could explain the $6 billion gap which was attributed by Barrick to goodwill. That unexplained gap suggests that the DCF calculations used by Barrick's valuers to value Placer's land, its principal asset, were wrong. … [T]he danger identified by the majority in Murry of attributing a value to goodwill which actually inheres in an asset was readily apparent. … At the acquisition date, Placer was a land rich company which had no material property comprising legal goodwill. ...

In other words, “the intention of the parties was never to assign the options on shares … but rather to transfer the sums to the foundations.” ... After quoting the equivalent of ITA s. 7(3)(a), he stated: Thus … [the s. 69(1)(b) equivalent] cannot be engaged in order to fill in the rules for computing income provided in [the stock option rules]. ... Agence du revenu du Québec, 2019 QCCQ 1430 under s. 7(1)(b), s. 7(3)(a) and Reg. 100(1) – employer. ...

20 November 2019- 12:07am Denis – Court of Quebec does not accept the CRA view that a triplex is a single property for tax purposes Email this Content The taxpayer sold a triplex in 2011 at a gain, which he reported as being fully exempt under the Quebec principal residence exemption. ... This decision likely is inconsistent with the CRA view (e.g., in 2011-0417471E5 and 2016-0651791C6 – both referred to by Breault JCQ) that a duplex or triplex is a single property for tax purposes. ... Agence du revenu du Québec, 2019 QCCQ 6708 under s. 54 – principal residence. ...

11 December 2019- 11:48pm 626468 New Brunswick – Federal Court of Appeal finds that safe income from asset sale was reduced by accrued, but not yet payable, taxes on the gain Email this Content An individual rolled his apartment building into a Newco in consideration for a mortgage assumption and shares with nominal paid-up capital, and then rolled those shares into a new Holdco. Following the realization shortly thereafter by Newco of a taxable capital gain and recapture of depreciation on a sale of the building, Newco increased the adjusted cost base to Holdco of its shares by effecting a series of s. 84(1) dividends (including a capital dividend) – following which the individual sold his shares of Holdco to a third party for a sale price based on the amount of cash sitting in Newco. ... Webb JA stated: Both the fair market value of the shares and the portion of the resulting capital gain that would be attributable to the income earned or realized would reflect the tax liability that, although not payable immediately, would eventually have to be paid. … This tax liability would not disappear if, as contemplated by subsection 55(2) … the shares of Tri-Holdings would have been sold immediately before the dividend in question. ...

28 May 2020- 11:43pm Ludmer – Quebec Court of Appeal confirms that CRA had abusively applied Reg. 7000(2)(d) to equity-linked notes and, thus, inconsistently with published positions Email this Content The Canadian-resident taxpayers were shareholders of a BVI company (“SLT”) which, in turn, held notes issued by two foreign subsidiaries of two Canadian banks. ... However … to succeed, the claim for punitive damages must rest upon a finding of intentional conduct and an unlawful deprivation of property. … However abusive the CRA’s conduct might have been, it is difficult to subscribe to the Appellants’ arguments that there was here an intention to unlawfully deprive the Appellants of their property. ... Attorney General of Canada, 2020 QCCA 697 under Reg. 7000(1)(d) and General Concepts – Negligence. ...

13 July 2020- 11:40pm Hunt – Federal Court of Appeal indicates that it would be prepared to consider whether any broad discretion of CRA to waive tax was unconstitutional Email this Content The taxpayer, who had been assessed TFSA advantage tax under s. 207.05, and was unhappy with the amount of the tax that the Minister had ultimately offered to waive under s. 207.06, brought a Rule 58(1) application to the Tax Court, which asked whether s. 207.05 offends s. 53 of the Constitution Act, 1867 – with counsel arguing that in light of the potential waiver under s. 207.06 “the Minister sets the rate of tax, not Parliament, and this offends section 53.” ... In describing where assistance was needed, he stated: [A]fter a full examination of the text in light of its context and purpose, the Court might conclude that Parliament’s provision, in its authentic meaning, satisfactorily constrains the Minister’s discretion and defines what she can do and how she should do it. … But in other cases, the Court might conclude that Parliament’s provision, in its authentic meaning, gives the Minister an unconstrained, undefined discretion without criteria. ... They would not fix the fatal problem: Parliament’s over-delegation of taxation power in the first place contrary to section 53 …. ...

27 September 2020- 11:17pm Irish Bank Resolution Corp – England and Wales Court of Appeal effectively finds that the Treaty PE Article has an embedded thin cap rule Email this Content HMRC increased the UK branch profits of the Irish taxpayers’ branch banking, or home mortgages, businesses by attributing to their UK permanent establishments notional additional free capital on the basis that if they had operated as distinct and separate enterprises, they would have had a higher amount of free capital and therefore a correspondingly lower amount of borrowed capital – with the result that HMRC disallowed interest which was actually paid to third parties. ... Otherwise the comparator provisions … cannot work. To construe the phrase "same or similar conditions" as requiring the PE's actual ratio of free to borrowed capital to be applied would be self-defeating. ... Summaries of Irish Bank Resolution Corporation Ltd v Revenue and Customs [2020] EWCA Civ 1128 under Treaties – Income Tax Conventions- Art. 7 and General. ...

6 June 2021- 10:34pm Brent Carlson Family Trust – Federal Court finds that CRA had been confused by the rectification jurisprudence in rejecting an amended s. 85(1) election Email this Content In implementing a plan to maximize the utilization by family members of the capital gains exemption (“CGE”) on the sale to an arm’s length purchaser of an operating company that was indirectly held by family trusts, the trusts engaged in a dirty s. 85(1) exchange of existing low-basis common shares of a subsidiary for new shares of that subsidiary that included Class F preferred shares, with a joint s. 85 election being filed at an agreed amount that resulted in recognition of a capital gain equaling the aggregate CGE available to the trust’s beneficiaries. ... Before setting aside and remitted to the Minister for redetermination, Walker J stated: … The Minister’s delegate … imports equitable requirements specific to rectification and rescission without acknowledging any difference in the remedies sought. … They requested only the amendment of the Original Elections, as contemplated in subsection 85(7.1). ...

Whether it was denied input tax refunds under the Quebec Sales Tax Act for the QST on its electricity purchases turned on whether it used the electricity “to produce movable property … intended for sale” within the meaning of s. 17(aa) of the Quebec Retail Sales Tax Act (“RSTA”) The Court of Quebec had followed C.R.I. ... In my view, this relief conferred a benefit on the Appellant and … constituted valuable consideration that may be characterized as "any other consideration" within the meaning of section 2(9) of the RSTA. ... Agence du revenu du Québec, 2021 QCCA 1068 under ETA s. 123(1) – consideration. ...

17 November 2021- 10:17pm Lauria – Tax Court of Canada accepts that shares transferred 3 weeks prior to filing the IPO preliminary should be valued at a 40% “marketability” discount to the IPO value Email this Content On April 1, 2006, the taxpayers, who were executives of Gluskin Sheff+Associates Inc. ... In fact, the Appellants just seemed to ignore it, when in my opinion, having regard to their skills in and knowledge of the securities industry from working as executives for a wealth management firm and the multiple other circumstances or red flags that went up … they were clearly aware of the impact of the IPO’s value on their holdings. ... The Queen, 2021 TCC 66 under General Concepts – FMV – shares and s. 152(4)(a)(i). ...