Taxation Year

Table of Contents

Cases

Marino v. Canada, 2022 FCA 115

Oceanspan principle indicates that a non-resident who does not compute income from any source for ITA purposes does not have a taxation year

An individual with no connection to Canada paid significant tuition fees while in attendance at U.S. universities prior to 2012 then, on immigrating to Canada, claimed his “unused” tuition tax credits as a deduction from Canadian tax. Given that the tax credit provisions referred to an individual’s “taxation year,” the Crown successfully argued before the Tax Court the Oceanspan principle that “a non-resident with no source of income in Canada, was not a ‘taxpayer’ and therefore did not have a taxation year” (para. 29). The Tax Court rejected the taxpayer’s position that s. 250.1(a) had the effect of deeming any non-resident to have a taxation year - and instead indicated that this provision only “applies where a non-resident must have a taxation year if a provision of the Act is to operate as it is intended to operate, including in respect of another taxpayer,” for example, respecting a non-resident trust with a resident beneficiary recognizing income under s. 104(13) based on when that trust has a taxation year end.

In the Court of Appeal, Stratas JA stated (at para. 3) that “Oceanspan is … directly on point … [and] binds us, just as it bound the Tax Court.” He further stated (at para. 4):

The appellant contends that section 250.1 of the Act, added after Oceanspan, supersedes Oceanspan and has the effect of deeming every non-resident person to have a taxation year in Canada. We disagree for the reasons expressed by the Tax Court at paragraphs 35-40.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 250.1 - Paragraph 250.1(a) s. 250.1(a) did not supersede Oceanspan principle 256
Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(13) s. 104(13) requirement to compute the income of a non-resident trust with a Canadian beneficiary is an example of s. 250.1(a) application 284

See Also

Harvey v. The Queen, 94 DTC 1910 (TCC)

Bowman TCJ. found that there was no basis for the Minister to prorate a capital cost allowance claim for a taxation year of the taxpayer on the basis that the taxpayer did not commence the business in question until the last month of the year. Bowman TCJ. stated (p. 1915) that he could:

"see nothing in the Act that requires a person who starts a new business to shorten his taxation year simply because the business was not in operation for the full year."

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