I have a great deal of sympathy for the notion that the “taxes” imposed in respect of TFSAs by sections 207.05 and 207.06 of the Income Tax Act (Canada) are in fact penalties and not “taxes”. It’s unfortunate that Parliament…
Inventory vs capital property
Procon Mining & Tunnelling Ltd. v R, 2022 TCC 71, includes a useful discussion of the distinction between capital property and inventory. The appellant acquired shares of other corporations in the hope that joint ventures with the other corporations would…
First director resignation ineffective
In Soulliere v R, 2022 FCA 126, the appellant taxpayer had been assessed as a director of a corporation. The appellant was the incorporating director of the corporation, but he purported to resign a few weeks after its incorporation and…
Phantom income of a trust
A trust receives a deemed dividend under 84(2) or 84(3) of the Income Tax Act as on account of capital for trust law purposes. The trust pays the cash received for the “dividend” to a capital beneficiary. The CRA agrees…
Rental operation as a business
A trust owned and leased commercial buildings and offered certain services to tenants of the buildings, namely electricity, heating, water, maintenance, cleaning and security services. The CRA stated that the trust could be considered to be carrying on a business…
Dividend ordering
Holdco owns all of the shares of Opco, which are worth $5 million. The Opco shares have safe income of $1 million. Opco has GRIP of $1 million and NERDTOH of $70,000. Opco can pay a $1 million eligible dividend…
Economic dependence
In Keybrand Foods Inc. v R, 2020 FCA 201, the Court held that economic dependence was a factor to consider in determining whether parties dealt not at arm’s length as a matter of fact. The CRA gave the following as…
Due diligence
What is due diligence for the purposes of a penalties that apply “automatically” such as under subsection 167(2)? Due diligence depends on whether the person believed on reasonable grounds in a non-existent state of facts which, if it had existed,…
A Voluntary Disclosure Gone Wrong
The following article was published by the Canadian Tax Foundation. John Loukidelis “A Voluntary Disclosure Gone Wrong” (2021) 21:3 Tax for the Owner-Manager 10. In 4053893 Canada Inc. v. Canada (National Revenue) (2021 FC 218), the court dismissed an application…
Crypto situs
While the UK Inland Revenue is prepared to treat cryptocurrency as property with a situs in the country of residence of its holder, the CRA has stated that it is still reviewing the matter (2021-0896021C6 – answer to question 11…