Purpose/Intention

Cases

Keybrand Foods Inc. v. Canada, 2020 FCA 201

In concluding that interest on a bank loan to fund a share subscription for shares of a company in financial difficulty (“Vidabode”) by the...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 251 - Subsection 251(1) - Paragraph 251(1)(c) a transaction with a financially subordinate company was a non-arm’s length transaction 466
Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) - Subparagraph 20(1)(c)(i) interest was non-deductible on loan made to company that had no reasonable prospects of recovery 335

MacDonald v. Canada, 2020 SCC 6

An individual with a significant long-term holding in common shares of a public company (BNS) entered into a cash-settled forward which had the...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Futures/Forwards/Hedges cash-settled forward sales were a hedge of a shareholding notwithstanding their settlement without a corresponding share sale and a stated intention to speculate 654
Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(b) - Capital Loss v. Loss - Hedges cash-settled forward “objectively” was a capital share hedge notwithstanding no matching share sale 542

Ranjbar v. Canada, 2016 FCA 116

The trial Judge found that a purchase of a townhome satisfied ETA s. 254(2)(b) because at the time of the agreement of purchase and sale, the...

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Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 254 - Subsection 254(2) - Paragraph 254(2)(g) s. 254(2)(g)(ii) satisfied as alternative to (i) 184

Swirsky v. Canada, 2014 DTC 5037 [at 6723], 2014 FCA 36, aff'g 2013 TCC 73, 2013 DTC 1078 [at 431]

Before affirming a finding of Paris J that the taxpayer's wife had not established an income-producing purpose for money borrowed by her to...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) no objectively reasonable expectation of taxable dividends 459
Tax Topics - General Concepts - Onus applying GAAR at confirmation stage doesn't shift onus 73

Petro-Canada v. Canada, 2004 DTC 6329, 2004 FCA 158

The Tax Court had allowed a deduction for only a portion of the purchase price for seismic data purchased by two joint exploration corporations...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 251 - Subsection 251(1) - Paragraph 251(1)(c) joint purchase with no separate interests 119
Tax Topics - Income Tax Act - Section 66.1 - Subsection 66.1(6) - Canadian exploration expense - Paragraph (a) no plan to use purchased seismic data 144
Tax Topics - Income Tax Act - Section 67 paying more than FMV may not engage s. 67 109

Rich v. Canada, 2003 DTC 5115, 2003 FCA 38

Rothstein JA stated (respecting a situation where the predominant purpose of making a loan was to assist the taxpayer’s son) that a...

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Ludco Enterprises Ltd. v. Canada, 2001 DTC 5505, [2001] 2 S.C.R. 1082, 2001 SCC 62

Before going on to consider whether the taxpayer had borrowed money for an income-producing purpose, Iacobucci J. stated (at p. 5514):

"In the...

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Locations of other summaries Wordcount
Tax Topics - General Concepts - Tax Avoidance right to structure for tax avoidance 129
Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) ancillary purpose of earning (1%-yield) dividend income/allocation of reinvested proceeds 100% to income-producing source 414
Tax Topics - Statutory Interpretation - Certainty 103

Backman v. Canada, 2001 DTC 5149, 2001 SCC 10, [2001] 1 S.C.R. 367

Before finding that the taxpayers had not entered into an arrangement with the requisite intention to be partners, the Court stated (at p. 5154)...

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Words and Phrases
intention motivation
Locations of other summaries Wordcount
Tax Topics - General Concepts - Tax Avoidance 87
Tax Topics - Income Tax Act - Section 96 essential Canadian elements of partnership not present as only momentarily "partners" in common 298
Tax Topics - Statutory Interpretation - Provincial Law foreign "partnership" must have the attributes of a Cdn partnership 153

Roseland Farms Ltd. v. Canada, 99 DTC 5704, [1999] 4 CTC 348 (FCTD), aff'd 2001 DTC 5392 (FCA), 2001 FCA 167

Before going on to find that the decision to purchase farm land by the corporation originated with its shareholders, Sharlow J. stated (at p....

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Real Estate high leverage not significant if shareholder loans 105

Canada v. Wu, 98 DTC 6004, [1998] 1 CTC 99 (FCA)

In light of the additional word in s. 15(1.1) referring to "it may reasonably be considered", the Tax Court Judge had erred in finding that the...

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74712 Alberta Ltd. (formerly Cal-Gas & Equipment Ltd.) v. The Queen, 97 DTC 5126, [1997] 2 CTC 30 (FCA)

Robertson J.A. stated (at p. 5135) after discussing jurisprudence on paragraph 20(1)(c):

"... I see nothing in the jurisprudence ... which...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) guarantee of parent borrowing was not made re taxpayer's income-earning capacity 197

Maritime Forwarding Ltd v. The Queen, 88 DTC 6114, [1988] 1 CTC 186 (FCTD)

"It has often been repeated in tax matters that assertions by a taxpayer as to his intentions are only persuasive to the extent that they may be...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 256 - Subsection 256(2.1) 71

Mohawk Horning Ltd. v. The Queen, 86 DTC 6296, [1986] 2 CTC 89, [1986] 2 CTC 46, 86 DTC 6297 (FCA)

It was found that any change of intention by a non-controlling member of a syndicate ("Schneider") to hold his interest in the real property of...

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Don Fell Ltd. v. The Queen, 81 DTC 5282, [1981] CTC 363 (FCTD)

The intention of a company of which one person is the sole shareholder, director and officer, is the intention of that person.

Bomag (Canada) Ltd. v. The Queen, 81 DTC 5085, [1981] CTC 156 (FCTD), aff'd 84 DTC 6363, [1984] CTC 378 (FCA)

The intention of the German parent of the taxpayer in negotiating a contract for the cancellation of a franchise prior to the incorporation of the...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 13 - Subsection 13(21) - Undepreciated Capital Cost - A cost of obtaining surrender of previous contact was part of cost of new contract 36
Tax Topics - Income Tax Regulations - Schedules - Schedule II - Class 14 72

Kit-Win Holdings (1973) Ltd. v. The Queen, 81 DTC 5030, [1981] CTC 43 (FCTD)

The intentions of the dominant member of a land-development syndicate were attributed to the taxpayer, which was a more passive member, for the...

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Robbie Holdings Ltd. v. The Queen, 80 DTC 6336, [1980] CTC 422 (FCTD)

"The motivation or motivations which lead a person to make a purchase of land are always questions of fact. What the purchaser says on this point...

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Program Properties Ltd. v. The Queen, 78 DTC 6215, [1978] CTC 320 (FCTD)

Walsh, J. stated: "The intent of this closely held company can only be determined by examing the intent of the shareholders of it and in...

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See Also

Commissioner of Taxation v Sharpcan Pty Ltd, [2019] HCA 36

Before finding that the taxpayer’s expenditures for 10-year assignable gaming licences (“GMEs”), which it required in order to be permitted...

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Words and Phrases
purpose motive
Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(b) - Capital Expenditure v. Expense - Contract Purchases or Prepayments 10-year gaming licences required to maintain existing gaming revenues were purchased on capital account 350
Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(b) - Capital Expenditure v. Expense - Concessions and Licences periodic payments under 30-year government concession were currently deductible 206
Tax Topics - Income Tax Act - Section 13 - Subsection 13(34) - Paragraph 13(34)(b) 10-year gaming licences required to maintain existing gaming revenues were not for goodwill 245

High-Crest Enterprises Limited v. The Queen, 2015 TCC 230, nullified on procedural grounds 2017 FCA 88

ETA s. 191.1(2) effectively deems the HST to be payable on the greater of most costs and the fair market value where the builder received...

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Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 191.1 - Subsection 191.1(1) - Government Funding government funding only of operating costs did not detract from its objective of increasing beds 257
Tax Topics - Statutory Interpretation - Certainty interpretation with reasonably certain application is preferred 176
Tax Topics - Excise Tax Act - Regulations - Public Service Body Rebate (GST/HST) Regulations - Section 2 - Government Funding government funding only of operating costs did not detract from its objective of increasing beds 173

McKesson Canada Corporation v. The Queen, 2014 DTC 1040 [at 2723], 2013 TCC 404

FCA appeal settled.

The taxpayer sold receivables to its Luxembourg parent at over twice the discount which could be supported under s. 247(2))....

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Locations of other summaries Wordcount
Tax Topics - General Concepts - Evidence expert reports without testimony 56
Tax Topics - Income Tax Act - Section 247 - New - Subsection 247(2) terms adjusted within framework of transaction chosen by taxpayer 928
Tax Topics - Income Tax Act - Section 247 - New - Subsection 247(4) advocacy 3rd-party report not read by taxpayer 163
Tax Topics - Treaties - Income Tax Conventions - Article 9 5-year limitation did not apply to secondary Part XIII assessment 206

McCoy v. The Queen, 2003 DTC 660, 2003 TCC 332

Before going on to find that a limited partnership had acquired software for the purpose of gaining or producing income, Bowman A.C.J. stated (at...

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Jacques St-Onge Inc. v. The Queen, 2003 DTC 153 (TCC)

Archambault T.C.J. referred, with approval, to the statement of Rip T.C.J. in Bailey v. The Queen, [1989] T.C.J. 602 that: "what is 'reasonable'...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 50 - Subsection 50(1) wind-up of debtor was delayed 139

Wong v. The Queen, 99 DTC 458, [1999] 2 CTC 2173 (TCC)

Before going on to accept evidence that stock dividends that produced the result described in s. 15(1.1) were not declared with that purpose in...

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Vodafone Cellular Ltd. v. Shaw, [1997] BTC 247 (C.A.)

Before going on to find that a contract-cancellation payment by the taxpayer was made exclusively for the purposes of its trade, Millett L.J....

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IRC v. Fisher's Executors, [1926] A.C. 395 (HL)

"In any case desires and intentions are things of which a company is incapable. These are the mental operations of its shareholders and officers....

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Administrative Policy

14 March 2016 Internal T.I. 2015-0609671I7 - Earnout, Amalgamation, Cost of Shares and ECE

A Canadian Acquisitionco acquired Canadian Targetco for a cash base price plus earnout obligations, and then immediately merged with Targetco...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 88 - Subsection 88(1) - Paragraph 88(1)(d) post-amalgamation earnout payment could be applied to increase an s. 88(1)(d) bump of capital property (but not ECP) of the amalgamated target 317
Tax Topics - Income Tax Act - Section 14 - Subsection 14(5) - Eligible Capital Expenditure payments made by Amalco in satisfaction of earnout obligation for acquisition of one precedessor by the other were not ECE 224
Tax Topics - Income Tax Act - Section 54 - Adjusted Cost Base earnout payments an addition to cost of shares which had since disappeared 90
Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) - Subparagraph 20(1)(c)(i) position on interest deductibility following target amalgamation is based on policy and ITA scheme rather than technical 350

Articles

Michael McGowan, "HMRC v Lloyds Bank Leasing (No 1) Ltd: the troublesome increase in the scope of the "sole or main object" test", [2015] British Tax Review, No.5 2015 (Thomson Reuters (Professional) UK Limited), p. 649

Facts in Lloyds Bank case (p. 649)

[K]awasaki Kisen Kaisha (K-Line) won a tender contract to acquire and operate two ships to transport liquefied...

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Words and Phrases
one of main objects
Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 83 - Subsection 83(2.1) structured transactions with tax reduction as one of main objects 85

David C. Nathanson, "Tax Motive Kills Partnership: Spier Freezes (cf. Continental Bank)", Tax Litigation, Vol. VII, No. 3

Includes a discussion of Norglen Ltd. v. Reeds Rain Prudential Ltd., Circuit Systems Ltd., [1998] 1 All E R 218 (HL) (respecting the irrelevance...

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Jones, "Nothing Either Good or Bad, But Thinking Makes It So - The Mental Element in Anti-Avoidance Legislation", 1983 British Tax Review, pp. 9, 113.