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11 August 2022- 10:59pm Stroud – Tax Court of Canada applies the Moldowan REOP tests for GST/HST purposes Email this Content Moldowan indicated that an activity should have a reasonable expectation of profit (REOP) to qualify as a business, and suggested that, in determining whether there is a REOP, the “following criteria should be considered: the profit and loss experience in past years, the taxpayer’s training, the taxpayer’s intended course of action, the capability of the venture as capitalized to show a profit after charging capital cost allowance.” ... After reviewing the unsatisfactory evidence presented by the taxpayer, who had reported very large losses (with meagre documentary support) from a racehorse farm and modest profits from his law practice (in years before he was disbarred), Spiro J stated: Having applied the criteria … in Moldowan, I find that each factor (other than time spent), weighs heavily in favour of the conclusion that the Appellant did not carry on his farm business with a reasonable expectation of profit. ... The Queen, 2022 TCC 86 under ETA s. 123(1) – commercial activity. ...

26 September 2022- 11:33pm Contact Lens King – Federal Court of Appeal finds that a requirement to make supplies pursuant to a prescription did not require obtaining a copy of the prescription Email this Content The zero-rating for contact lenses in Sched. ... He noted that the supplier, after the reporting periods in issue, had commenced requiring customers to certify that they had the prescription in their possession – and, regarding this customer attestation requirement, stated: [I]t is not for this Court, in this context, to measure its impact on the burden imposed on the appellant. ... II, s. 9, s. 286(1) and Statutory Interpretation – Inserting Words. ...

11 October 2022- 11:06pm Peach – Federal Court of Appeal distinguishes between not challenging a taxpayer’s business acumen and measuring by what a reasonable business person would have done Email this Content In his 2011 taxation year, the taxpayer earned $27 in revenue and deducted over $19,600 in business expenses from a business of selling life insurance and mutual funds to a client base largely consisting of friends and family. ... Keeping establishes that the Tax Court’s role is not to evaluate a taxpayer’s business acumen, a principle the Tax Court respected …. ... Canada, 2022 FCA 163 under s. 67, s. 3(a) – business and s. 152(4)(a)(i). ...

27 December 2022- 8:57pm Axamit Versa – Tax Court of Canada finds that the GST registration number need not be set out in a document issued to the ITC claimant by the supplier Email this Content The ARQ denied input tax credits claimed by Axamit for its 2015 year regarding GST charged by its landlord, because Axamit had not provided the ARQ with any document issued by the landlord as the ARQ considered to be required by the definition in Input Tax Credit Information (GST/HST) Regulations of “supporting documentation.” ... The King, 2022 CCI 163 under Input Tax Credit Information (GST/HST) Regulations – s. 2 – supporting documentation and ETA s. 223(2). ...

15 February 2023- 10:33pm Buhler Versatile – Tax Court of Canada finds that increasing the horsepower of a tractor by 20% was SR&ED Email this Content Wong J allowed the claim of the taxpayer, which was the only Canadian manufacturer of agricultural tractors, respecting a project to build a four-wheel drive tractor with 85 horsepower (or about 20%) above the current industry maximum. ... She also found that the scientific method had been followed – and documented well enough, although only marginally so. ... The King, 2023 TCC 18 under s. 248(1) – SR&ED. ...

20 February 2023- 11:58pm Ahamed TFSA – Tax Court of Canada finds that a TFSA is not exempted on profits of a business of trading in qualified investments Email this Content The self-directed TFSA of a professional investment advisor, which actively traded qualified investments (mostly, penny stocks listed on the TSX Venture Exchange), was assessed under s. 146.2(6) for its 2009 to 2012 taxation years (during which $15,000 in contributions grew to $564,483) on the basis that its net gains were income from carrying on a business. ... In dismissing the TFSA’s appeal, Spiro J stated: So long as the business is one that may be “carried on” (i.e., not an “adventure in the nature of trade”) all businesses — without statutory exception — fall within the scope of subsection 146.2(6) of the Act, including a business of trading qualified investments. ...

9 March 2023- 11:20pm Ossai – Federal Court sets aside a CRA decision on the basis that it was unintelligible Email this Content Although the facts are more intricate, they essentially involved the taxpayer, in early 2021, promptly withdrawing $29,000 from his TFSA when he discovered (before being so notified by CRA) that he had over-contributed by $20,000 – then shortly thereafter, contributing a further $6,000 to his TFSA, not realizing that under the “excess TFSA amount” definition, such contributions were not offset by his “excess” TFSA withdrawal earlier in the year of $9,000 because it is only a prior, not a current, year’s withdrawals that restore contribution room. ... CRA denied his request for relief under s. 207.06(1) on the basis that the removal of the excess contributions did not occur within a reasonable time frame – but provided no explanation as to why the $9,000 excess withdrawal in 2021 did not offset the further 2021 contributions. ...

1 May 2023- 11:41pm Quintal – Court of Quebec finds that amounts paid to a client to induce him to purchase a life insurance policy were income under s. 12(1)(x) Email this Content Quintal and other clients of an insurance broker (Chabot) participated in a scheme of Chabot to defraud life insurance companies, whose math depended on the commissions generated to Chabot from the sale of whole life policies substantially exceeding the premiums payable under those policies during the first two years of their term (beyond which, they could be cancelled without Chabot being required to repay his commissions). ... The principal (unsuccessful) argument of Quintal that the payments received by him from Élan were not includible in his income pursuant to the equivalent of s. 12(1)(x) was that those amounts were not received by him “in the course of earning income from … property.” ... Quintal by Élan were inducement payments since without them … he would never have purchased such an insurance policy at such a cost.” ...

14 May 2023- 10:27pm Prospera Credit Union – Tax Court of Canada finds that a credit union, although not an authorized MFT unit distributor, earned GST-exempted fees for doing most of the work Email this Content A credit union (“Westminster”), which was not authorized to sell mutual fund units or securities to its members, entered into “participation agreements” with two arm’s-length companies (“CAMI” and “CSI”) which were so authorized, pursuant to which Westminster employees nominally became employees or representatives of CAMI or CSI and became licensed and trained to sell securities, while remaining essentially full-time employees of Westminster working under its supervision. ... The King, 2023 TCC 65 under ETA s. 123(1) – financial service – (r.4). ...

11 June 2023- 11:22pm River Cree Resort – Federal Court of Appeal finds that a supply to an ATM owner was the location rather than cash loaded onto the ATM Email this Content The owner and operator of a casino resort (“River Cree”) agreed with the owner of ATMs (“Access Cash”) which, in turn, had access to the Interac payment network of a network operator, that it would make various locations on its resort available for the siting of Access’ ATMS, load those ATMs with its own cash (for the later reporting periods at issue) or with money borrowed by it from Access Cash (for the earlier periods) and provide the utilities, security, routine maintenance and customer support necessary to operate the ATMs. ... Canada, 2023 FCA 130 under ETA s. 123(1) – financial service – (a). ...