Neal Armstrong has a good summary of the government’s response to the Sixth Report of the Standing Committee on Finance. It looks like changes are coming to the VDP. Neal Armstrong also has a mischievous sense of humour. He writes…
Negative PUC?
The following is a summary of Marie-Emmanuelle Vaillancourt, “Negative Paid-Up Capital and Subsection 84(4) Reduction”, Tax Topics no. 1894 (June 26, 2008). What are the tax consequences when a corporation purports to reduce tax paid-up capital (PUC) when PUC is…
Trusts and deemed income
Greg A. Leslie, “Trusts — Be Mindful of Allocating Deemed Income!”, Tax Hyperion 13:11 (November 2016) summarizes CRA technical interpretation 2015-0604971E5 (October 19, 2016). How does a trust allocate a deemed gain under s 48.1 of the Income Tax Act…
De facto arm’s length
Marissa Halil and Manu Kakkar, “Section 84.1 and Factual Non-Arm’s-Length Considered” Tax for the Owner-Manager 17:1 (January 2017) summarizes Poulin v R, 2016 TCC 154, in which the Court held that conflict between parties and hard bargaining does not mean…
GAAR and corporate surplus
In Pomerleau c R, 2016 CCI 228, the Tax Court applied GAAR to a series of transactions that used the stop loss rule in 40(3.6) to create basis not caught by the PUC grind in 84.1, which in turn allowed…
Shareholder agreements and the SBD
Jack Bernstein, “Buy-Sell Provisions and Association” Canadian Tax Highlights 24:11 (Nov 2016), is a useful supplement to my post on the subject.
TPSs and PACs
The CRA has previously stated that a deemed dividend arising on the redemption of a taxable preferred share (TPS) for a “specified amount” will not be an excluded dividend for the purposes of Part VI.1 of the Income Tax Act…
Borrowing from RRSP to loan to Opco
If the technical requirements of the Income Tax Act (Canada) are met, a taxpayer can mortgage her house to her RRSP and then deduct the interest on the loan from the RRSP, if the loan proceeds are on-loaned to Opco.…
Self-assessing GAAR?
In Quinco Financial Inc v R, 2016 TCC 190, Justice Bocock held that interest on a GAAR assessment accrues from the balance due date, just like any other assessment. His Honour, however, in obiter, also stated that a taxpayer has…
Corporate gifts
Neal Armstrong reports that the Quebec Court of Appeal, in Emballages Starflex Inc. v Agence du revenu du Québec, 2016 QCCA 1856, has held that a corporation cannot deduct a gift to a charity as a business or promotional expense.…