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23 August 2018- 1:03am Devon – Tax Court of Canada finds that payments made to target’s employees for surrendering their options on target’s acquisition were mostly deductible by it Email this Content Two public-companies made cash payments for the surrender by employees of their options previously granted to them under employee stock option plans, with the surrenders occurring on the closing of their acquisition by other public companies. ... (f) of the definition of eligible capital expenditure for “the cost of … a right to acquire [a share]” did not apply given that “the word ‘cost’ contemplates an acquisition of an asset or other property,” whereas “when a stock option is surrendered to the issuing corporation, the rights represented by that option [instead] are extinguished.” ...

13 September 2018- 11:10pm Laliberté – Tax Court of Canada that the Cirque du Soleil’s bearing most of the $41.8M cost of a space trip for its controlling shareholder gave rise to a shareholder benefit Email this Content The founder and controlling shareholder of Cirque du Soleil was found to have received a taxable benefit under s. 15(1) (or alternatively, under s. 246(1)) equal to approximately 90% of the $41.8 million cost of sending him on a trip to the international space station in September and October 2009, given that the cost was borne by his family holding company and then largely passed through to the top operating company in the Cirque du Soleil group (whose CFO refused to deduct it for corporate income tax purposes). ... For that reason I could conclude that an allocation in the range of 0 to 10% of the cost of the space trip would be a reasonable charge to Cirque du Soleil. … [T]he remaining 90% of the cost of the trip, being $37.6 million, was the amount of the benefit conferred on and enjoyed by M. ...

20 September 2018- 11:21pm Lachance – Federal Court finds that CRA could refuse an extension to a taxpayer confused by a CRA Guide Email this Content The GST/HST Guide on the new housing rebate indicated that an Ontario new housing rebate was available in circumstances where the federal rebate would have been available but for the value of the new home having been over $450,000. ... CRA denied her extension request on the grounds that the Guide disclosure was not inaccurate – and none of the other published grounds for taxpayer relief were met. ...

8 October 2018- 11:42pm Hunt – Tax Court of Canada finds that CRA’s discretion to waive tax does not render the tax unconstitutional Email this Content A taxpayer implemented an estate freeze, subscribed for common shares of the company at a low value and contributed those shares to his TFSA at a low value. CRA assessed him advantage tax under s. 207.05 equalling 100% of the appreciation of the shares within his TFSA before the shares’ sale – and following a Federal Court action by him, proposed to reduce the rate of advantage tax to his marginal federal and provincial tax rate. ...

24 October 2018- 1:24am Laval Technopole – Court of Quebec applies the traditional common law tests of Crown agency to determine whether companies were agents of Canadian municipalities Email this Content Various companies in Quebec whose function it was to promote commercial development, or cultural, sporting or tourist activities, in their respective municipalities, were found to be subject to a higher rate of employer health tax because they were an agent (“organisme mandataire”) of a Canadian municipality. ... Agence du revenu du Québec, 2018 QCCQ 6352 under s. 212(3) – fully exempt interest- (a)(iii). ...

28 October 2018- 9:54pm Laplante – Federal Court of Appeal finds that a purported distribution of QSBCS gains to family trust beneficiaries was a sham Email this Content The taxpayer (Laplante) was the dominant trustee of a family trust (DL Trust) that had realized a capital gain of around $6M on the sale of qualified small business corporation shares. ... Canada, 2018 CAF 193 under General Concepts – Sham. ...

5 November 2018- 10:36pm Akanda – Federal Court of Appeal grants an extension to seek reversal of a default judgment notwithstanding the absence of a reasonable explanation for the delay Email this Content After the taxpayer (Akanda) had missed a lot of deadlines for providing a list of documents and completing discovery examinations, and shortly after its counsel had resigned, its appeals respecting the denial of over $6M and $1.5M in SR&ED and ITC claims, respectively, were dismissed without an appearance by the taxpayer. ... He noted that Akanda had satisfied three of the usual criteria for such an extension (having a continuing intention to pursue the application to set aside the default judgment, having some merit to its application and there being no demonstrated prejudice to the Crown in the three month delay) but not the fourth criterion (having a reasonable explanation for the delay) – but stated: Since the findings with respect to three of the four factors favour Akanda and since the amounts involved are significant, the interests of justice support a finding that the application for an extension of time should be granted. ...

6 December 2018- 11:51pm Hi-Tech – Tax Court of Canada confirms that the required ITC documentary information can be spread among different supporting documents Email this Content Sommerfeldt J dealt with a situation where an audit fee paid in various payments by a GST registrant had problematic documentation. ... Although not needing to land on this issue, he indicated that there may have been undue delay for purposes of the rule in ETA.s 152(1)(b) (effectively deeming consideration to have become due when its invoicing is unduly delayed) even if the audit firm had “issued” the invoice, given that the invoice date was six months after the completion of the audit work – whereas normally invoices were issued much more promptly. ...

4 January 2019- 2:01am Loblaw Financial – Tax Court of Canada finds that the Crown should not receive a costs award Email this Content CRA prevailed in assessing a Loblaw subsidiary for the realization of $473 million of foreign accrual property income between 2001 and 2010 through a wholly-owned Barbados international bank (GBL), but only on the basis that GBL’s business was not conducted principally with arm’s length persons. The taxpayer had made a settlement offer on what C Miller J had described as a principled basis, namely, that CRA would apply GAAR to GBL’s 2006 to 2013 years – but not to the earlier years on the basis that they were not covered by waivers provided. ...

1 February 2019- 2:32am Therrien – Court of Quebec finds that the adult daughter of the taxpayer’s ex-common law partner was the taxpayer’s “child” Email this Content When the handicapped daughter (“V”) of the taxpayer’s ex-common law partner was 22, she started living with the taxpayer. ... The relevant part of the Quebec Taxation Act definition of “child” (which was essentially the same as ITA s. 252(1)(b)) referred to: a person who is wholly dependent on the taxpayer for support and of whom the taxpayer has, or immediately before such person attained the age of 19 years did have, in law or in fact, the custody and control This reference to “custody and control … in law or in fact” might have, but did not, give Massol JCQ difficulty given that V was an adult who was with him purely as a matter of choice. ...