3295940 Canada Inc. v R, 2022 TCC 68 considered a taxpayer who had wanted to sell shares of 329, which had a high tax cost, to an arm’s length purchaser. The purchaser would not buy the shares for commercial reasons.…
Timing of Corporate Partner’s CDA Increase
The CRA has stated that, when a partnership receives a capital dividend, a corporate partner’s capital dividend account increases at the time of the receipt of the dividend or at the end of the partnership’s fiscal period depending on the…
Farm property rollover
The CRA recently confirmed that subsection 73(3) does not require property to be owned by the taxpayer in the years when it is used principally in the business of farming in which the taxpayer or certain related persons were actively…
Reportable and notifiable transactions
Amit Ummat and I published the following article in the most recent edition of the Hamilton Law Association Journal. One important point: Finance has postponed the coming into effect of the new rules to 2023. Lawyers can usually assist with…
Director liability defence fails
In Burnett v R, 2022 TCC 99, the Court rejected the taxpayer’s due diligence defence of a director liability assessment. It did not matter that the taxpayer was an “outside director” (which the evidence tended to contradict in any case).…
Earnout payments taxed under 12(1)(g)
In 4432002 Canada Inc. c La Reine, 2022 CCI 101, the corporate taxpayer appealed from CRA reassessments that had included amounts in its income under 12(1)(g) of the Income Tax Act (Canada) and imposed Part III tax liability for excess…
Value of an interest in a discretionary family trust
Cottrell v Cottrell, 2022 BCSC 1607, is a BC family law decision, part of which addresses the value of a spouse’s interest in several discretionary trusts. Joanne was a beneficiary of family trusts established by her parents. Under BC family…
Jeopardy collection order
In general, the CRA cannot collect a debt under the Income Tax Act (Canada) where the tax debtor has objected to, or appealed from, the reassessment underlying the debt (section 225.1). In Canada (National Revenue) v Zhao, 2022 FC 1108,…
Stock options issued to a corporation
Section 7 of the Income Tax Act (Canada) does not apply to stock options granted to a CCPC for consulting services rendered. Instead, “general tax principles” apply to determine when the CCPC must include an amount in income in respect…
EIFEL rules
The new excess interest and financing expense rules (“EIFEL” for short) are set out in draft legislation released by Finance on February 4, 2022. The EIFEL rules do not apply to an “excluded entity”, which includes: (1) Canadian-controlled private corporations…