Summary of Michael H. Lubetsky “Income Tax Disputes Involving Loss Years: Pitfalls, Foibles, and Possible Reforms” (2019) 67:3 Canadian Tax Journal 499-531. This article won an award from the Canadian Tax Foundation as the best article it published in 2019.…
Use of a cottage
At the 2020 Canadian Tax Foundation Roundtable (question 7), the CRA was asked about a cottage owned by an alter ego trust or a joint spousal trust trust. Can the children of the trust’s beneficiaries use the cottage without being…
Prescribed rate loan
In response to question 11 at the 2020 Canadian Tax Foundation Roundtable, the CRA said that a prescribed rate loan could be refinanced at a lower rate by selling property acquired with the first loan, repay the first loan and…
Series of transactions
It’s frustrating for clients when I tell them that about the “series of transactions” concept as it relates to related party butterflies. I tell them there’s no bright line test for what constitutes a series so that there is always…
Safe income and trust allocations
In technical interpretation 2019-0833061E5 (January 27, 2020), the CRA stated that, where a trust receives a dividend of $2,500, $1,000 of which is ‘safe’, it cannot designate the safe portion to a corporate beneficiary and the rest to an individual…
Getting around the AAII grind
The authors suggest that corporations might form a partnership to hold an investment portfolio to reduce or avoid the small business deduction grind for passive income in paragraph 125(5.1)(b) of the Income Tax Act (Canada). They counsel caution, however, because…
TOSI and digital downloads
In technical interpretation 2019-0833181E5 (March 15, 2020), the CRA considered when the sale or licensing of digital products could be considered to generate income from a service for the purposes of the TOSI rules. According to the CRA, the download…
Transferee pays debtors non-tax debts
In Brown v R, 2020 TCC 45, the Court considered whether section 160 of the Income Tax Act (Canada) applied where a tax-debtor husband transferred funds to his wife who had agreed to use the funds to pay his credit…
Acknowledgement of a debt
The 10-year limitation period during which the CRA can collect a debt under the Income Tax Act (Canada) is re-started if the debtor “makes a written acknowledgement” of it. The CRA has stated that merely filing an objection or an…
Case law update
The following are my notes on a case law update from Sal Mirandola given at an OBA taxation law presentation on September 22, 2020 (“Advising your clients amidst financial uncertainty: Summer 2020 tax developments”) For the paper, see ~\Knowledge\Seminar materials\2020…