Thursday last I tried, once again, to explain the restrictive covenant rules in proposed section 56.4 of the Income Tax Act (Canada) to a seminar hosted by the Hamilton Law Association (please send an email to me if you would like a copy of the PowerPoint presentation). I’m not sure how well I succeeded. I find the rules difficult to work with and impossible to explain because they are so full of apparently random tricks and traps.
Yubnub
I’ve found yubnub.org to be a pretty useful tool especially after I integrated it with Firefox, my browser of choice. With a few keystrokes, I am able to perform searches, including Google and Google Maps searches, without having to go to the search engine websites.
Yubnub allows a user to create custom commands, and I have created three that are tax-related.
Rectification, again
The Niagara region seems to be doing its part to contribute to the law of rectification in the tax context. Juliar v. Canada (Attorney General), 1999 CanLII 15097 (ON S.C.) originated in the peninsula. Now comes QL Hotel Service Limited v. Ontario (Finance), 2008 CanLII 15226 (ON S.C.). In the latter case, one corporation incorporated another and then transferred intangible property to the other for one common share and tangible property for one million Class A Special Shares. The transferor then sold the shares of the transferee to an arm’s length purchaser.
Criminal investigations
I posted previously on the decision of the Federal Court of Appeal in Canada (Minister of National Revenue) v. Ellingson, 2006 FCA 202, which was decided in light of the Supreme Court of Canada’s decision in R v. Jarvis, [2002] 3 S.C.R. 757, 2002 SCC 73. The Ontario Court of Appeal has now weighed in on the subject in R. v. Tiffin, 2008 ONCA 306. In this case, the Court of Appeal considered a trial court finding that the CRA had abused its audit power in pursuit of a criminal investigation. The Court considered whether the evidence gathered using the audit power should be excluded. Ultimately, in a split decision, the Court decided that a significant portion of the evidence should not be excluded even though the trial judge concluded that the CRA personnel involved had acted in bad faith and dishonestly. The decision is also interesting for the insight it gives into the methods used by the CRA’s “Special Enforcement Program” and the distinction between an investigation and an audit.
Paying dividends
Richard Weber at Taylor Leibow was kind enough to forward to me a CRA technical interpretation (2007-0229311I7) dated June 14, 2007, concerning the payment of dividends. A corporation purported to pay a capital dividend. The necessary election was filed, but the corporation forgot to reflect the dividend in its financial statements, and apparently the dividend was not otherwise paid. The CRA discovered these facts when conducting an audit.
Leaving a Sinking Ship
The following article on resignation as a director of a corporation and directors’ liability under the Income Tax Act (Canada) appeared in the latest edition of the Hamilton Law Association Law Journal.
2.0
Over the last few years, lawyers’ magazines and newspapers have been full of talk about “Web 2.0” and its significance for the legal profession. To some degree, I remain a skeptic, despite that I have been blogging (a quintessential 2.0 activity) since 2005.
Donald Bowman Joins FMC
Donald Bowman, the former Chief Justice of the Tax Court of Canada, has joined Fraser Milner Casgrain LLP as Counsel.
New Associate Chief Justice
Most tax practitioners will have heard that a 25-year veteran of the Tax Court was appointed as its new Chief Justice earlier this month. Gerald Rip takes over from Donald Bowman, who turned 75 this month. The Prime Minister also appointed Eugene Rossiter as the new Associate Chief Justice. Justice Rossiter is a relative newcomer to the Court: he was only appointed in 2006. Perhaps he is being groomed for the Chief’s chair.
C-50
Bill C-50—”An Act to implement certain provisions of the budget tabled in Parliament on February 26, 2008 and to enact provisions to preserve the fiscal plan set out in that budget”—received third reading in the House of Commons yesterday.