In Philip Friedlan and Adam Friedlan “Brown v. Canada: REOP Redux?” Tax for the Owner-Manager 23:2 (April 2023), the authors argue that Brown v R, 2022 FCA 200, appears to have confirmed that R v Paletta, 2022 FCA 86, introduced…
Travel expense case
1048547 Ontario Inc. v R, 2023 TCC 24, illustrates the evidentiary burden a taxpayer will face when trying to justify travel expenses to exotic locations that seem to have nothing to do with the taxpayer’s ordinary business operations. If you…
Accounting entries, again
In Houle c. Le Roi, 2023 CCI 2, the Court considered assessments that alleged a shareholder received a benefit in two taxation year because of an (unsupported) increase in the credit balance of the shareholder loan account. The Court held…
Safe income again
A corporation must reduce the safe income of its shares by contingent liabilities and reserves, if they reduce the “inherent gain” of the shares. “The safe income is reduced by actual and potential cash outflows”. APFF 2022 Conference question 1,…
RRSP spousal rollover
An estate cannot transfer property from an RRSP to a former spouse on a rollover basis under 73(1) (which requires that the transferor be an individual other than a trust) or 146(8.1) (if the former spouse is not a beneficiary…
Safe income determination time
If Aco is incorporated to purchase the assets of Bco and then purchases the assets, Bco’s safe income is not increased by any gain realized on the sale if the incorporation of Aco triggers the safe income determination time. The…
Poker Winnings Taxed
Sometime ago, I wrote a post about the taxation of gains realized at the poker table. I said that the CRA might not be focusing on auditing poker players because the average player loses money. I quoted an article by…
164(6) carry back procedure
An estate that wishes to carry back a loss to the terminal return of the deceased under subsection 164(6) of the Income Tax Act (Canada) must file an amended T1 for the terminal year. A T1ADJ will not suffice. See…
RDTOH and safe income
The CRA accepts that, if refundable tax contributes to the gain on a share immediately before its disposition, it can also contribute to the safe income of the share. In the example, a corporation with a December 31 year-end, sells…
Corporate guarantee of shareholder loan
A shareholder of a corporation borrows money for an income-earning purpose, and the corporation guarantees the loan, which guarantee is secured by a mortgage on corporate-owned property. The shareholder pays a reasonable guarantee fee to the corporation. The shareholder is…