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., 2018 FCA 166-- summary under Subsection 245(4) Summary Under Tax Topics- Income Tax Act- Section 245- Subsection 245(4) allocation of most partnership profits to a lossco that acquired its interest at year end without economic risk was vacuous and abused ss. 96(1)(f), 103(1) and 160 The taxpayer was a holding company which wholly-owned a “Partnerco” holding an approximate ¼ limited partnership interest in a strata development partnership (the partnership) which, by May 25, 2006, had realized income of $13 million from the sale of most of the strata units. ... In finding that such allocation defeated the object of s. 96(1) and thus was abusive for purposes of s. 245(4), Woods JA stated (at paras. 68-69, 71) that: [T]he allocation of the partnership’s income for tax purposes to Nuinsco, which became a partner one day before the end of the partnership’s fiscal period, frustrates the object, spirit or purpose of paragraph 96(1)(f) … by divorcing the economic consequences of the arrangement from the allocation of taxable income … [as] Nuinsco had virtually no economic interest or risk in the real estate development … except for a 10 percent “deal fee”. ... In also finding that there was an abusive circumvention of s. 160, i.e., avoidance of the application of s. 160 to the stock dividends and preferred share redemptions (viewed as being in combination a gratuitous transfer of property by the Partnercos to the Holdcos) as a result of the acquisition of control of the Partnercos (resulting in deemed taxation year ends of the Partnercos occurring before they had been allocated partnership income and, therefore, before they had incurred a tax liability) occurring shortly before the partnership fiscal period end, Woods JA stated (at paras. 123): [T]he acquisition of control of Partnerco arose as part of a series of transactions that was devoid of any purpose or effect except to obtain a tax benefit, or in this case, two tax benefits – the avoidance of tax by Partnerco and the avoidance of liability under section 160 by Holdco. … Landrus … makes it clear that abuse may be established by the vacuity of transactions. ...

She stated (at para. 11) that “this Court has already determined that it is reasonable for the Minister to have regard to the diligence of a taxpayer in circumstances such as this: Denso Manufacturing … 2021 FCA 236 ” and that “even if … the Minister applied the wrong test in denying its applications for late filing, [the Bank] was still required to provide a reasonable explanation for its delay under the Hennelly test, which it failed to do.” ...

(para. 4) It was also immaterial that s. 256(7)(c)(i) (dealing specifically with a transaction of this type) was added only subsequently (“ Deans Knight … did not look at other provisions enacted after s. 111(5) in order to determine the object, spirit, and purpose of s. 111(5).” ...

. … [The taxpayer] … would know whether he had the necessary donative intent in order for the payment of $65,000 to CLES to qualify as a charitable donation. ...

. … [S]ee Wertman …. [I]t could not be seriously argued that Penn Central was in the business of dealing in stock, and no such submission was made. … There is [however] some authority for the proposition that income from property that is being used in a business may, in appropriate circumstances, be income from the business itself; an example might possibly be income in the form of interest from a bank account, the bank account being used in the day-to-day operation of the business. …The question is … whether the [Canada Southern] shares themselves constituted a fund “employed and risked” in the business. ...

., an audit adjustment) … the Minister has no ability to refuse the carryback request in these circumstances because a taxpayer has a statutory right to claim a loss carryback by virtue of paragraph 111(1)(a)” (para. 41), Woods JA stated (at para. 42): The Minister has the right to reject a taxpayer’s request for a loss carryback. The point was made in Greene … 95 D.T.C. 5684 … that the Minister only has to consider a request, not necessarily issue a reassessment granting the request. ...

Lehigh Cement Limited, 2014 DTC 5058 [at at 6849], 2014 FCA 103, aff'g 2013 DTC 1139 [at 740], 2013 TCC 176-- summary under Certainty Summary Under Tax Topics- Statutory Interpretation- Certainty loath to interpret a provision to give the Minister a broad discretion as to whether tax was owing In rejecting the Minister’s position that s. 95(6)(b) had a broader scope than addressing situations where Canadian taxpayers manipulate share ownership in foreign corporations to achieve more favourable tax consequences under the foreign affiliate rules, Stratas JA stated (at para. 67): Absent clear wording, I would be loath to interpret paragraph 95(6)(b) in a way that gives the Minister such a broad and ill-defined discretion – a standardless sweep – as to whether or not a tax is owing, limited only by her view of unacceptability. ...

In finding that such CCA claims could not be treated as having been revised, Webb JA indicated (at para. 32) that the “administrative practice [in IC 84-1] is not binding on this Court, nor can it amend the Act, noted (at para. 36) that “ Nassau Walnut … drew a distinction between an election and a designation” and found (at para. 41) that “the comments in Nassau Walnut with respect to an election, and the inability of a taxpayer to change an election absent a specific provision in the Act permitting such a change, are applicable in this case.” ...

In applying Deans Knight to reverse the Tax Court finding that there was no abuse of s. 111(5), Monaghan JA stated (at paras. 34-35): The object, spirit and purpose of subsection 111(5) – its rationale – is “to prevent corporations from being acquired by unrelated parties in order to deduct their unused losses against income from another business for the benefit of new shareholders”. ...

In applying Deans Knight to reverse the Tax Court finding that there was no abuse of s. 111(5), Monaghan JA stated (at paras. 34-35): The object, spirit and purpose of subsection 111(5) – its rationale – is “to prevent corporations from being acquired by unrelated parties in order to deduct their unused losses against income from another business for the benefit of new shareholders”. ...