E-Views

This review of criteria for judicial review of a CRA decision refusing a late adjustment (ITA ​s. 152(4.2)) includes a discussion (para. 17) of when the Court will consider affidavit evidence that goes beyond the documents before the CRA reviewer who made the decision.  [22]           In the present case, the decision made under subsection 152(4.2) of the ITA is a discretionary one. Subsection 152(4.2) of the ITA does not provide the… Read More »David Anthony v. Canada (National Revenue) 2016 FC 955 (Boswell J) — Judicial review of CRA discretion to allow late return adjustments — factors FC considers

This case is interesting because it was not a tax protester case but it applied Torres and other Fiscal Arbitrators decisions to find this investment banker grossly negligent for failing to report $18 million of taxable dividends in his 2007 tax return. The banker blames his accountants for failing to include properly the $18 million in his tax return. The most damning fact was that the taxpayer… Read More »Melman v. The Queen – 2016 TCC 167 (Bocock) — Gross negligence penalty for failing to report $18MM of taxable dividends

Ms. O’Callaghan was her brother’s designated beneficiary under his RSP. She got about $273,000 from his RSP on his death.  As a result of the RSP benefit under ITA subsection 146(8.8), the estate owed about $98,000 of federal and provincial tax.  ​To pay for the tax liability, Ms. O’Callaghan gave the executor (who was also her brother) $135,000. But the executor only paid to CRA about $39,000… Read More »O’Callaghan v. The Queen 2016 TCC 169 (Favreau) — an RRSP designate beneficiary may be liable for the Estate’s tax on the RSP even if she paid the tax to the Executor

This case deals with the non-arm’s length transfer rule in ETA s. 325.  That rule taxes a non-arm’s length transferee who receives property from a tax debtor.  The amount of the assessment is reduced by the amount of consideration given for the transfer.   Here, the appellant’s common law partner’s corporation loaned the appellant money ($27,000.)  Throughout the reasons there is no suggestion by the Court or… Read More »St-Pierre c. La Reine 2016 CCI 146 (Favreau J) — ETA s. 325 — must a transferee repay the debt for there to be valid consideration for a loan?

The Crown brought this motion to delete from the Notice of Appeal facts and reasons pleading “the Minister of National Revenue’s motivation and predominant purpose in issuing the requirements and obtaining from the banks the appellant’s bank records, and documents and information derivative of such records, used to issue the reassessments”.  The Notice of Appeal also challenged the way the CRA applied the net worth method.… Read More »Bauer v. The Queen 2016 TCC 136 (Lyons) — CRA motives and conduct are irrelevant in a TCC appeal; related pleadings will be struck from the Notice of Appeal

Funds were seized from a Somali man who was trying to leave an area where gunshots had been heard.  Although he did not appear at the hearing, the court refused to accept the Crown’s hearsay and speculative evidence as grounds for concluding that the funds were proceeds of crime or to be used for crime.  The court ordered the money returned to the young man.… Read More »Attorney General of Ontario v $8,740 In Canadian Currency, 2016 ONSC 3773 (Dunphy J.) — Civil Remedies Act (ON) — Crown has burden of proof

This was a non-arm’s length transfer case (here, under ITA s. 160).  This rule taxes a transferee of property from a person who owed taxes at the time of the transfer.  This was a strategic dispute over the lack of particulars in the Notice of Appeal.  The appellant had been the major shareholder of a bankrupt corporation which the Crown said owed taxes at the… Read More »Atwill-Morin c. La Reine 2016 CCI 127 (Lamarre) – ITA s 160 — Can you demand that the Crown prove the underlying tax debt?

[13]           Next, the appellant argues that subsection 18.15(3) of the Act entitled him to have his evidence considered on a less onerous and technical standard in accordance with the objective of the informal procedure. This argument fails as well. This provision of the Act has been interpreted by our Court to mean that the rules for the admission of evidence do not apply technically in the context… Read More »Barnwell v. Canada 2016 FCA 150 (Boivin, Rennie, Gleason JJ.A.) — informal procedure eliminates strict rules of evidence but does not entitle the appellant to a more favourable weighting of certain portions of his evidence

“[33]           In the circumstances of this case, CRA’s determination not to accept the Form T661 as submitted by the Applicant was not procedurally unfair. Not only was this determination reasonable for the reasons stated above, it did not, as the Applicant contends, wrongfully convert an appealable SR&ED claim into a non-appealable non-filing. The Minister did not deprive the Applicant of any procedural rights because the Applicant… Read More »AFD Petroleum Ltd. v. Canada (Attorney General) (Boswell, J.) — There is no right to amend a return to claim SRED credits and there is no TCC appeal or FC judicial review from CRA’s refusal to accept an incomplete claim form after the objection period e

This was a disallowed ITCs case, where the issue was simply whether or not the appellants carried on business with a reasonable expectation of profit sufficient to satisfy the definition of “commercial activity”.​   There was no credible tree farming business and the primary expenses did not seem to relate to the tree farm. Justice Campbell says, though:  [19]        According to the definition of commercial activity… Read More »Living Friends Tree Farm v. The Queen 2016 TCC 116 (Campbell, J.) — No reasonable expectation of profit to support ITCs claimed

Another precise analysis of the law from Justice Owen, here in the context of a Fiscal Arbitrators-like tax scheme based on a false distinction between a person and his social insurance number. The case analyses the criteria for gross negligence in this context. The essence of the reasons is that gross negligence involves “a marked and substantial departure from the conduct of a reasonable person… Read More »De Gennaro v. The Queen 2016 TCC 108 (Owen, J.) – gross negligence penalty criteria in tax protester case

This case is a dispute over the deductibility of expenses paid.  The Crown said these were either for the purchase of shares or excessive and prohibited by ITA ss. 18(1)(a) and 67. The Court did not find the Appellant’s witnesses credible.   The Crown had accepted, based on wrong information that it had from the Appellant, that the inter-company agreement that provided for the expensed payment had… Read More »Edison Transportation, LLC v. The Queen 2016 TCC 80 (Pizzitelli J.) — the Court is not bound by false pleadings

See also Chartrand v. The Queen 2015 TCC 298 (RG Masse) Spurvey v. The Queen 2015 TCC 300 (RG Masse) 

[36]        In the present case, the Appellant has adduced evidence of a product improvement that benefitted the company but there was insufficient evidence for me to conclude that a scientific or technological advancement occurred. Product improvement alone is insufficient to bring a taxpayer within the SR&ED provisions contained in the Act. …  The evidence supports that well-known, routine programming tools were used to develop and improve upon… Read More »2037625 Ontario Inc. (ITC Invoice to Cash Inc.) v. The Queen 2015 TCC 269 (D Campbell) — Integrating your software with someone else’s is routine programming, not SR&ED — there is no technical uncertainty or advancement

Justice Pizzitelli in his recent decision, Mariano (a Global Learning Gift Initiative (GLGI) scheme) referred to Justice Woods’ decision David, distinguishing it on the basis that the Crown had failed to plead donative intent as an issue. (See Mariano at para. 23.)  He also noted that David had been appealed.  This was the appeal (along with Mr. Castro and others).  The FCA overturned Justice Woods’ decision on the basis that… Read More »Canada v. Castro 2015 FCA 225 (Scott, Stratas, Boivin) — Charity scams — no right to credit for cash portion if receipt is for higher amount

The Estate in this case argued that it was entitled to capitalize interest expense for carrying land held for capital gain. (The taxpayer wasn’t represented by counsel.)  Lyons J. rejected that view on the basis that ITA ss. 20(1)(c) and 18(2) restrict interest deductibility.  She says: ​[1]             The Estate of Zoltan Kokai-Kuun (“Zoltan”), the appellant, appeals the reassessment for the 2008 taxation… Read More »Kokai-Kuun Estate v. The Queen, 2015 TCC 217 (Lyons) — interest expense excluded from ACB notwithstanding ITA s. 53(1)(h)