Words and Phrases - "liable for tax"
Canada (Attorney General) v 18335898 Alberta Ltd (Whitecap Energy Inc), 2023 ABKB 357
The defendant (“Whitecap Energy”) was an Alberta corporation which had been wound up into its sole shareholder (“Whitecap Resources”) and dissolved. The Attorney General sought to revive Whitecap Energy pursuant to s. 208 of the Business Corporations Act (Alberta) in order that it could be assessed by CRA which, in turn, would permit an assessment of Whitecap Resources under ITA s. 160. Principally at issue was whether the Attorney General had standing as an “interested party,” which was relevantly defined in ABCA s. 206.1 to “mean … (a) … a creditor of a dissolved corporation … or (d) a person designated as an interested person by an order of the Court.”
In finding that the Attorney General was not a “creditor,” Schlosser J stated (at para. 9):
Taxpayers remain liable for tax when income is earned (s. 152(3) ITA), notwithstanding that no return is filed. The liability does not become a debt until the taxes are assessed and a Notice of Assessment is issued (sections 158, 227, and 248(2) …. and cf Brogan Family Trust …).
However, in finding that he should exercise his discretion to designate the Attorney General, he stated (at para. 14):
[T]he Attorney General of Canada has a valid interest in revival and seeks this remedy in furtherance of its valid interest for a legitimate purpose; which is to convert liability for taxes into a debt.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 160 - Subsection 160(1) | CRA could revive a corporation for the purpose of assessing it in order to make a s. 160 assessment of the shareholder | 141 |
Cristofaro v. Agence du revenu du Québec, 2020 QCCQ 1461, rev'd 2021 QCCA 1025
In 2003-0026827, CRA applied Oceanspan to find that a non-resident student who has no Canadian sources of income is precluded from transferring her unutilized tuition credits to her resident father under ITA s. 118.9 because:
an individual who is not resident in Canada and who has no Canadian source income would not be entitled to the tuition and education tax credits. The individual is not liable to pay tax in Canada, and therefore has no need to utilize the provisions permitting the tax credits.
Although this federal position does not appear to have been mentioned to him, Cameron JCQ rejected a similar position advanced by the ARQ to justify the denial of a tuition credit transfer (under the Quebec equivalent of s. 118.9) by a daughter studying in Scotland, who was resident in Ontario and had no Quebec sources of income, to her father, also an Ontario resident, who had Quebec professional income allocated to him by a cross-country professional firm. Cameron JCQ stated:
The legislation does not suggest that in any year where a Quebec resident who is a student does not have liability for tax pursuant to articles 22 or 25 TA, she would not be able to transfer the unusable credit to a parent. To interpret the law as implying that would be a direct contradiction of the purpose of the legislation, that of permitting a taxpaying parent to reduce tax liability because of the support of the child for education.
He went on to indicate (at para. 49) that in any event, the daughter could be considered to be “subject to tax” (or “liable for tax” to use his preferred translation, and also essentially the phrase considered in Crown Forest):
… The income tax legislation … applies to all Canadian residents … because they may, in one year or another, earn business income in Quebec… . In that sense, the daughter is “subject to the tax” to use Revenu Québec’s phrase, because she could, potentially, depending on circumstances, get some business income generated in Quebec even without being a resident here.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 118.9 | a non-resident with no sources of income in Quebec nonetheless could transfer a tax credit to a Quebec taxpayer | 434 |