Substance

Table of Contents

Cases

Hidden Valley Golf Resort Assn. v. Canada, [2002] GSTC 42 (FCA)

Before going on to find that the leasing by the Appellant of cottage properties was a single supply of exempt residential accommodation, Sharlow...

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Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 123 - Subsection 123(1) - Supply lease was root of transaction 106
Tax Topics - Excise Tax Act - Schedules - Schedule V - Part I - Section 7 leasing of serviced premises was exempt 137

Mollinaro v. The Queen, 2000 DTC 6114 (FCA)

Pursuant to an agreement in which the taxpayer's holding company agreed to sell all the shares of a pizza manufacturing company ("Pizza Crust") to...

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Canada v. Pinot Holdings Ltd., 99 DTC 5772 (FCA)

Noël J.A. indicated that the following statement from IRC v. Duke of Westminister, [1935] AC 1 at 30-31 remained "eminently good law":

"And what...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 97 - Subsection 97(2) partnership not transparent re partnership borrowing to pay vendor partner 168

Shell Canada Ltd. v. Canada, 99 DTC 5669, [1999] 3 S.C.R. 622, [1999] 4 CTC 313

In the course of rejecting a submission that a borrowing in New Zealand dollars by the taxpayer at 15.40% interest should be treated (in light of...

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Locations of other summaries Wordcount
Tax Topics - General Concepts - Tax Avoidance taxpayers entitled to rely on structure of their transactions 170
Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) borrowing in legal substance was in weak currency 174
Tax Topics - Income Tax Act - Section 67 s. 67 does not apply where provisions, having their own internal limiting clauses, apply 96
Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Foreign Exchange FX hedging gain was capital gain as hedged borrowing was on capital account 225
Tax Topics - Statutory Interpretation - Specific v. General Provisions 96

Continental Bank Leasing Corp. v. Canada, 98 DTC 6505, [1998] 2 S.C.R. 298, [1998] 4 CTC 119

In finding that the taxpayer and other corporations had been successful in creating a partnership through entering into an agreement that was...

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Locations of other summaries Wordcount
Tax Topics - General Concepts - Illegality statutory statement that illegal act not invalid 189
Tax Topics - Income Tax Act - Section 96 5 day partnership with tax motivation 165

Pardee Equipment Ltd. v. R., 97 DTC 5279, [1997] 3 C.T.C. 451 (FCTD)

Although the form of the document governing the delivery of equipment to the taxpayer was that of consignment, Reed J. found that the proper legal...

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Locations of other summaries Wordcount
Tax Topics - General Concepts - Ownership "consignment" was true sale given that equipment could not be returned 68

The Queen v. Friedberg, 92 DTC 6031, [1992] 1 CTC 1 (FCA)

Before finding against the taxpayer, Linden, J. A. stated (p. 6032):

"In tax law, form matters. A mere subjective intention, here as elsewhere in...

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Locations of other summaries Wordcount
Tax Topics - General Concepts - Tax Avoidance subjective intention does not alter transactions 156
Tax Topics - Income Tax Act - Section 118.1 - Subsection 118.1(1) - Total Charitable Gifts 212

Gesser Estate v. The Queen, 89 DTC 5274, [1989] 2 CTC 31 (FCTD), rev'd 92 DTC 6273 (FCA)

Pinard J. applied the principle (stated in Simon's Income Tax) "that the taxing Acts are to be applied in accordance with the legal rights of the...

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Shaw v. The Queen, 89 DTC 5194, [1989] 1 CTC 386 (FCTD), aff'd 93 DTC 5213 (FCA)

In order to determine the substance of a non-arm's length transfer of a business from a partnership to a corporation, regard was had to the...

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Choquette v. The Queen, 74 DTC 6563, [1974] CTC 742 (FCTD)

In finding that the description of a payment made to the taxpayer in an agreement as a capital sum was not conclusive, Décary J. quoted the...

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Automatic Toll Systems (Canada) Ltd. v. MNR, 74 DTC 6060, [1974] CTC 30 (FCTD)

When the taxpayer contacted an agent to determine what was required in order to terminate its obligation to pay the agent a 10% commission on...

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The Queen v. F.H. Jones Tobacco Sales Co. Ltd., 73 DTC 5577, [1973] CTC 784 (FCTD)

In determining whether an obligation was that of a corporation or its shareholder, Noel, J. stated: "The Court must consider the situation from a...

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MNR v. Import Motors Ltd., 73 DTC 5530, [1973] CTC 719 (FCTD)

The court accepted the taxpayer's submission "that it is the real character of the transaction and not the name given to it or the method by which...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 9 - Compensation Payments periodic payments styled by payor as compensation for lost discounts were damages for crippling of business 106

Huston v. MNR, 61 DTC 1233, [1961] CTC 414 (Ex.Ct.)

In finding that no portion of payments received from the War Claims Fund was interest income, Thurlow, J. stated that the payments 'take their...

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See Also

ING Intermediate Holdings Ltd v HMRC, [2017] EWCA Civ 2111

Although accepting (per BLP) that a mere borrowing by a company is not a supply by it, Arden LJ accepted the finding below that the services...

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Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 123 - Subsection 123(1) - Supply services provided in deposit-taking business were more than peripheral so that supplies were made 290
Tax Topics - Excise Tax Act - Section 153 - Subsection 153(1) interest paid by bank to depositors was reduced by implied fees earned as consideration going to the bank 143
Tax Topics - Excise Tax Act - Section 123 - Subsection 123(1) - Financial Service - Paragraph (c) borrowing is not by itself a supply by borrower 69

Crooks v. The Queen, 2016 TCC 52 (Informal Procedure)

An agreement for the purchase of a new condo by the appellant was amended shortly before closing at the insistence of the mortgage lender to add...

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Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 254 - Subsection 254(2) - Paragraph 254(2)(a) accommodation co-owner was not supplied her interest directly by the builder 451
Tax Topics - Excise Tax Act - Section 123 - Subsection 123(1) - Recipient “ultimate liability” doctrine indicated an accommodation-party co-purchaser of condo was not a recipient 301
Tax Topics - Excise Tax Act - Section 262 - Subsection 262(3) accommodation co-purchaser (for financing purposes) of condo was not a recipient of supply by builder 231
Tax Topics - General Concepts - Sham the addition of an accommodation co-purchaser (for financing purposes) of condo might have been a sham if done for tax purposes 131
Tax Topics - Statutory Interpretation - Benefits-Conferring Legislation interpretation to favour conferral of intended benefits 207

Commissioners for HM Revenue and Customs v. Secret Hotels2 Ltd., [2014] UKSC 16

Before going on to find that an agreement under which the appellant was stipulated to act as agent in fact created an agency relationship, Lord...

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Locations of other summaries Wordcount
Tax Topics - General Concepts - Agency terms reflected agent's dominance 226

Revenue and Customs Commissioners v. First Nationwide, [2012] BTC 99, [2012] EWCA Civ 278

The fact that the payment of a dividend out of the share premium account of a Caymans company reduced the capital that would have been...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 90 - Subsection 90(1) capital v. income character of distributions/payment of dividend out of share premium account 311

Chabaud c. La Reine, 2012 DTC 1076 [at 2856], 2011 TCC 438 (Informal Procedure)

In finding that "bursary" amounts a postdoctoral fellow received from his university were in fact remuneration from employment, Archambault J....

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Fiducie Famille Gauthier v. The Queen, 2011 DTC 1343 [at 1917], 2011 TCC 318, aff'd 2012 FCA 76

The taxpayer, a family trust, made a non-arm's-length sale of shares to a numbered corporation ("404") for a promissory note of approximately $2.6...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 84.1 - Subsection 84.1(1) agreement to bear costs was additional consideration 237

Stefanson Farms Ltd v. The Queen, 2009 DTC 177, 2008 TCC 682

An agreement dated October 16, 1998, with an effective date of January 1, 1998, between the taxpayer and shareholder which provided for the...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 98 - Subsection 98(5) 103

Ceco Operations Ltd. v. The Queen, 2006 DTC 3006, 2006 TCC 256

In finding that a transfer by the taxpayer of business assets to a partnership in consideration for partnership units and non-units consideration...

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Queenswood Land Associates Ltd. v. The Queen, 97 DTC 1048, [1997] 2 CTC 2688 (TCC), rev'd 2000 DTC 6065, Docket: A-182-97 (FCA)

An amount paid by the taxpayer that had been labelled a "fee" was found to represent a reduction of indebtedness owing by it to the recipient of...

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Entré Computer Centers Inc. v. The Queen, 97 DTC 846, [1997] 1 CTC 2291 (TCC)

Payments made by Canadian franchisees to the taxpayer that were calculated as a mark-up on the value of products sold by the taxpayer to them were...

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Collins v. The Queen, 96 DTC 1034 (TCC)

Before rejecting a submission that the taxpayer had held half of his shares of a private company on a resulting trust for his wife, Bowman TCJ....

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Locations of other summaries Wordcount
Tax Topics - General Concepts - Ownership ownership means beneficial ownership 27
Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(2) 86

Stafford v. The Queen, 93 DTC 438, [1993] 1 CTC 2284 (TCC)

Before rejecting a submission that the taxpayer should be regarded as having received options on behalf of another person notwithstanding the form...

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Viceroy Rubber and Plastics Ltd. v. MNR, 93 DTC 347, [1993] 1 CTC 2343 (TCC)

Before going on to find that an agreement, which was in the form of a lease, in substance was a sale agreement, Brulé J. stated (p.354) that:

"It...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 212 - Subsection 212(1) - Paragraph 212(1)(d) "lease payments" were deferred purchase price 151

McArdle Estate [No. 2] v. MNR, 62 DTC 402 (TAB)

After finding that a transaction was in substance a re-allotment of shares rather than their redemption notwithstanding that a resolution referred...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 84 - Subsection 84(3) repurchase and re-allotment of shares was not a redemption 384

No. 115 v. MNR, 53 DTC 338 (ITAB)

Payments received by the taxpayer which were stipulated to be consideration for his agreement not to engage in the lobster business within two...

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Foster v. M.N.R, 51 DTC 232 (ITAB)

The legal effect of a lease and option-purchase agreement entered into the taxpayer was found to be a sale agreement, with the result that "rent"...

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Administrative Policy

17 February 2021 External T.I. 2018-0768051E5 F - Contrat de crédit-bail

Regarding a lease of a truck tractor with a term of 48 months and a bargain purchase option at maturity, CRA indicated that the monthly rental...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) - Subparagraph 20(1)(c)(ii) leasing contract cannot be recharacterized as a secured loan funding an acquisition of depreciable property 246
Tax Topics - Income Tax Act - Section 68 lease payments for vehicle lease with bargain purchase option are allocated between ACB of option and deductible lease payments 301
Tax Topics - Income Tax Act - Section 49 - Subsection 49(3) a portion of the lease payments under a lease with a bargain purchase option recharacterized as consideration for the option 146
Tax Topics - Income Tax Act - Section 13 - Subsection 13(5.2) acquisition of leased vehicle pursuant to bargain purchase option followed by sale of vehicle could engage s. 13(5.2) 131
Tax Topics - Income Tax Act - Section 16.1 - Subsection 16.1(1) truck tractor is prescribed property 26

S4-F14-C1 - Artists and Writers

Characterization of amount turns on its true nature, not its label

1.4 The tax treatment of a particular amount depends not upon the label affixed...

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7 February 2014 External T.I. 2014-0516921E5 F - Crédit et frais résiduels

Before going on to analyse automobile leases - under which the lessee bore all risk including being responsible for the rents even if the...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 13 - Subsection 13(21) - Depreciable Property lease/sale distinction established based on the legal relationship 107
Tax Topics - Income Tax Act - Section 6 - Subsection 6(2) employer potentially can choose to prorate terminal credits or deficiencies (based on sale price on car lease termination relative to residual value) in applying formula 263
Tax Topics - Income Tax Act - Section 13 - Subsection 13(21) - Undepreciated Capital Cost - A lease under which lessee bore all risk implicitly treated as lease rather than purchase 180

18 July 2011 External T.I. 2010-0370561E5 F - Location avec option d'achat

In the absence of sham, is a lease a lease and a sale a sale? CRA responded:

[W]hether a contract is a lease agreement or a sales contract must...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 49 - Subsection 49(1) where lease is coupled with bargain purchase option, a portion of the rents must be allocated to option proceeds 164
Tax Topics - Income Tax Act - Section 68 where lease is coupled with bargain purchase option, a portion of the rents must be allocated to option proceeds 147

28 October 2010 Internal T.I. 2010-0376041I7 F - Contrat d'acquisition ou de location

Motor vehicle lease agreements between a company and a leasing company provide that the company will automatically acquire ownership of the leased...

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Words and Phrases
sham
Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 6 - Subsection 6(2) - Element E lease where lessee got benefits of ownership even if it didn’t acquire title needed study to determine its true nature 171
Tax Topics - Income Tax Act - Section 13 - Subsection 13(21) - Undepreciated Capital Cost - A lease where lessee got benefits of ownership even if it didn’t acquire title not necessarily a lease 135

Income Tax Technical News, No. 21, June 14, 2001

"Recharacterization is permissible only if the label attached by the taxpayer to the particular transaction does not properly reflect its actual...

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20 January 1999 External T.I. 9832305 - LEASING FEES AS BUSINESS EXPENSES

"Generally, we will rely on the assumption that the form of a particular lease agreement reflects the true relationship between the parties so...

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89 C.R. - Q.8

"A transaction that takes the form of a lease will ordinarily be treated as a lease for the purposes of the Act, on the presumption that the...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 16.1 - Subsection 16.1(1) 87

88 C.R. - "Finance and Leasing" - "Leasing"

RC will normally rely on the assumption that the form of an agreement reflects the true relationship of the parties involved.

88 C.R. - F.Q.23

There is no conflict with GAAR in characterizing a transaction based on the legal rights and obligations of the parties.

Articles

Thivierge, "Emerging Income Tax Issues: Substance Over Form Revisited, Section 160 of the Income Tax Act, and Series of Transactions", 1993 Conference Report, c. 4

Pound, "Remedial Tax Planning: How to Fix It When It's Broke", 1993 Conference Report, c. 9, pp. 9:21 - 24.