Subsection 245(4) - Application of subsection (2)

Cases

Canada v. Alta Energy Luxembourg S.A.R.L., 2021 SCC 49

A Blackstone limited partnership and a U.S. shale company transferred their investment in a Canadian subsidiary (Alta Canada), that was to develop...

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Locations of other summaries Wordcount
Tax Topics - Treaties - Income Tax Conventions - Article 13 utilization of the business property exemption by a Luxembourg conduit accorded with the bargain negotiated by Canada, which was to encourage investment by such investors 605
Tax Topics - Treaties - Income Tax Conventions - Article 4 a company resident under Luxembourg domestic law (its legal seat was there) and that was “liable to be liable to tax,” was resident there for Treaty purposes even though a conduit 366
Tax Topics - Treaties - Income Tax Conventions subsequent OECD Treaty commentary not followed 198
Tax Topics - Statutory Interpretation - Treaties additional consideration in Treaty context of giving effect to the contractual bargain 237

Canada v. Deans Knight Income Corporation, 2021 FCA 160, leave granted 10 March 2022

The non-capital losses of $90M, and other tax attributes of the taxpayer, were effectively sold to arm’s length investors pursuant to...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 111 - Subsection 111(5) - Paragraph 111(5)(a) the object and spirit of s. 111(5) is abused on an arm’s length acquisition of “actual” (albeit, not de jure) control of a Lossco 522

The Gladwin Realty Corporation v. Canada, 2020 FCA 142

The taxpayer, a private real estate corporation, rolled a property under s. 97(2) into a newly-formed limited partnership, with the LP then...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 245 - Subsection 245(1) - Tax Benefit tax benefit did not arise until alleged excessive CDA utilized outside a corporate group 261

Canada v. Alta Energy Luxembourg S.A.R.L., 2020 FCA 43, aff'd 2021 SCC 49

A Blackstone LP and a U.S. shale company transferred their investment in a Canadian subsidiary (Alta Canada), that was to develop a shale...

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Locations of other summaries Wordcount
Tax Topics - Treaties - Income Tax Conventions - Article 13 Treaty shopping was not an abuse 391

Birchcliff Energy Ltd. v. Canada, 2019 FCA 151

A newly-launched public corporation (“Predecessor Birchcliff”), accessed the losses of a Lossco (Veracel), in order to shelter the profits...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 256 - Subsection 256(7) - Paragraph 256(7)(b) - Subparagraph 256(7)(b)(iii) - Clause 256(7)(b)(iii)(B) policy is to exclude the truly larger corporation (ignoring transitory cash) from loss streaming rules 299

Madison Pacific Properties Inc. v. Canada, 2019 FCA 19

Predecessors of the taxpayers had been acquired for their losses in transactions where less than 50% of their voting shares, but more than 90% of...

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2763478 Canada Inc. v. Canada, 2018 FCA 209

An individual did not sell his shares of an operating company (Groupe AST) directly to a third-party purchaser, but instead transferred them on a...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 248 - Subsection 248(10) 9 month separation did not avoid series 290
Tax Topics - Income Tax Act - Section 245 - Subsection 245(3) not each transaction in series effecting an estate freeze had that objective 417
Tax Topics - Income Tax Act - Section 245 - Subsection 245(6) individual allegedly suffering double taxation re s. 245(2) denial of capital loss of his corporation failed to apply under s. 245(6) within 180 days 327

Canada v. 594710 British Columbia Ltd., 2018 FCA 166

The taxpayer was a holding company which wholly-owned a “Partnerco” holding an approximate ¼ limited partnership interest in a strata...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 160 - Subsection 160(1) stock dividend followed by redemption of the stock dividend shares effected in combination a transfer of property for no consideration 334
Tax Topics - Income Tax Act - 101-110 - Section 103 - Subsection 103(1) s. 103(1) likely applies to the allocation of most of the partnership profits at year end to a lossco that never had significant economic interest or risk in the partnership business 327
Tax Topics - Income Tax Act - Section 152 - Subsection 152(8) s. 152(8) cured an error in an assessment as to when the taxation year in question commenced 371
Tax Topics - Income Tax Act - Section 96 - Subsection 96(1) - Paragraph 96(1)(f) purpose of s. 96 is for income allocation to be allocated in accordance with economic participation 102

Pomerleau v. Canada, 2018 FCA 129

To simplify the facts somewhat by ignoring transactions in which the taxpayer accessed tax attributes of his sister, the taxpayer wanted to...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 84.1 - Subsection 84.1(2) - Paragraph 84.1(2)(a.1) - Subparagraph 84.1(2)(a.1)(ii) GAAR applied to converting soft ACB (generated from crystallizing the capital gains deduction) into pseudo-hard ACB under s. 53(1)(f.2) for use in extracting surplus 497

Wild v. Canada (Attorney General), 2018 FCA 114

Mr. Wild stepped up the adjusted cost base of his investment in a small business corporation (PWR) by transferring his PWR common shares to two...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 84.1 - Subsection 84.1(1) transactions to bump PUC did not abuse s. 84.1 prior to use of such PUC to strip surplus 207

Fiducie financière Satoma v. Canada, 2018 FCA 74

In order to strip surplus of an operating corporation (“Gennium”) controlled by the Pilon family, a dividend paid by Gennium was distributed...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 245 - Subsection 245(1) - Tax Benefit tax benefit to trust from tax-free dividend even though not distributed to a beneficiary 277
Tax Topics - Income Tax Act - Section 3 pervasive rule that the same income is not to be taxed in 2 persons’ hands 148
Tax Topics - Statutory Interpretation - Double Taxation (Presumption Against) inclusion of income in more than one taxpayer’s hands is contrary to s. 3 173
Tax Topics - Income Tax Act - Section 112 - Subsection 112(1) abusive to use s. 112(1) so as to avoid ultimate taxation of individuals 180
Tax Topics - Income Tax Act - Section 75 - Subsection 75(2) use of s. 75(2) to access s. 112(1) deduction for dividend in fact received by family trust, was abusive 286
Tax Topics - Income Tax Act - Section 82 - Subsection 82(2) s. 82(2) supports the primacy of s. 75(2) over the actual dividend recipient 60

Canada v. Oxford Properties Group Inc., 2018 FCA 30

A corporation (“BPC”), which was mostly owned by a Canadian pension fund (“OMERS”), obtained the agreement of a predecessor of the...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 88 - Subsection 88(1) - Paragraph 88(1)(d) s. 88(1)(d) bump is intended to permit the transfer of ACB that otherwise would be lost to another property that is taxed in the same way 371
Tax Topics - Income Tax Act - Section 98 - Subsection 98(3) - Paragraph 98(3)(c) s. 98(3)(c) bump is intended to avoid gain realization where there has been no economic gain 267
Tax Topics - Income Tax Act - Section 69 - Subsection 69(11) 3-year time limitation in s. 69(11) did not establish safe harbor for avoidance of recapture on sale after that period 382
Tax Topics - Income Tax Act - Section 100 - Subsection 100(1) purpose is to ensure that latent recapture will be recognized on sale to tax exempt 254
Tax Topics - Income Tax Act - Section 97 - Subsection 97(2) object includes ultimate taxation of the deferred gain 234
Tax Topics - Income Tax Act - Section 171 - Subsection 171(1) GAAR question as to determining a provision’s object was subject to correctness standard 169
Tax Topics - Statutory Interpretation - Hansard, explanatory notes, etc. statement that amendment was for “clarification” was self-serving 209
Tax Topics - Statutory Interpretation - Interpretation Act - Subsection 45(2) determination of whether amendment merely clarified requires review of pre-amendment state of law 146
Tax Topics - Income Tax Act - Section 245 - Subsection 245(2) consequential s. 245(2) adjustment must be scaled to the abuse 391

GUY GERVAIS V. HER MAJESTY THE QUEEN, 2018 FCA 3

The taxpayer’s wife (Mrs. Gendron) purchased 1.04M preferred shares from the taxpayer (Mr. Gervais) at a cost of $1.04M (with Mr. Gervais...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 74.2 - Subsection 74.2(1) purpose of ensuring that a gain deferred under interspousal rollover is attributed back to the transferor 241

Univar Holdco Canada ULC v. Canada, 2017 FCA 207

A non-resident's acquisition of the shares of a Netherlands public company (Univar NV) indirectly holding the shares of a valuable Canadian...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 212.1 - Subsection 212.1(4) using old s. 212.1(4) to extract surplus from a non-resident target’s Canadian sub was not abusive 371
Tax Topics - Income Tax Act - Section 245 - Subsection 245(2) the result achieved (no s. 212.1 withholding) accorded with the underlying policy of permitting surplus stripping as part of an arm’s length acquisition 109

Canada v. Superior Plus Corp., 2015 DTC 5118 [at 6319], 2015 FCA 241, aff'g 2015 TCC 132

The Superior Plus Income Fund (the "Fund") effectively converted (in accordance with the distribution method contemplated under s. 107(3.1)) into...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 232 - Subsection 232(1) - Solicitor-Client Privilege non-tax legal opinion produced on discovery which potentially supported a GAAR argument did not entail implied waiver of tax memos until used in evidence 200

Inter-Leasing, Inc. v. Ontario (Revenue), 2014 ONCA 575

In order to minimize provincial income tax, a Canadian corporate group restructured so that various intercompany debts were owing (on a...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 115 - Subsection 115(1) - Paragraph 115(1)(a) - Subparagraph 115(1)(a)(ii) holding intercompany loans was not a business, corporate objects presumption not applied 366

Canada v. Global Equity Fund Ltd., 2013 DTC 5007 [5526], 2012 FCA 272

The taxpayer subscribed for common shares of a new subsidiary for approximately $5.6 million, which then declared a stock dividend in the form of...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 152 - Subsection 152(9) on appeal to FCA, Crown could not introduce new arguments that required further evidence 295

1207192 Ontario Limited v. Canada, 2012 DTC 5157 [at 7396], 2012 FCA 259, aff'g 2011 DTC 1301 [at 1686], 2011 TCC 383

This was a companion case to Triad Gestco.

The taxpayer, which had realized a capital gain of $2,974,386, transferred cash and marketable...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 245 - Subsection 245(3) purpose objectively determined 141

Triad Gestco Ltd. v. Canada, 2012 DTC 5156 [at 7385], 2012 FCA 258

The taxpayer, which was directed and controlled by Mr. Cohen, and which had realized a capital gain of approximately $8 million, transferred $8...

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Canada Safeway v. Alberta, 2012 DTC 5133 [at 7271], 2012 ABCA 232

This case was a companion decision to Husky Energy.

An Alberta taxpayer ("CSL") borrowed $600 million from its Alberta parent ("CSHL") over the...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 245 - Subsection 245(3) focus on whether individual transactions are avoidance transactions 139

Husky Energy v. Alberta, 2012 DTC 5132 [at 7262], 2012 ABCA 231

An Alberta corporate taxpayer within the Husky group of companies ("Operations") used the proceeds of loan repayments received from other Alberta...

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Copthorne Holdings Ltd. v. Canada, 2012 DTC 5006 [at 6536], 2011 SCC 63, [2011] 3 S.C.R. 721

The ultimate controlling family members decided that a Canadian subsidiary ("Copthorne I") should be amalgamated with a wholly-owned subsidiary of...

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Locations of other summaries Wordcount
Tax Topics - General Concepts - Stare Decisis high threshold for reversing not met 193
Tax Topics - Income Tax Act - Section 245 - Subsection 245(1) - Tax Benefit tax benefit illuminated by comparison to reasoanble alternative 315
Tax Topics - Income Tax Act - Section 248 - Subsection 248(10) "in contemplation" could be retrospective 342
Tax Topics - Statutory Interpretation - Expressio Unius est Exclusio Alterius implied exclusion principle 109

St. Michael Trust Corp. v. Canada, 2010 DTC 5189 [at 7361], 2010 FCA 309, aff'd sub nom Fundy Settlement v. Canada, 2012 DTC 5063 [at 6881], 2012 SCC 14

After finding against the taxpayers on the grounds inter alia that two Barbados trusts were resident in Canada, Sharlow, J.A. found that if...

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Lehigh Cement Limited v. Canada, 2010 DTC 5081 [at 6844], 2010 FCA 124

After the terms of the debt owing by the taxpayer to a non-resident affiliate were amended so that they would comply with various requirements of...

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Canada v. Remai, 2009 DTC 5188 [at 6257], 2009 FCA 340

In order to make promissory notes that he had donated to a charitable foundation cease to be non-qualifying securities, the taxpayer arranged for...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 251 - Subsection 251(1) - Paragraph 251(1)(c) providing a favour is consistent with arm's length dealing 222
Tax Topics - Statutory Interpretation - Redundancy/reading in words provision not to be interpreted such that it can never apply 40

Collins & Aikman Products Co. v. The Queen, 2009 DTC 1179 [at 958], 2009 TCC 299, aff'd 2010 DTC 5164 [at 7293], 2010 FCA 251

The taxpayer ("Products"), which was a corporation resident in the U.S., transferred the shares of its subsidiary ("CAHL"), which was non-resident...

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Words and Phrases
apply

Canada v. Landrus, 2009 DTC 5085 [at 5840], 2009 FCA 113

A partnership of which the taxpayer was a member ("Roseland II") and another partnership ("Roseland I") owning a similar and adjacent condominium...

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Lipson v. Canada, 2009 DTC 5528, 2009 SCC 1, [2009] 1 S.C.R. 3

The taxpayer's wife ("Jordanna") borrowed $562,500 from the Bank of Montreal under an interest-bearing demand promissory note in order to purchase...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 74.1 - Subsection 74.1(1) purpose of attribution rules: preventing use of related-person status to reduce tax when transferring property/attribution of interest expense 248

Canada v. MIL (Investments) S.A., 2007 DTC 5437, 2007 FCA 236

In March 1993 an individual ("Boulle") transferred his shares of a Canadian public junior exploration company ("DFR") to the taxpayer, which was a...

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Mathew v. Canada, 2005 DTC 5538, 2005 SCC 55, [2005] 2 S.C.R. 643

An insolvent trust company ("STC") transferred a portfolio of mortgages with unrealized losses to a partnership of which a wholly-owned subsidiary...

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Canada Trustco Mortgage Co., v. The Queen, 2005 DTC 5523, [2005] 2 S.C.R. 601, 2005 SCC 54

The taxpayer purchased trailers from the U.S. user of the trailers ("TLI"), with the taxpayer appointing TLI as its agent to hold title on its...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 245 - Subsection 245(1) - Tax Benefit tax benefit if taxable income reduction or on basis of comparison to alternative 132
Tax Topics - Income Tax Act - Section 248 - Subsection 248(10) "in contemplation" references "because of" or "in relation to" 127
Tax Topics - Statutory Interpretation - Certainty 131
Tax Topics - Statutory Interpretation - Ordinary Meaning primacy to ordinary meaning if unequivocal 96

Canada v. Imperial Oil Ltd., 2004 DTC 6044, 2004 FCA 36

The Court affirmed the finding of the Tax Court that the claiming of an investment allowance by the taxpayer on short-term loans made by it close...

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Canada v. Produits Forestiers Donohue Inc., 2003 DTC 5471, 2002 FCA 422

In order to realize an allowable business investment loss on its investment in a corporation ("DMI") held jointly by it and a third party...

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Novopharm Ltd. v. Canada, 2003 DTC 5195, 2003 FCA 112

A profitable Canadian corporation ("Novopharm") acquired losses approximating $20 million of an arm's-length corporation ("Lossco") through a...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) borrowing to receive deemed dividend 352

Canada v. Canadian Pacific Ltd., 2002 DTC 6742, [2002] 3 F.C. 170, 2002 FCA 98

The taxpayer borrowed 216 million in Australian dollars under debentures bearing interest at 16.125% per annum and that had been issued at a 2%...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 245 - Subsection 245(3) primary purpose of a borrowing in a tax-advantageous currency was to raise money 290
Tax Topics - Income Tax Act - Section 245 - Subsection 245(1) - Transaction an aspect of a transaction is not a transaction 249

OSFC Holdings Ltd. v. Canada, 2001 DTC 5471, 2001 FCA 260

After becoming insolvent, a company ("Standard") in the mortgages business established a partnership, transferred a mortgage portfolio to the...

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Longley v. The Queen, 99 DTC 5549 (B.C.S.C.)

Quijano J. found that GAAR would not apply to an arrangement under which taxpayers made contributions to a fringe political party on the basis...

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See Also

3295940 Canada Inc. (formerly, Sabex Inc.) v. The Queen, 2022 CCI 68

Following preliminary transactions, on June 28, 2004, a Canadian holding company (“Micsau”) held all the shares, having a fair market value...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 83 - Subsection 83(2) use of capital dividend to avoid s. 55(2) abused the capital dividend system 533
Tax Topics - Income Tax Act - Section 88 - Subsection 88(1) - Paragraph 88(1)(d.2) indirect use of high outside basis in the taxpayer’s shares as compared to basis in shares sold by it was contrary to the policy of prohibiting a bump of the inside basis 195

Magren Holdings Ltd. v. The Queen, 2021 TCC 42

The appellants engaged in transactions which were intended to result in the realization by them of substantial capital gains (resulting in...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 185 - Subsection 185(3) Part III tax assessments of distributions of gains that were denied outside the Part I tax normal reassessment period were not statute-barred 314
Tax Topics - Income Tax Act - Section 185 - Subsection 185(1) no requirement to issue separate assessment for each election, and no remedy for inordinate time to issue assessments 396
Tax Topics - General Concepts - Ownership acquisition of income fund units to be held for a few days before their redemption did not represent an acquisition of beneficial ownership 549
Tax Topics - General Concepts - Sham transactions did not result in real capital losses 306
Tax Topics - Income Tax Act - Section 184 - Subsection 184(3) election was not available where a CDA sham 365

Grenon v. The Queen, 2021 TCC 30

In order that the taxpayer’s RRSP could indirectly invest in operating businesses in which he and/or two business colleagues had a management...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Regulations - Regulation 4801 - Paragraph 4801(a) - Subparagraph 4801(a)(i) - Clause 4801(a)(i)(A) distribution of units that included significant purchases by minors and by adults who did not pay for their own units, was unlawful 755
Tax Topics - Income Tax Act - Section 204.2 - Subsection 204.2(1.1) alleged distribution from non-qualified investment was not an over-contribution 277
Tax Topics - General Concepts - Window Dressing window-dressing is a deception about intention 312
Tax Topics - Income Tax Act - Section 207.1 - Subsection 207.1(1) non-qualified investments not “included” in annuitant’s income because it was never assessed 346
Tax Topics - Income Tax Act - Section 152 - Subsection 152(4) CRA’s assessing listed taxable RRSPs in a T3GR global return was not of the taxpayer’s (also listed) RRSP /inappropriate reliance in legal opinion on certificate of fact was carelessness 441
Tax Topics - Income Tax Act - Section 207.2 - Subsection 207.2(3) CRA’s assessment of Pt. XI.1 shown on the T3GR for all RRSPs of one type did not start the normal reassessment period for the taxpayer’s RRSP since no tax shown for it 370
Tax Topics - Income Tax Regulations - Regulation 4900 - Subsection 4900(1) - Paragraph 4900(1)(d.2) distribution was not lawful because the issuer had not complied with the OM exemption, which was the exemption that it had chosen to rely on 291

MMV Capital Partners Inc. v. The Queen, 2020 TCC 82

A venture capital corporation (“MMV Finance”) was issued, early in 2011, voting common shares of a corporation (“MMV”) (that was in...

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Rogers Enterprises (2015) Inc. v. The Queen, 2020 TCC 92

To simplify somewhat, a group of private corporations owned for the benefit of the Rogers family structured their affairs such that one...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 245 - Subsection 245(1) - Tax Benefit no tax benefit where alleged excessive CDA addition was not distributed to individual shareholders 498
Tax Topics - Income Tax Act - Section 89 - Subsection 89(1) - Capital Dividend Account - Paragraph (d) - Subparagraph (d)(iii) 2016 amendment changed the law so as to reduce CDA bump by policyholder’s ACB 259

Deans Knight Income Corporation v. The Queen, 2019 TCC 76, rev'd 2021 FCA 160

The “Tax Attributes” of a Lossco (the taxpayer) were effectively sold to arm’s length investors pursuant to transactions under which:

  • The...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 251 - Subsection 251(5) - Paragraph 251(5)(b) - Subparagraph 251(5)(b)(i) 3rd party was expected to, but could not require, an acquisition of voting control 589
Tax Topics - Income Tax Act - Section 256 - Subsection 256(8) loss streaming rules are conditioned on an acquisition of effective control 132

Gladwin Realty Corporation v. The Queen, 2019 TCC 62, aff'd 2020 FCA 142

The taxpayer, which carried on a commercial real estate business and had September 30 year ends, transferred on a s. 97(2) rollover basis a...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 89 - Subsection 89(1) - Capital Dividend Account - Paragraph (a) contrary to purpose of the capital dividend rules to fully exempt a capital gains distribution 300
Tax Topics - Income Tax Act - Section 40 - Subsection 40(3.1) purpose of s. 40(3.1) is to trigger gain on extraction of excess funds by passive partners 330
Tax Topics - Income Tax Act - Section 123.3 no CRA challenge to continuance to BVI to avoid s. 123.3 tax 96

Les Développements Iberville Ltée v. Agence du Revenu du Québec, 2018 QCCA 1886 (Quebec Court of Appeal)

Three affiliated Quebec corporations (Développements, Location and Estrie) would have realized gains totaling $728.9 million (plus recapture of...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 85 - Subsection 85(1) abuse of Quebec equivalents of ss. 85(1) and 97(2) to avoid (rather than defer) tax 420
Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Real Estate property bifurcated between capital and income portion on acquisition 98
Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(b) - Capital Expenditure v. Expense - Improvements v. Repairs or Running Expense improvements to leased retail premises were not demonstrated to be made only at tenants’ requests 106
Tax Topics - Income Tax Regulations - Regulation 402 - Subsection 402(6) purpose of inter-provincial allocation rules is for 109% of income to be allocated and taxed 558
Tax Topics - Income Tax Act - Section 249.1 - Subsection 249.1(1) no policy of permitting differing Quebec and federal year ends 196

Loblaw Financial Holdings Inc. v. The Queen, 2018 TCC 182, rev'd on s. 95(1) - investment business - (a) (arm's length conduct) grounds 2020 FCA 79, in turn aff'd 2021 SCC 51

The taxpayer, an indirect wholly-owned subsidiary of Loblaws (a Canadian public company), wholly-owned a Barbados subsidiary (GBL), that was...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 165 - Subsection 165(1.11) requirement met where Crown knew the nature and quantum of the dispute 269
Tax Topics - Income Tax Act - Section 95 - Subsection 95(1) - Foreign Bank CFA qualified as a foreign bank since it was licensed under Barbados law as an international bank 123
Tax Topics - Income Tax Act - Section 95 - Subsection 95(1) - Investment Business - Paragraph (a) Barbados-licensed international bank, which used Loblaw funding to invest responsively to Loblaw considerations, conducted an offside non-arm’s length business 429
Tax Topics - Income Tax Act - Section 95 - Subsection 95(1) - Investment Business - Paragraph (c) employee equivalents was reduced by employee time described in s. 95(2)(b) 290
Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Foreign Exchange short-term debt securities were inventory because they were the raw material for generating swap income 130
Tax Topics - Income Tax Act - Section 152 - Subsection 152(4.01) - Paragraph 152(4.01)(a) - Subparagraph 152(4.01)(a)(ii) GAAR is generally a separate matter rather than being subsumed in the allegedly-misused substantive provision 208
Tax Topics - Income Tax Act - Section 245 - Subsection 245(3) application of GAAR required the occurrence of an avoidance transaction (or series) in non-statute-barred years and the relevant previous year’s avoidance transaction did not occur as part of the series 512
Tax Topics - Income Tax Act - Section 248 - Subsection 248(10) hiring of employees 15-years previously to engage foreign bank exception to investment business definition was not part of same series as renewal of foreign bank licence 228
Tax Topics - Income Tax Act - Section 95 - Subsection 95(2) - Paragraph 95(2)(l) purpose of s. 95(2)(l) exception was to permit non-resident subsidiaries of Canadian banks and dealers to compete internationally 190

Custeau v. Agence du revenu du Québec, 2018 QCCQ 5692, aff'd 2020 QCCA 1496

When the taxpayers’ corporation (“Opco”), a small business corporation, was in financial difficulty, a Quebec regional development fund...

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Tax Topics - Income Tax Act - Section 245 - Subsection 245(3) generation and subsequent use of PUC exceeding taxpayers’ invested capital were not avoidance transactions as this generation was imposed by arm’s length investor 585

Alta Energy Luxembourg S.A.R.L. v The Queen, 2018 TCC 152, aff'd 2020 FCA 43, aff'd 2021 SCC 49

A Blackstone LP and a U.S. shale company held their investment in a Canadian subsidiary (Alta Canada), that was to develop a shale formation in...

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Tax Topics - Treaties - Income Tax Conventions - Article 13 a large exploration property in which only six wells had been drilled qualified as immovable property used in the business 400
Tax Topics - Statutory Interpretation - Interpretation Bulletins, etc. taxpayers should be able to rely on CRA position in making a capital investment 125

9199-3899 Québec inc. v. Agence du revenu du Québec, 2017 QCCA 1524

In order to reduce Quebec capital tax, the taxpayer lent $350M on a non-interest-bearing basis to its parent on January 27, 2005, and claimed this...

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Birchcliff Energy Ltd. v. The Queen, 2017 TCC 234

A newly-launched public corporation ("Birchcliff") sought to access the losses of a lossco ("Veracel") in order to shelter the profits from...

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Tax Topics - General Concepts - Sham ephemeral transactions under a Plan of Arrangement were not a sham 215
Tax Topics - Income Tax Act - Section 251.2 - Subsection 251.2(2) - Paragraph 251.2(2)(a) proxy which accorded no discretion to a class of shareholders did not render them a group 221
Tax Topics - Income Tax Act - Section 245 - Subsection 245(3) series of transactions found to be an avoidance transaction 306

2763478 Canada Inc. v. The Queen, 2017 TCC 98, aff'd 2018 CAF 209

An individual did not sell his shares of an operating company (Groupe AST) directly to a third-party purchaser. Instead he rolled his shares into...

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Tax Topics - Income Tax Act - Section 245 - Subsection 245(3) not every transaction had estate-freezing objective 312

Fiducie Financière Satoma v. The Queen, 2017 TCC 84, aff'd 2018 FCA 74

$6.3 million in funds was extracted from a private operating company (“Gennium”) by paying those dividends to a holding company (“9134”),...

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Tax Topics - Income Tax Act - Section 245 - Subsection 245(1) - Tax Benefit tax benefit even though corporate surplus stripped in favour of family trust had not so far been distributed 215
Tax Topics - Income Tax Act - Section 75 - Subsection 75(2) s. 75(2) application ousts dividend inclusion to income recipient (in absence of GAAR) 114

MP Western Properties Inc. v. The Queen, 2017 TCC 82, aff'd sub nomine Madison Pacific Properties Inc. v. Canada, 2019 FCA 19

Predecessors of the taxpayers had been acquired for their losses in transactions where less than 50% of their voting shares, but more than 90% of...

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Tax Topics - Other Legislation/Constitution - Federal - Tax Court of Canada Rules (General Procedure) - Section 95 - Subsection 95(1) Crown must produce all documents “considered by officials involved in or consulted during” a GAAR-related audit 304

1245989 Alberta Ltd. v. The Queen, 2017 TCC 51, rev'd sub nom. Wild v. Canada, 2018 FCA 114

An individual (Mr. Wild) stepped up the adjusted cost base of his investment in a small business corporation (PWR) by transferring his PWR common...

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Tax Topics - Income Tax Act - Section 84.1 - Subsection 84.1(1) the use of class PUC-averaging to bump the PUC of personally-held shares was an abuse of s. 84.1 701
Tax Topics - Income Tax Act - Section 245 - Subsection 245(5) assessment of PUC without current income effect 34

Veracity Capital Corp. v. The Queen, 2017 BCCA 3

The following transactions occurred under a KPMG-advised “Q-Yes” plan for the avoidance of 90% of the B.C. income tax that otherwise would...

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Tax Topics - Statutory Interpretation - Inserting Words Crown's interpretation entailed the addition of words that were already in a closely related provision 201

594710 British Columbia Ltd. v. The Queen, 2016 TCC 288, rev'd 2018 FCA 166

The taxpayer was a holding company and Canadian-controlled private corporation which wholly-owned a “Partnerco” holding a 24.975% limited...

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Tax Topics - Income Tax Act - Section 160 - Subsection 160(1) indirect transfer of property to taxpayer did not entail departure from FMV 462
Tax Topics - Income Tax Act - Section 245 - Subsection 245(2) GAAR reassessment must reflect the abuse 315
Tax Topics - Income Tax Act - Section 96 - Subsection 96(1) - Paragraph 96(1)(f) LP profits can be allocated to purchasing partner at year end 278

Pomerleau c. La Reine, 2016 TCC 228, aff'd 2018 FCA 129

An individual taxpayer engaged in a surplus-stripping transaction similar to transactions in a ruling which CRA had resiled from following...

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Tax Topics - Income Tax Act - Section 84.1 - Subsection 84.1(2) - Paragraph 84.1(2)(a.1) GAAR applied to converting soft ACB (generated from crystallizing the capital gains deduction) into pseudo-hard ACB under s. 53(1)(f.2) for use in extracting surplus 717

Oxford Properties Group Inc. v. The Queen, 2016 TCC 204, rev'd 2018 FCA 30

A corporation (“BPC”), which was mostly owned by a Canadian pension fund (“OMERS”), obtained the agreement of a predecessor of the...

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Tax Topics - Income Tax Act - Section 248 - Subsection 248(10) subsequent sale part of series as it utilized the benefit of previous LP packaging transactions 383
Tax Topics - Income Tax Act - Section 97 - Subsection 97(2) purpose not to tax underlying recapture on subsequent LP unit sale 431
Tax Topics - Income Tax Act - Section 88 - Subsection 88(1) - Paragraph 88(1)(d) purpose: to push down ACB of shares of sub to qualifying non-depreciable property 489
Tax Topics - Statutory Interpretation - Interpretation Act - Subsection 45(2) subsequent amendment shed light on scope of previous version 107
Tax Topics - Income Tax Act - Section 100 - Subsection 100(1) S. 100 operates only on outside basis gain 290
Tax Topics - Income Tax Act - Section 69 - Subsection 69(11) Parliament provided safe harbour for sales after 3 years 204
Tax Topics - Income Tax Act - Section 98 - Subsection 98(3) - Paragraph 98(3)(c) purpose: to preserve high outside basis through push down 293

Gervais v. The Queen, 2016 TCC 180, aff'd 2018 FCA 3

After a third party ("BW") had made an offer to purchase the shares of a Quebec manufacturing company ("Vulcain"), Mr. Gervais sold 1.04M Vulcain...

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Tax Topics - Income Tax Act - Section 245 - Subsection 245(3) comparison with outright sale and gift 193
Tax Topics - Income Tax Act - Section 245 - Subsection 245(1) - Tax Benefit benefit compared to straight sale and gift 166

R. v. Golini, 2016 TCC 174

A family corporation (“Ontario”) used proceeds of a daylight loan to redeem shares of Holdco, which used those proceeds to purchase a life...

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Tax Topics - Income Tax Act - Section 15 - Subsection 15(1) a loan to a shareholder with recourse limited to an asset pledged by the corporation was a shareholder benefit 589
Tax Topics - General Concepts - Sham sham doctrine did not apply to a "minor pretence" 338
Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) interest deduction on limited recourse loan 305
Tax Topics - Income Tax Act - Section 84 - Subsection 84(1) policy of 84(1) 219

Univar Holdco Canada ULC v. The Queen, 2016 TCC 159, rev'd 2017 FCA 207

An acquisition of the shares of a Netherlands public company indirectly holding the shares of a valuable Canadian sub (Univar Canada) with nominal...

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Tax Topics - Income Tax Act - Section 212.1 - Subsection 212.1(4) creating a sandwich structure in order to access s. 212.1(4) was an abuse of the s. 212.1(1) anti-surplus stripping rule 628
Tax Topics - Statutory Interpretation - Interpretation Act - Subsection 45(3) policy of current version of s. 212.1(4) confirmed by proposed amendment 142

Veracity Capital Corporation v. M.N.R., 2015 DTC 5136 [at 6421], 2015 BCSC 2278, rev'd 2017 BCCA 3

The following transactions occurred under a KPMG-advised plan in order to avoid 90% of the B.C. income tax that otherwise would have been payable...

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Tax Topics - Income Tax Act - Section 245 - Subsection 245(3) investment in LP units with 7.2% return was primarily for tax avoidance reasons/year end selections were avoidance transactions 491

Birchcliff Energy Ltd. v. The Queen, 2015 TCC 232, nullified on procedural grounds 2017 FCA 89

Shortly after it became a public company, a predecessor ("Birchcliff") of the taxpayer entered into an agreement for a major acquisition of...

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Tax Topics - General Concepts - Sham transitory share issuance under plan of arrangement was not a sham 177
Tax Topics - Income Tax Act - Section 111 - Subsection 111(5) - Paragraph 111(5)(a) grant of proxy did not detract from investors acting individually in own interest 237
Tax Topics - Income Tax Act - Section 245 - Subsection 245(3) share subscription was avoidance transaction notwithstanding its "overarching purpose" was financing 148

HMRC v Pendragon plc, [2015] UKSC 37

A scheme, which exploited a UK VAT rule which was intended to avoid double-taxation, so as to avoid tax, was found to be abusive. See summary...

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Tax Topics - Excise Tax Act - Section 274 - Subsection 274(4) scheme, exploiting a rule intended to avoid double-taxation so as to avoid tax, was abusive 755

Superior Plus Corp. v. The Queen, 2015 DTC 1124 [at 765], 2015 TCC 132, aff'd 2015 FCA 241

The Superior Plus Income Fund (the "Fund") effectively converted (in accordance with the distribution method contemplated under s. 107(3.1)) into...

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Tax Topics - Income Tax Act - Section 232 - Subsection 232(1) - Solicitor-Client Privilege disclosure of commercial legal opinion did not entail waiver of privilege for tax legal opinions 145

Barrasso v. The Queen, 2014 TCC 156

The taxpayer, who had realized a capital gain of $30 million earlier in the year, subscribed for Class A common shares of a corporation newly...

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Descarries v. The Queen, 2014 DTC 1143 [at 3412], 2014 TCC 75 (Informal Procedure)

The six taxpayers, who were siblings (or a step-daughter of their deceased father), held all the shares, having an aggregate fair market value...

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Tax Topics - Income Tax Act - Section 171 - Subsection 171(1) free to raise an interpretation not advanced by either party 83
Tax Topics - Income Tax Act - Section 84 - Subsection 84(2) holdco distribution made out of loan from still-operating sub - s. 84(2) did not apply 521

Pièces automobiles Lecavalier Inc. v. The Queen, 2014 DTC 1126 [at 3319], 2013 TCC 310

A Canadian subsidiary ("Greenleaf") of Ford U.S. paid down to $9,750,000 (including accrued interest) a debt of $24,369,439 (plus accrued...

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Tax Topics - General Concepts - Evidence Canadian tax accountant's testimony on US tax consequences accorded little weight 152
Tax Topics - Income Tax Act - Section 245 - Subsection 245(3) debt-paydown transactions were avoidance transactions 268
Tax Topics - Income Tax Act - Section 248 - Subsection 248(10) debt-paydown transactions effected in contemplation of sale transaction were part of same series as the sales transactions 248

Gwartz v. The Queen, 2013 DTC 1122 [at 640], 2013 TCC 86

The taxpayers ("Brianne and Steven") were minors and beneficiaries of a family trust (the "Trust"). The Trust held all the common shares (as...

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Swirsky v. The Queen, 2013 TCC 73, 2013 DTC 1078 [at 431], aff'd 2014 FCA 36

Paris J. noted obiter (at para. 75) that Overs v. The Queen, 2006 TCC 26, "has been implicitly overruled by the Lipson decision."

MacDonald v. The Queen, 2012 TCC 123, rev'd 2013 DTC 5091 [at 5982], 2013 FCA 110

The taxpayer planned to move to the U.S.. Although the capital gain on the shares of his wholly owned corporation ("PC") that would have arisen...

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Antle v. The Queen, 2009 DTC 1305, 2009 TCC 465, aff'd 2010 DTC 5172 [at 7304], 2010 FCA 280

A plan for the taxpayer to avoid capital gains on his sale of shares of a corporation ("PM") would have entailed him gifting the shares to a...

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Garron Family Trust v. The Queen, 2009 DTC 1568, 2009 TCC 450, aff'd sub nom St. Michael Trust Corp. v. The Queen, 2010 DTC 5189 [at 7361], 2010 FCA 309, aff'd sub nom Fundy Settlement v. Canada, 2012 SCC 14

Woods, J. rejected a submission of the Crown that it would have represented an abuse of the Canada-Barbados Income Tax Convention to use the gains...

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Tax Topics - Income Tax Act - Section 75 - Subsection 75(2) 130

OGT Holdings Ltd. v. Deputy Minister of Revenue (Québec), 2009 DTC 5705, 2009 QCCA 191

The taxpayers engaged in a "Québec shuffle" transaction in which they transferred shares of subsidiaries to a related Ontario purchaser on a...

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Landrus v. The Queen, 2008 DTC 3583, 2008 TCC 274, aff'd supra.

A partnership of which the taxpayer was a member ("Roseland II") and another partnership ("Roseland I") owning a similar and adjacent condominium...

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McMullen v. The Queen, 2007 DTC 286, 2007 TCC 16

The taxpayer and an unrelated individual ("DeBruyn") accomplished a split-up of the business of a corporation ("DEL") of which they were equal...

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Tax Topics - Income Tax Act - Section 245 - Subsection 245(3) 270
Tax Topics - Income Tax Act - Section 251 - Subsection 251(1) - Paragraph 251(1)(c) mutual benefit and same advisors insufficient to establish non-arm's length in structured sale transaction 257
Tax Topics - Income Tax Act - Section 84 - Subsection 84(2) 229
Tax Topics - Income Tax Act - Section 84.1 - Subsection 84.1(1) arm's length: negotiation based on self-interest 257

Ogt Holdings Ltd. v. Deputy Minister of Revenue of Québec, 2006 DTC 6604 (Court of Québec)

The taxpayers accomplished an indirect sale of their indirect investment in an operating company ("Canstar") to an arm's length purchaser ("Nike")...

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

The taxpayer transferred assets of a business to a partnership in what was intended to be an s. 97(2) rollover transactions in consideration for...

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Tax Topics - General Concepts - Substance 99
Tax Topics - Income Tax Act - Section 56 - Subsection 56(2) 265
Tax Topics - Income Tax Act - Section 97 - Subsection 97(2) partnership subscription for taxpayer affiliate pref shares not boot 263

Lipson v. The Queen, 2006 DTC 2687, 2006 TCC 148, aff'd supra.

The taxpayer's wife ("Jordanna") borrowed $562,500 from the Bank of Montreal to fund the purchase of shares of a family company from the taxpayer...

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Desmarais v. The Queen, 2006 DTC 2376, 2006 TCC 44

The taxpayer, who held 14.28% of the common shares of a Canadian private corporation ("Consercom") transferred a 9.76% block to a wholly-owned...

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Evans v. The Queen, 2005 DTC 1762, 2005 TCC 684

A corporation ("117679") owned by the taxpayer issued a stock dividend of non-voting shares to the taxpayer that were redeemable and retractable...

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XCO Investments Ltd. v. The Queen, 2005 DTC 1731, 2005 TCC 655

A partnership owned by the taxpayers admitted a third party ("Woodward") as a member of the partnership with a view to selling an apartment...

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Canada v. Jabin Investments Ltd., 2003 DTC 5027, 2002 FCA 520

In order to avoid the application of the pre-1994 version of section 80, debt owing by the taxpayer was sold by a bank (for consideration equal to...

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Loyens v. The Queen, 2003 DTC 355, 2003 TCC 214

In order that the sale of a real estate property could be accomplished in a manner that utilized the losses of a loss company ("Lobro Stables")...

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Hill v. The Queen, 2002 DTC 1749 (TCC)

Under a non-recourse loan owing by the taxpayer and other tenants of an office building to the non-resident landlord, 90% of the cash flow was...

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Fredette v. The Queen, 2001 DTC 621 (TCC)

A partnership ("SDF") of which the taxpayer and two trusts for his children were the partners owned substantially all the units in a second...

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Geransky v. The Queen, 2001 DTC 243 (TCC)

The taxpayer, who owned a portion of the shares of the holding company ("GH") which, in turn, owned an operating company ("GBC") utilized the...

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Tax Topics - Income Tax Act - Section 84 - Subsection 84(2) holding company business was continued and underlying assets were not distributed 307

Jabs Construction Ltd. v. The Queen, 99 DTC 729, [1999] 3 CTC 2556

After it was determined as a result of settlement of litigation between the taxpayer and a co-venturer that it would sell its 50% interest in 13...

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The Queen v. Central Supply Co. (1972) Ltd., 97 DTC 5295 (FCA)

The taxpayer acquired units in limited partnerships that had incurred Canadian exploration expense and then, within 24 hours and after the...

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Gibson Petroleum Co. Ltd. v. The Queen, 97 DTC 1420 (TCC)

The taxpayer which owned one-half of the shares of a company ("Wascana") having non-capital losses that were about to expire, transferred...

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RMM Canadian Enterprises Inc. v. The Queen, 97 DTC 302, [1998] 1 C.T.C. 2300 (TCC)

A non-resident corporation ("EC") approached a business associate who, along with two other individuals, formed a Canadian corporation ("RMM") to...

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Tax Topics - Income Tax Act - Section 159 - Subsection 159(3) 167
Tax Topics - Income Tax Act - Section 245 - Subsection 245(3) 188
Tax Topics - Income Tax Act - Section 251 - Subsection 251(1) - Paragraph 251(1)(c) purchaser of cash-rich company without any signifcant separate role did not deal at arm's length 177
Tax Topics - Income Tax Act - Section 84 - Subsection 84(2) application of s. 84(2) to sale of cash-rich company to accommodation party who quickly paid cash proceeds therefor 222
Tax Topics - Treaties - Income Tax Conventions 96
Tax Topics - Treaties - Income Tax Conventions - Article 10 116

McNichol et al. v. The Queen, 97 DTC 111, [1997] 2 CTC 2088 (TCC)

The taxpayers sold their shares of a corporation ("Bec"), whose assets (following a sale of real estate) consisted largely of cash, to a corporate...

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Tax Topics - Income Tax Act - Section 251 - Subsection 251(1) - Paragraph 251(1)(c) 3rd-party purchaser, of cash-rich company, that looked to its own interests dealt at arm's length 117
Tax Topics - Income Tax Act - Section 84 - Subsection 84(2) 191

Administrative Policy

17 May 2022 IFA Roundtable, Q.12

Regarding Alta Energy, CRA stated:

The SCC considered a matter central to the CRA’s ongoing efforts to protect Canada’s tax base and the...

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Tax Topics - Treaties - Multilateral Instrument - Article 7 - Article 7(1) CRA is monitoring PPT compliance on a priority basis 317

7 October 2021 APFF Roundtable Q. 4, 2021-0900921C6 F - Mind and management et statut de SPCC

A corporation which will generate investment income is incorporated outside Canada (and, thus, is not a Canadian corporation, as per s. 89(1) and,...

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Tax Topics - Income Tax Act - Section 123.3 use of foreign corporation with central management and control in Canada to avoid s. 123.3 tax could be GAARable 170

26 November 2020 STEP Roundtable Q. 12, 2020-0839981C6 - 21 year planning, 107(5) and TCP

In 2017-0724301C6, CRA indicated that it quite possibly was a GAARable circumvention of ss. 107(5) and (2.1) for a Canadian-resident discretionary...

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Tax Topics - Income Tax Act - 101-110 - Section 107 - Subsection 107(5) distributions by a Canadian discretionary trust to a NR-owned Canadian corporate beneficiary of TCP not carved-out in s. 107(5) appear abusive 288

27 October 2020 CTF Roundtable Q. 1, 2020-0860991C6 - ACB increase due to misalignment of ACB

A wholly-owned subsidiary (Subco1) of Parentco effects an s. 55(3)(a) spin-off one of its assets (all the shares of Subco2) to Newco, which is...

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Tax Topics - Income Tax Act - Section 55 - Subsection 55(2.1) - Paragraph 55(2.1)(b) GAAR may apply to spin-offs that effect a disproportionate distribution of high basis assets to the Spinco 353

15 September 2020 IFA Roundtable, Q.6

Canco (wholly-owned by NRco) acquired all the shares of FA1 for $100, thereby effecting a reduction of the paid-up capital (PUC) of the common...

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Tax Topics - Income Tax Act - Section 212.3 - Subsection 212.3(9) - Paragraph 212.3(9)(b) - Subparagraph 212.3(9)(b)(ii) reinstatement arguably occurs on distributing shares of sub capitalized with daylight loan 398

8 October 2010 Roundtable, 2010-0373621C6 F - Utilisation abusive des fiducies familiales

Examples of the abusive use of family trusts to which CRA has applied GAAR included:

  • Capital gains are shifted off-shore through the use of...

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8 October 2010 Roundtable, 2010-0373221C6 F - Paid-up capital

Opco, a Canadian-controlled private corporation owning and operating a seniors' residence, and whose shares (which are qualified small business...

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Tax Topics - Income Tax Act - Section 245 - Subsection 245(3) - Paragraph 245(3)(a) transaction can be an avoidance transaction even where the series is motivated by business reasons 142
Tax Topics - Income Tax Act - Section 89 - Subsection 89(1) - Paid-Up Capital - Paragraph (a) abusive use of PUC averaging to shift PUC to individuals 39

3 December 2019 CTF Roundtable Q. 13, 2019-0824491C6 - Triangular Amalgamation

In a domestic triangular amalgamation, in which the shareholders of Targetco receive shares of Parentco, and Parentco receives shares of the...

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Tax Topics - Income Tax Act - Section 87 - Subsection 87(9) - Paragraph 87(9)(a.4) use of a “Midco” on triangular amalgamation “technically” avoids ss. 87(9)(a.4) and (c) limitation 426

3 December 2019 CTF Roundtable Q. 6, 2019-0823581C6 - 21 year planning, 107(5), and TCP

CRA indicated that 2016-0669301C6 and 2017-0693321C6 dealt with an abusive circumvention of s. 104(5.8) through a s. 107(2) rollout by a...

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Tax Topics - Income Tax Act - 101-110 - Section 107 - Subsection 107(2) a s. 107(2) rollout of Cdn Realtyco shares (i.e., TCP) to a NR-owned corporate beneficiary is inherently abusive 255

6 February 2019 Internal T.I. 2018-0762101I7 - Ruling request - DSU plan and EPSP

A Canadian public company (Employerco) proposed that the share appreciation right (SAR) units of its employees be converted into an equivalent...

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Tax Topics - Income Tax Act - Section 144 - Subsection 144(3) proposed use of EPSP trust to produce equivalent of CCPC stock option plan was abusive 577
Tax Topics - Income Tax Regulations - Regulation 6801 - Paragraph 6801(d) conversion of SARs to DSUs triggered immediate inclusion under s. 6(1)(a) or 6(11) 420

7 March 2019 CTF GAAR Seminar - Suzanne Saydeh on GAAR Committee

  • The approach of the GAAR Committee to surplus-stripping has changed significantly. In 2015-0610701C6, CRA commented that, having regard to the...

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7 March 2019 CTF Seminar on GAAR: Alexandra MacLean on GAAR

  • If an audit team proposes raising GAAR, there is a mandatory referral to the Abusive Tax Avoidance Division at Headquarters. They do a rigorous...

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Alexandra MacLean, "CRA Audits of Large Corporations - The view from ILBD" under Responses to recent adverse decisions – Univar, 27 November 27 2018 CTF Annual Conference presentation.

Univar found that the result of the cross-border surplus-stripping transactions before it could have been equally accomplished if the non-resident...

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27 November 2018 CTF Roundtable Q. 5, 2018-0780041C6 - GAAR on PUC reduction

CRA provided two examples of when it would apply GAAR where paid up capital (“PUC”) is reduced to nil in order to avoid a s. 88(1)(b) gain on...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 88 - Subsection 88(1) - Paragraph 88(1)(b) where Parent acquired the net tax equity in Subco at a bargain price (low share ACB), avoiding a s. 88(1)(b) gain on wind-up through reducing PUC is abusive 548
Tax Topics - Income Tax Act - Section 84 - Subsection 84(3) no challenge of a reduction of PUC of shares of DC held by TC before redemption 222

9 August 2016 Internal T.I. 2014-0526171I7 - Resettlement of a Trust

A non-resident common-law commercial trust had been settled with cash and Canadian real estate by two (apparently non-resident) corporations. A...

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Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition sale of the two interests in a commercial trust to a 3rd party gave rise to a new trust given that this not contemplated when trust settled 395
Tax Topics - Income Tax Act - Section 111 - Subsection 111(1) - Paragraph 111(1)(a) constructive resettlement of trust on sale of beneficial interests therein extinguished its losses 204

13 June 2017 STEP Roundtable Q. 2, 2017-0693321C6 - GAAR and 21-year planning

At the 2016 CTF Roundtable, Q.1, CRA considered that it generally would consider it to be an abusive circumvention of the rule for the realization...

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Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(5.8) GAAR generally applicable to using Canco to defer s. 104(4) deemed disposition only for lifetime of existing beneficiaries 306

12 May 2017 External T.I. 2017-0683511E5 F - Purpose tests of a dividend or repurchase of share

Opco, which has no safe income, avoids s. 55(2.1)(b) by using its cash to purchase most of the common shares held by its parent for cancellation. ...

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Tax Topics - Income Tax Act - Section 55 - Subsection 55(2.1) - Paragraph 55(2.1)(b) - Subparagraph 55(2.1)(b)(ii) redeeming common shares otherwise than out of safe income may be GAARable 346
Tax Topics - Income Tax Act - Section 55 - Subsection 55(3) - Paragraph 55(3)(a) using s. 55(3)(a) to distribute cash otherwise than from safe income likely abusive 193

29 November 2016 CTF Roundtable Q. 1, 2016-0669301C6 - GAAR & 21-year rule planning

A discretionary resident trust that is approaching its 21st anniversary distributes property with an unrealized gain to a corporate beneficiary...

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Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(5.8) making a s. 107(2) distribution to a corporate beneficiary held by a new trust is an abusive circumvention of the s. 104(4) 21-year rule 259

27 April 2016 External T.I. 2016-0625001E5 F - Surplus Stripping

A discretionary trust of which X and his holding company (Holdco) are the beneficiaries receives a s. 84(1) deemed dividend of $100K from Opco...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 84 - Subsection 84(2) using a trust to funnel a deemed dividend from creating PUC to a Holdco beneficiary and funnelling that PUC to the individual beneficiary, is surplus stripping 220
Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(24) distribution of s. 84(1) dividend effected with note issuance 231

2 May 2016 External T.I. 2016-0633351E5 F - Descarries Case and Document no. 2015-0610711C6

In 2015-0610711C6, CRA had indicated that as a result of Descarries, it would no longer issue rulings in which an individual can in effect use...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 84.1 - Subsection 84.1(1) purpose of 84.1 not restricted to monetization transactions 166

13 January 2016 External T.I. 2015-0604521E5 - ACB increase in paragraph 55(3)(a) reorganization

An intermediate holding company (Holdco) wishes to have its subsidiary (Opco) spin off a business to another Holdco subsidiary (Newco). This is...

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Tax Topics - Income Tax Act - Section 55 - Subsection 55(3) - Paragraph 55(3)(a) GAAR may be applied if the transactions produce an outside basis step-up 423
Tax Topics - Income Tax Act - Section 80 - Subsection 80(1) - Forgiven Amount - Element B - Paragraph B(a) contribution of note by creditor to debtor 36

24 November 2015 CTF Roundtable Q. 11, 2015-0610711C6 - Impact of the Descarries decision

In 2005-0134731R3 F, Mr. X realized a capital gain of selling all of the common shares of HOLDCO to his children in consideration for promissory...

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Tax Topics - Income Tax Act - Section 84.1 - Subsection 84.1(1) abuse of s. 84.1 to use basis stepped up under CGD to create a capital loss permitting surplus extraction 331

24 November 2015 CTF Roundtable Q. 4, 2015-0610701C6 - Surplus Stripping and GAAR

Less overall tax is paid if, rather than Opco paying a taxable dividend to one of its shareholders (A, an individual), A rolls his shares into a...

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Tax Topics - Income Tax Act - Section 55 - Subsection 55(5) - Paragraph 55(5)(f) deliberate non-use of s. 55(5)(f) designation does not violate GAAR 249

9 October 2015 APFF Roundtable Q. 15, 2015-0595641C6 F - Surplus Stripping and GAAR

Less overall tax is paid if, rather than Opco paying a taxable dividend to one of its shareholders (A, an individual), A rolls his shares into a...

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Tax Topics - Income Tax Act - Section 55 - Subsection 55(2) GAAR did not apply where a taxpayer deliberately triggered the application of s. 55(2) 147

9 October 2015 APFF Roundtable Q. 14, 2015-0595631C6 F - Indirect Monetization of CGD

Following Descarries, CRA will no longer issue rulings in which an individual can in effect use shares (e.g., preferred shares) whose ACB was...

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Tax Topics - Income Tax Act - Section 84.1 - Subsection 84.1(2) - Paragraph 84.1(2)(a.1) individual cannot effectively use the ACB of shares previously stepped-up using the capital gains deduction to create a loss to offset a gain on the sale of common shares 139

28 May 2015 IFA Roundtable Q. 2, 2015-0581551C6 - IFA 2015 Q.2: GAAR and treaty shopping

What is CRA's position on the application of the GAAR to treaty shopping arrangements? CRA stated:

The…comments on treaty shopping… made in...

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GST/HST Memorandum 16-4 "Anti-avoidance Rules" 20 February 2015

3. ...Transactions that rely upon the strict wording of a provision in the Act to gain a tax benefit where none was intended and, therefore,...

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10 October 2014 APFF Roundtable Q. 21, 2014-0538091C6 F - 2014 APFF Roundtable, Q. 21 - Impact of the Descarries Case

What is the CRA position on Descarries? After noting that the case was not appealed because in the result it was favourable and it was only an...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 248 - Subsection 248(28) will not impose double taxation under s. 84(2) and (3) 42
Tax Topics - Income Tax Act - Section 84 - Subsection 84(2) Descarries failed to recognize breadth of s. 84(2) 572

2 December 2014 CTF Roundtable, Q. 6

Does the formation of a partnership with only Canadian partners in order to meet the requirement of a "Canadian partnership" under subsection...

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Tax Topics - Income Tax Act - Section 100 - Subsection 100(1) avoidance of s. 100 through partnership boot paydown 343

10 October 2014 APFF Roundtable Q. 20, 2014-0534671C6 F - D&D Livestock

What is the CRA position on D & D Livestock? CRA stated (TaxInterpretations translation):

[S]ubsection 245(2) was not applied in this case....

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Tax Topics - Income Tax Act - Section 55 - Subsection 55(2.1) - Paragraph 55(2.1)(b) - Subparagraph 55(2.1)(b)(i) CRA is concerned by planining that can result in an unjustified duplication of fiscal attributes including ACB 178

2013 Ruling 2013-0504301R3 - Loss Consolidation

A public company (Lossco) is transferring losses to a "Profitco" which is a wholly-owned indirect subsidiary of another public company (Bco) which...

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Tax Topics - Income Tax Act - Section 111 - Subsection 111(1) - Paragraph 111(1)(a) Lossco sale of Newco pref to profitco for profitco note; provincial GAAR ruling 448

24 November 2013 CTF Roundtable, 2013-0508161C6 - Loss on disposition of shares

A shareholder having an accrued foreign exchange loss on common shares of an FA and an accrued foreign exchange gain on a related party debt used...

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Tax Topics - Income Tax Act - Section 112 - Subsection 112(3) loss preservation transactions which avoid s. 112(3) stop-loss rule 293
Tax Topics - Income Tax Act - Section 93 - Subsection 93(2.01) loss preservation transactions which did not satisfy the s. 93(2.01) requirements 227

18 June 2013 External T.I. 2012-0433261E5 F - 55(5)(f) and Surplus Stripping

Rather than paying themselves annual dividends of $150,000 from their equally-owned small business corporation (the "Dividend Payor"), A and B...

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Tax Topics - Income Tax Act - Section 84 - Subsection 84(2) partial conversion of retained earnings to capital dividends through deliberate failure to make s. 55(5)(f) designation was abusive stripping 508

5 October 2012 APFF Roundtable Q. 13, 2012-0454181C6 F - Discretionary Dividend Shares

Mr. X holds 100 Class A voting participating shares of Opco with a fair market value of $5M and nominal adjusted cost base and paid-up capital....

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Tax Topics - Income Tax Act - Section 15 - Subsection 15(1) discretionary dividend shares issued for nominal consideration 195
Tax Topics - Income Tax Act - 101-110 - Section 110.6 - Subsection 110.6(7) - Paragraph 110.6(7)(b) acquisition by Holdco of discretionary dividend shares of Opco at undervalue could engage s. 110.6(7) application to Opco commons 208

5 October 2012 APFF Roundtable Q. 8, 2012-0454161C6 F - Computation of CDA and Acquisition of Control

Where Mr. A, who owns 50% of the shares of a CCPC ("Holdco") having cash as its only asset, purchases the other 50% shareholding of Mr. B, s....

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Tax Topics - Income Tax Act - Section 89 - Subsection 89(1) - Capital Dividend Account - Paragraph (a) CDA deduction for net capital losses not affected by their denial under s. 111(4)(a) 134

3 July 2012 External T.I. 2012-0443421E5 F - 84.1 and partnership

A and B are Canadian-resident spouses who have not utilized their capital gains exemption and who each hold 50 Class A shares (the only issued...

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Tax Topics - Income Tax Act - Section 84.1 - Subsection 84.1(1) use of partnership to avoid s. 84.1 could be attacked through challenge to partnership validity or applying s. 245(1) re circumvention of s. 84.1 537

2011 Ruling 2011-0392171R3 - XXXXXXXXXX

A deposit-taking financial institution with significant non-capital losses (LossCo") was directed by the provincial regulator to quickly merge...

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28 November 2010 CTF Roundtable Q. 21, 2010-0386361C6 - 2010 CTF Q21 - Reasonable Salary for Inc. Prof.

CRA stated that para. 1(j) of IT-189R2 ("Corporations Used by Practising Members of Professions") and para. 17 of IC 88-2 ("General Anti-Avoidance...

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8 October 2010 Roundtable, 2010-0373291C6 F - Tuck-Under Transactions - Safe Income Extractions

Despite the decision in Vaillancourt-Tremblay (which addressed only s. 84(2), and not s. 245(2)), CRA will continue to challenge abusive surplus...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 84 - Subsection 84(2) CRA accepts use of tuck-under transactions to extract safe income 196
Tax Topics - Income Tax Act - Section 55 - Subsection 55(2.1) - Paragraph 55(2.1)(c) safe income can be extracted using tuck-under 63

2010 Ruling 2009-0332571R3 - Loss consolidation - related or affiliated

Mr A and Mrs B are siblings. Mr A holds all the voting shares of HA which, in turn, holds Lossco. HA also is the common shareholder of HASub....

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Tax Topics - Income Tax Act - Section 111 - Subsection 111(1) - Paragraph 111(1)(a) loss shift between related but unaffiliated corporations 163

2005 Ruling 2005-0123631R3 - Thin Capitalization Rules

GAAR will apply to prevent what otherwise would be the avoidance of the thin capitalization rule when debts owing by a Canadian corporation to a...

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7 July 2010 External T.I. 2010-0370611E5 F - Purchase of Shares by Subsidiary - Sec. 245

A CRA response at the 2005 APFF Roundtable (2005-0141061C6) dealt with the situation where Mr. X, an arm’s length shareholder owning 20% of the...

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Tax Topics - Income Tax Act - Section 84.1 - Subsection 84.1(1) realization by an individual of capital gain by selling shares to the corporation’s Newco sub requires inter alia that any basis created in Newco not be abused 139

27 May 2008 External T.I. 2008-0269441E5 F - Withdrawn Ruling Request

The 2005-0134731R3 transactions, accommodating “an intergenerational transfer of a family business,” would be abusive surplus stripping if...

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Tax Topics - Income Tax Act - Section 84 - Subsection 84(2) the 2005-0134731R3 transactions, accommodating “an intergenerational transfer of a family business,” would be abusive surplus stripping if applied to inter-sibling transfer 102

Income Tax Technical News, No. 34, 27 April 2006 under "Sale of Tax Losses"

Where Profitco avails itself of the benefit of tax losses of Lossco, a publicly traded corporation that is insolvent and has ceased to carry on...

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7 October 2005 APFF Roundtable Q. 13, 2005-0141061C6 F - Purchase of Shares by Subsidiary - Sec. 84.1 & 245

S.245(2) generally would not apply where an individual ("X") owning 20% of the shares of Opco disposes of his shares of Opco to a...

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31 August 2005 Internal T.I. 2005-0134831I7 F - Capital Gains Exemption Strip

Two brothers, who had stepped up the ACB in shares of their respective holding companies using the capital gains exemption, then redeemed those...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 84.1 - Subsection 84.1(1) - Paragraph 84.1(1)(a) s. 84.1 did not apply to transferring crystallized preferred shares’ ACB to common shares under s. 40(3.6)(b), with those shares exchanged for high-PUC prefs of new Holdcos for cash redemption 565
Tax Topics - Income Tax Act - Section 40 - Subsection 40(3.6) individuals holding high-ACB/low-PUC prefs and low ACB/PUC common shares preserved that ACB under s. 40(3.6)(b) for surplus-stripping purposes on their prefs’ redemption 91

17 March 2005 External T.I. 2005-0118601E5 F - Sale of Shares-Transfer of Family Business

An individual ("A") wholly-owning Holdco, held Holdco common shares with a nominal FMV, ACB and PUC, and Holdco preferred shares having an FMV of...

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Tax Topics - Income Tax Act - Section 84.1 - Subsection 84.1(2) - Paragraph 84.1(2)(a.1) - Subparagraph 84.1(2)(a.1)(ii) preliminary s. 85(1)(g) exchange transaction for crystallized preferred shares avoided application of s. 84.1(2)(a.1)(ii) 443

2004 Ruling 2004-0094751R3 - Withholding tax; interest

GAAR did not apply where a Canadian securitization trust, in order to borrow at favourable rates provided by an arm's length foreign lender,...

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7 December 2004 External T.I. 2004-0103061E5 F - Non Arm's Length Sale of Shares-Surpl. Stripping

A professional partnership (“SENC”) with three members disposes of all the shares of the services corporation ("Serviceco" - rendering...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 84.1 - Subsection 84.1(1) application of s. 84.1 if company sold to accommodation party, followed by wind-up of that company and payment of purchase price 87

2004 Ruling 2004-0088541R3 - Loss utilization

Loss utilization transactions in a related group of companies under which Profitco transfers its promissory note of a wholly-owned subsidiary of...

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2004 Ruling 2004-0084311R3 - Incorporating a Partnership

On the transfer of the assets of a partnership to a corporation ("Newco") in consideration for shares and a promissory note, for reasons of legal...

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2004 Ruling 2003-0053981R3 - XXXXXXXXXX

A mutual fund trust (the "Fund") subscribes for Class A redeemable retractable shares of a newly-incorporated subsidiary ("MFC") and distributes...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - 101-110 - Section 107.4 - Subsection 107.4(1) - Paragraph 107.4(1)(a) qualifying drop-down of partnership units to subsidiary unit trust where s. 107.4(2)(a) was ousted due to units issuance 246
Tax Topics - Income Tax Act - 101-110 - Section 107.4 - Subsection 107.4(1) - Paragraph 107.4(1)(h) immediate refinancing of drop-down subsidiary trust of MFT did not offend policy of para. (h) 234
Tax Topics - Income Tax Act - 101-110 - Section 107.4 - Subsection 107.4(3) - Paragraph 107.4(3)(m) units must be received on drop-down of LP to new subtrust (thereby ousting s. 107.4(2)(a)), in order to receive outside basis under s. 107.4(3)(m) 241

Income Tax Technical News, No. 30, 21 May 2004

Under the scheme of the Act it is acceptable to transfer deductions within an affiliated group of corporations. The Agency will not feel...

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2003 Ruling 2003-0041823 - FOREIGN PROPERTY PENSION CORPORATIONS

The establishment by a pension corporation of a subsidiary pension corporation for the purpose of increasing the percentage of underlying foreign...

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10 October 2003 External T.I. 2003-0029955 F - Surplus Stripping Post-Geransky

General discussion as to whether s. 245(2) might be applied in the situation where shareholders of an operating corporation ("Opco") sell their...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 84 - Subsection 84(2) hybrid sale: internal step-up followed by share sale 451

2 June 2003 External T.I. 2003-0002485 - DEBT FORGIVENESS-GIFT FUND

A farmer transfers farm property to an adult child at fair market value taking back a promissory note as consideration, then makes a gift to his...

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31 March 2003 Ruling 2002-0166273 - DEBT OF A TRUST FOREIGN PROPERTY

Where a trust issues debt and the only property held by the trust is foreign property, the Directorate indicated that although the technical...

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9 September 2002 External T.I. 2002-0141005 - Debt forgiveness and capital contribution

Technical Interpretation No. 9518785 (respecting a parent subscribing for shares of a sub, which uses the funds to repay debt owing) is being...

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2001 Ruling 2001-0090213 - Tax loss consolidation

Description of loss consolidation transactions under which a public corporation lends money on an interest-bearing basis to a profitable...

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2000 Ruling 2000-0010723 - STOCK BONUS PLAN

A corporation ("TC") previously transferred a property to another corporation ("DC") and received non-voting preferred shares of DC as...

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May 1999 CALU Conference No. 9908430., Q.3

GAAR likely would apply where holding companies for individual shareholders own and pay premiums for insurance policies on the lives of the other...

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Income Tax Technical News, No. 9, 10 February 1997

As a result of an amendment to s. 69(11), "a series of transactions that results in the transfer of the benefit of the losses, deductions or other...

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30 November 1996 Ruling 9717003 - GAAR, IDENTICAL PROPERTIES

In order to avoid averaging with the low ACB of shares currently held by them that are subject to an escrow agreement, employees of a public...

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1995 Ontario Tax Conference Round Table, Q. 5 (No. 952503)

Where $500,000 worth of common shares of Opco are sold by its individual shareholder to a corporate purchaser, following which the purchased...

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6 July 1995 External T.I. 9316465 F - Payment to Dissenting Shareholders on Amalgamation

In response to a proposal that a payment be made to a separated wife of a husband by her dissenting to the amalgamation of a corporation...

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21 June 1995 External T.I. 9510915 - 6363-1 FOREIGN AFFILIATES - DEEMED ABI

With respect to a loan by a wholly-owned foreign affiliate of a Canadian corporation ("Canco") to a non-resident corporation that was related to...

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12 April 1995 External T.I. 9508595 - GAAR AND UTILIZATION OF LOSSES

S.245 will not apply in a situation where inventory is transferred by a corporation to a wholly-owned subsidiary for the purpose of utilizing the...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 111 - Subsection 111(1) - Paragraph 111(1)(a) inventory roll-down to use non-capital losses 114

27 May 1994 External T.I. 9408945 - TRANSFER OF PARTNERSHIP INTEREST

GAAR potentially may apply where a taxpayer transfers to her spouse her interest in a partnership in which they are equal partners and receives a...

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1994 A.P.F.F. Round Table, Q. 34

Transactions, whereby an individual took advantage of the fact that he had preferred shares of a holding company with a fair market value and ACB...

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Rulings Directorate Discussion and Position Paper on Motion Picture Films and Video Tapes as Tax Shelters, Version 29/3/93 930501 (C.T.O. "Motion Picture Films - C.C.A.")

S.245(2) will be applied where CCA claims effectively are doubled-up by having Partnership B acquire all but one of the interests in Partnership A...

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Rulings Directorate Discussion and Position Paper on Motion Picture Films and Video Tapes as Tax Shelters, Version 29/3/93 930501 (C.T.O. "Motion Picture Films - C.C.A.")

RC will accept investors in film limited partnerships being accorded the right to put their units to an entity related to the film promoter...

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1993 A.P.F.F. Round Table, Q. 2

"In a situation where a non-resident of Canada carries out a series of transactions whose purpose is to secure an exemption from or reduction of...

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93 CPTJ - Q.14

Where a transaction is structured to avoid the application of a specific anti-avoidance rule, the general anti-avoidance rule may still be...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 69 - Subsection 69(11) 30

26 January 1993 T.I. (Tax Window, No. 28, p. 1, ¶2383)

Whether s. 245(2) would apply where a profitable corporation provides services at less than fair market value to an affiliated company with losses...

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11 January 1993 T.I. (Tax Window, No. 27, p. 14, ¶2358)

A capital gain realized on a cash distribution of paid-up capital on preferred shares that constitute qualified small business corporation shares...

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December 1992 B.C. Tax Executives Institute Round Table, Q. 1 (No. 9230390)

Where a corporation grants investors an option to acquire a debenture with terms identical to those of an existing callable debenture, RC will...

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16 December 1992 T.I. 920178 (November 1993 Access Letter, p. 511, ¶C245-050)

Discussion of whether s. 245 will apply where additional shares are required, or shareholdings are pooled, in order that Part IV tax will not...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 186 - Subsection 186(4) 30

1 December 1992 T.I. (Tax Window, No. 27, p. 9, ¶2319)

If one of the purposes of a series of transfers of a capital property within a related corporate group is to utilize non-capital losses of one of...

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92 C.R. - Q.24

Transactions whereby a stock dividend is issued to the sole shareholder of a corporation who transfers the stock dividend shares to Newco,...

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31 August 1992 Memorandum (Tax Window, No. 24, p. 3, ¶2191)

The use of s. 55(3)(b) to effect a transfer of assets deriving their value principally from real estate in the guise of a treaty-protected share...

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24 June 1991 T.I. (Tax Window, No. 4, p. 2, ¶1313)

GAAR does not apply to an arrangement whereby, in order to satisfy the 24-month hold period for the enhanced capital gains exemption, the vendor...

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2 January 1991 T.I. (Tax Window, Prelim. No. 3, p. 11, ¶1083)

A butterfly reorganization involving the distribution of land inventory which is achieved on a rollover basis under ss.97(2) and 90(3) through the...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 85 - Subsection 85(1.1) 46

6 December 1990 T.I. (Tax Window, No. 2, p. 9, ¶1197)

RC could not give an opinion as to whether GAAR would apply to deny the current deduction of cost of distributing units of a mutual fund incurred...

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5 December 1990 Memorandum F-3973 (Tax Window, Prelim. No. 2, p. 17, ¶1063)

Transactions whereby a corporation with non-capital losses which are about to expire transfers its capital properties at a gain to a...

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9 October 1990 T.I. (Tax Window, Prelim. No. 1, p. 17, ¶1035)

GAAR will not apply to a transfer of farmland by an individual to his child pursuant to s. 73(3) following shortly thereafter by a sale by the...

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90 C.R. - Q22

The fact that an estate freeze has been accomplished in favour of a discretionary trust of which the freezor is a beneficiary would not generally...

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90 C.R. - Q20

Where, in order to "crystallize" his capital gains deduction, the individual sells shares to his spouse and does not elect to have the provisions...

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90 C.R. - Q21

S.245(2) will apply where an individual owns the shares of a corporation ("Caschco") the assets of which are primarily liquid assets, sells the...

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14 June 1990 T.I. (November 1990 Access Letter, ¶1535)

The French word "abus" is broad enough to encompass both "misuse" and "abuse".

30 May 1990 T.I. (October 1990 Access Letter, ¶1487)

RC will consider applying s. 245(2) to an arrangement which has been set up primarily to change income received by one corporation from an...

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9 May 1990 Meeting (October 1990 Access Letter, ¶1474)

S.245(2) will not normally be applied to transactions whose purpose is to qualify a corporation as a small business corporation.

20 April 1990 T.I. (September 1990 Access Letter, ¶1435)

An arrangement whereunder employees participating in an employee share purchase plan are permitted to realize capital gains treatment rather than...

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23 February 1990 Memorandum (July 1990 Access Letter, ¶1346)

GAAR will not apply where a parent corporation transfers publicly-traded shares with unrealized gains to a wholly-owned subsidiary on a rollover...

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6 February 1990 Memorandum (July 1990 Access Letter, ¶1345)

GAAR applies to transactions whereby (a) on the last day of Partnership A's fiscal year, Partnership B acquires a 99.9% interest in A, (b) in...

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11 January 1990 T.I. (June 1990 Access Letter, ¶1283)

The use of cash and term deposits to pay off liabilities in order to qualify as a qualified small business corporation at the time of the...

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15 November 89 T.I. (April 90 Access Letter, ¶1187)

A corporation ("Opco") is owned by brothers and sisters who wish to realize the value of its shares on a tax-free basis and to transfer those...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 55 - Subsection 55(2) 111

15 November 89 T.I. (April 90 Access Letter, ¶1186)

X amalgamates its subsidiary A (which has not depreciated its assets for tax purposes) with subsidiary B (whose depreciable property is fully...

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25 October 89 T.I. (March 1990 Access Letter, ¶1161)

The exemption in s. 245(4) potentially could apply to an arrangement whereby a corporation with non-capital losses becomes a personal services...

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20 October 89 T.I. (March 1990 Access Letter, ¶1158)

The sale by a corporation with non-capital losses which are about to expire of a capital property to its wholly-owned subsidiary at fair market...

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25 September 89 Memorandum (February 1990 Access Letter, ¶1127)

Arrangements that may circumvent the charitable donations limitation in ss.110.1(1)(b) and 118.1(1) are not subject to s. 245(2).

89 C.R. - Q.41

S.245 will not be applied where a taxpayer sells property to sustain a loss and then repurchases the property 31 days later. "Since this...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 54 - Superficial Loss 54

89 C.R. - Q.42

RC will not apply s. 245 to subject offshore trust, of which Canadian residents are beneficiaries, to Canadian tax prior to the exploration of the...

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89 C.R. - Q.43

A partnership which is subject to the rental-property restriction rules as a result of being over-leveraged has its partners borrow money, and use...

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89 C.R. - Q.44

GAAR would not ordinarily apply to the transfer by an individual of his shares of a family farm corporation to his children using the provisions...

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89 C.R. - Q. 3

The deposit by a non-resident of funds with the non-resident financial institution that in turn loans funds to a Canadian corporation with which...

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October 1989 Revenue Canada Round Table - Q.23 (Jan. 90 Access Letter, ¶1075)

An individual transfers all the shares of Holdco, which are "qualified small business corporation shares", to Newco, elects under s. 85(1) in...

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October 1989 Revenue Canada Round Table - Q.21 (Jan. 90 Access Letter, ¶1075)

In the context of a discussion of Friedberg, RC indicated that s. 245 might be applied to control abusive practices by taxpayers. However, GAAR...

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October 1989 Revenue Canada Round Table - Q.11 (Jan. 90 Access Letter, ¶1075)

It is acceptable for an individual taxpayer to stepped-up the basis of his qualified small business corporation shares by exchanging those shares...

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October 1989 Revenue Canada Round Table - Q.4 (Jan. 90 Access Letter, ¶1075)

The temporary injection of capital into a partnership in order to avoid the realization of gain on a rollover transaction would appear to...

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29 Aug. 89 T.I. (Jan. 90 Access Letter, ¶1084)

Because specific provisions such as ss.67, 69 and 56(2) are sufficient to address abuses which might otherwise arise from the use of professional...

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89 C.R. - Hiltz Paper (C.7)

88 C.R. - "Small Business Corporation Shares" - "'GAAR' and QSBC Shares"

The "purification" of a CCPC in order to qualify its shares as QSBC's, and dispositions made in order to use up the capital gains exemption, do...

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89 C.M.TC - "Section 245 of the Income Tax Act"

The incorporation of a special purpose sub to hold debt on an amalgamation, thereby avoiding the application of s. 80(2), is an abuse.

Borrowing...

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M. Hiltz, "Section 245 of the Income Tax Act", 1988 Conference Report, c.7.

Information Circular 88-2, General Anti-Avoidance Rule 21 October 1988

Ex. 21

Amalgamating an operating company with a shell corporation so as to produce a year end without obtaining CRA’s consent, thereby...

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IT-96R5 "Options Granted by Corporations to Acquire Shares, Bonds or Debentures" under "Anti-Avoidance Provisions"

ATR-44

An arrangement where a parent company uses borrowed funds to invest in the preference shares of a subsidiary which lends those funds to the parent...

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Finance

7 March 2019 CTF Seminar on GAAR: Brian Ernewein on GAAR – Past and Future

  • There is a free and collegial interchange of views between the Finance, Justice, and CRA members of the GAAR Committee so that, for example, CRA...

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Articles

Eytan Dishy, Chris Anderson, "The Permissibility of Surplus Stripping: A Brief History and Recent Developments", Canadian Tax Journal (2021) 69:1, 1 -33

Contrast between CRA and Copthorne approach to surplus stripping (pp.27-28)

  • While Copthorne (at para. 96) stated that the PUC scheme in the Act...

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David G. Duff, "Tax Treaty Abuse and the Principal Purpose Test – Part 2", Canadian Tax Journal, (2018) 66:4, 947-1011

Burden on Crown to establish abused policy (p. 1001)

Canadian courts have generally held that the GAAR should apply only where the object and...

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Alan M. Schwartz, Kevin H. Yip, "Policy Forum: Defending Against a GAAR Reassessment", Canadian Tax Journal (2014) 62:1, 129-46.

Admissibility of broader range of extrinsic evidence (pp. 136-7)

Rather than determining the meaning of the statute, the GAAR analysis requires a...

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David H. Sohmer, "Copthorne, Global Equity Fund, and the GAAR: Stubart Redux", The Canadian Taxpayer, January 25, 2013 – Vol. XXXV No.2, p. 9

At p.11:

As a result of the dilution of the requirements for clarity of text and clarity of legislative purpose, the GAAR now appears to have...

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Steve Suarez, "Tax Court Compels Disclosure in GAAR Case", Tax Notes International, Vol. 69 No. 3, 21 January 2013, p. 238

Regarding the significance of the finding in Birchcliff that the CRA can be compelled in GAAR litigation to disclose what it determined to be the...

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David H. Sohmer, "Copthorne and the Supreme Court: Did the Court Cross the Line?", The Canadian Taxpayer, Vol. XXXIV, No. 3, February 10, 2012, p. 9

Copthorne effectively equates abuse with a failure to be reasonable, which conflates ss. 245(4) and (5).

David H. Sohmer, "The Supreme Court Decision in Copthorne: A Move To The Middle", The Canadian Taxpayer, Vol. XXXIV, No. 2, January 27, 2012, p. 9

The GAAR can now be applied in the absence of a clear and unambiguous legistlative intent.

David H. Sohmer, "GAAR or GAAR Lite: What Did Parliament Really Want?", The Canadian Taxpayer, Vol. XXX, No. 4, February 12, 2008 - February 25, 2008, p. 25.

Corcoran, Porter, "The General Anti-Avoidance Rule - Application to Second-Tier Finance Company Structures", International Tax Planning, Vol. VI, No. 3, 1997, p. 403.

"Applying the General Anti-Avoidance Rule", Tax Profile, February 1992, p. 190: Summary of discussion by Mark Symes and Jim Pearson of the potential application of GAAR in a number of situations.

D.J. Arnold, J.R. Wilson, "The General Anti-Avoidance Rule - Part 1, Part 2 and Part 3", 1988 Canadian Tax Journal, p. 829, p. 1123, p. 1369.

R.F. Lindsay, "The General Anti-Avoidance Rule: Points to Consider", 1988 Conference Report, c.5.

T.E. McDonnell, "Legislative Anti-Avoidance: The Interaction of the New General Rule and Representative Specific Rules", 1988 Conference Report, c.6.