The Federal Court of Appeal has decided that, in light of Vavilov (2019 SCC 65), the standard of review for CRA charity revocation decisions is “palpable and overriding error.” Ark Angel Fund v. Canada (National Revenue), 2020 FCA 99. Molly…
Audit evidence excluded
A CRA “joint director” of the “Special Enforcement Program” and the “Criminal Investigations Program” heard that an anonymous informant had alleged that a taxpayer was evading taxes with the assistance of a highly-placed CRA official. The director ordered a civil…
Rescission lives
In Collins Family Trust v. Canada (Attorney General), 2020 BCCA 196, aff’g 2019 BCSC 1030, the Court affirmed Re Pallen Trust, 2015 BCCA 222, and held that, even Fairmont, 2016 SCC 56, and Jean Coutu (PJC), 2016 SCC 55, rescission…
PC employment agreement
In Andre Lamy Medicine Professional Corporation v R, 2020 TCC 61 (informal), the Court considered whether a Hamilton-based professional corporation (PC) was entitled to SRED credits. Some of the contracts relating to the research underlying the claim for the credits…
Disputes involving losses
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…