In R v 594710 British Columbia Ltd., 2018 FCA 166, the Court held that GAAR applied to a complicated series of transactions in which profits of a limited partnership were allocated to a corporation with tax shelter where the economic…
“All or substantially all”
In Atlantic Packaging Products Ltd. v R, 2018 TCC 183, the taxpayer sold one of its divisions (the “Tissue Division”) to an arm’s length purchaser. In connection with the sale, it sold 68% of the assets of the division to a subsidiary for Common Shares. The taxpayer sold the remaining assets of the division and the Common Shares of the subsidiary to the purchaser. The CRA reassessed on the basis that s 54.2 of the Income Tax Act did not apply to the sale of the Common Shares and that the sale was on income account. The Tax Court upheld the reassessment.
Spousal constructive trust precedes CRA lien?
From David Nathanson, “Tax Liens and Constructive Trusts” 26:8 Canadian Tax Highlights (Aug 2018): Thus, if a constructive trust is recognized, for income tax purposes the legal owner of the property in dispute is generally regarded by the CRA as…
Safe income accrual
From Henry Shew, “Safe Income May Vary Within Shares of the Same Class” 8:3 Cdn Tax Focus (August 2018): Assume that Holdco purchases 100 shares of Opco for $10 (“the old shares”). These shares earn $1 per share of safe…
Informal procedure appeals
Craig Burley has written a helpful article about a technicality relating to the $25,000 limit for informal procedure appeals to the Tax Court of Canada. He refers to Maier v R, 1994 CarswellNat 3242, T.C.J. No. 1260 (TCC), in…
Partnership reorganizations
The general rule on the dissolution of a partnership is that all partnership property is disposed of at fair market value (s 98(2)). The Income Tax Act (Canada), however, contains a number of rules providing for a rollover. 85(3)—No bump…
Settlement and HST
A payment of an amount pursuant to a settlement can be subject to HST. What happens where the settlement agreement is silent on whether the amounts payable under it include HST? In Automodular Corporation v. General Motors of Canada Limited,…
Corporate attribution
Manu Kakkar, Alex Ghani and Boris Volvofsky, in “Corporate Attribution: Refreeze May Cause Unsolvable Corporate Attribution Problem” 18:3 Tax for the Owner-Manager (July, 2018), argue that a refreeze at a lower value does not reduce the outstanding amount for the…
Penalties and deeming rules
In Semenov v R, 2018 TCC 58, the CRA found unexplained deposits in the individual taxpayer’s personal bank account. The CRA applied a “deeming” rule to treat the amounts as unreported income subject to gross negligence penalties. The CRA applied…
Taxation of a ‘signing bonus’
In Ritchie v R, 2018 TCC 113, the taxpayer owned land that he rented to a corporation he owned. The corporation carried on a farming business. Enbridge paid amounts to the taxpayer for easements across his land, including $255,790 as an “early signing bonus” (a bonus for signing the easement agreement before a certain date). The taxpayer reported the bonus as a capital gain. The CRA reassessed to include the full amount of the bonus in the taxpayer’s income. Was the bonus on capital account?