Tax Law

The moving party, a newly established university, brought a motion for summary judgment in its appeal seeking a rebate of sales tax paid on construction.

The Minister of Finance had denied the rebate on the basis that the moving party was a 'university' under the relevant regulation, which excluded universities receiving provincial financial assistance.

The court found that during the rebate period, the moving party's authority to grant degrees came from Ministerial consent rather than an Act of the Assembly.

Therefore, it did not meet the strict statutory definition of a 'university' and was entitled to the rebate.

The Crown appealed the respondent's acquittal on 14 counts of failing to file corporate tax returns under s. 238(1) of the Income Tax Act.

The trial judge had acquitted the respondent based on the defence of due diligence.

On appeal, the Crown sought to introduce fresh evidence showing that the respondent had still not filed the returns months after the trial, contradicting his trial testimony.

The Superior Court admitted the fresh evidence and found the trial judge erred by failing to consider the respondent's prior knowledge of his obligations and the continuing nature of the duty to file.

The appeal was allowed, the acquittals were set aside, and a new trial was ordered on the issue of due diligence.

The appellant employer and respondent employee settled two actions for $1,500,000.

The minutes of settlement required a $250,000 payment to the respondent's solicitors in trust 'with no deductions'.

The appellant, on accounting advice, withheld and remitted taxes to the CRA on the full settlement amount, applying the withholding for the trust payment against another payment made directly to the respondent.

The application judge found the appellant breached the minutes.

The Court of Appeal allowed the appeal, finding the minutes ambiguous and concluding the appellant acted reasonably.

Furthermore, the respondent suffered no loss as the remitted funds stood to his credit with the CRA.

The applicants sought an order requiring the Canada Revenue Agency to return funds seized from a tax debtor and pay them into court pending the outcome of a related proceeding.

The applicants alleged the tax debtor had misappropriated the funds from an estate.

The court dismissed the application, finding that even if it had jurisdiction to make the order, there was no need to do so because the funds were secure in the hands of the Receiver General and did not require preservation by payment into court.

The appellant purchased properties and executed vendor take back mortgages and a development agreement, paying land transfer tax on the total amount including the development milestones.

The development milestones were never met, the agreement was terminated, and the mortgages were discharged.

The appellant sought a refund of the land transfer tax paid on the development amounts.

The court dismissed the appeal, finding that the obligations under the development agreement formed an integral part of the consideration given on closing, and the contingent nature of the liability did not exclude it from the value of consideration under the Land Transfer Tax Act.

The offender was convicted of tax evasion and failing to remit GST after earning approximately $3,000,000 over four years without filing tax returns.

He was sentenced to one year in jail and fined $687,000 with ten years to pay.

The offender appealed his convictions, arguing the jury charge failed to distinguish between tax evasion and tax avoidance.

The Crown appealed the sentence, seeking a penitentiary term and a shorter time to pay the fines.

The Court of Appeal dismissed the conviction appeal, finding the jury charge accurate.

The Court upheld the custodial sentence but allowed the Crown's appeal regarding the fines, reducing the time to pay from ten years to two years.

The Attorney General appealed a decision discharging the bankrupt, arguing that the bankrupt's personal income tax debt exceeded the threshold under s. 172.1 of the Bankruptcy and Insolvency Act.

At the time of the discharge hearing, the bankrupt had unpaid income tax assessments totalling approximately $4.478 million, of which $4.424 million was subject to outstanding appeals to the Tax Court of Canada.

The Court of Appeal held that assessed amounts of personal income tax under appeal are contingent claims that the trustee can refuse to admit as proven claims.

Therefore, these amounts are not included in calculating the bankrupt's personal income tax debt under s. 172.1(1).

The appeal was dismissed.

The appellant appealed a decision granting the equitable remedy of rectification to correct mistaken share redemptions that triggered unintended tax consequences.

The application judge found that the respondents had a continuing intention to carry out loan arrangements on a tax-neutral basis and that the share redemptions were a mistake.

The Court of Appeal dismissed the appeal, holding that under the binding authority of Juliar, the critical requirement for rectification is proof of a continuing specific intention to undertake a transaction on a particular tax basis, which the respondents had established.

Following a successful appeal in a complex tax case, the appellant sought costs of the trial and appeal totaling over $1.3 million.

The respondent agreed costs should follow the event but argued the amounts were excessive.

The Court of Appeal declined to apply a 25% bump-up for a non-Rule 49 settlement offer, noting the respondent's obligation to protect the public purse in a test case.

The Court awarded the appellant costs of the appeal and trial fixed at $925,000 inclusive of disbursements and HST.

The appellant appealed a Master's partial summary judgment decision that declined to award the balance of the appellant's claim for financing and legal fees related to an HST dispute on a commercial property sale.

The Master had found that a trial was necessary to determine whether the appellant acted reasonably in refusing to provide an invoice dated as requested by the CRA, which led to the additional costs.

The Superior Court of Justice applied the standard of review from Hryniak v. Mauldin, finding no palpable and overriding error in the Master's decision, and dismissed the appeal.

The plaintiffs brought a proposed class action alleging that Air Canada improperly collected U.S. transportation taxes on tickets purchased in Canada and between Canada and the U.S., thereby giving extra-territorial effect to U.S. tax laws.

The motion judge found the Ontario court had jurisdiction but stayed the claims of passengers who paid in the U.S. on the basis of forum non conveniens.

On appeal and cross-appeal, the Court of Appeal held that while Ontario courts have jurisdiction to determine if a foreign law is being enforced extra-territorially, the entire action should be stayed on the basis of forum non conveniens.

The principle of comity requires that the interpretation of the U.S. Internal Revenue Code be undertaken by U.S. authorities first.

Following a power of sale by the first mortgagee, surplus funds were paid into court.

The second mortgagee and the Ministry of Finance both brought motions claiming priority to the surplus funds.

The Ministry claimed priority for unremitted retail sales tax collected by the mortgagors.

The court held that the deemed trust provisions under section 22 of the Retail Sales Tax Act gave the Ministry priority over all other security interests, including the registered second mortgage.

The Ministry was awarded its claim from the surplus funds, with the balance to the second mortgagee.

The plaintiff, a self-represented litigant, brought an action against the Crown and Canada Revenue Agency employees, arguing that as a 'human being' rather than a 'person', the Income Tax Act did not apply to her.

She sought the return of ten years of taxes and damages, and asserted the defendants should be noted in default.

The defendants brought a motion to strike the Statement of Claim.

The court found the defendants were not in default, as the plaintiff failed to comply with the Crown Liability and Proceedings Act requirements for default judgments against the Crown.

The court granted the defendants' motion to strike the claim without leave to amend, finding the plaintiff's pseudolegal arguments had been consistently rejected by Canadian courts and disclosed no reasonable cause of action.

The applicant sought a declaration from the Superior Court of Justice that certain shares were held in a family trust, after the Canada Revenue Agency assessed him on the basis that the trust did not exist.

The Attorney General of Canada argued that the Tax Court of Canada had exclusive jurisdiction over the matter.

The court declined jurisdiction, finding that the proceeding was essentially an appeal of a tax ruling and that the Tax Court of Canada is the appropriate forum to determine the existence of a trust for income tax purposes.

The applicant settlor applied to rectify a 1992 family trust indenture, claiming it failed to reflect his original intention to allow for a tax-deferred transfer of assets to his children due to a drafting mistake by his lawyers.

The court dismissed the application, finding the applicant failed to establish his specific tax-planning intention and the alleged mistake on a balance of probabilities.

The court noted the lack of corroborating evidence from the legal advisors who drafted the trust and the ambiguity of contemporaneous documents.

The defendants brought motions for summary judgment to dismiss the plaintiff's putative class action regarding a leveraged charitable donation program, arguing the claim was statute-barred.

The plaintiff alleged he relied on the defendants' tax opinions to participate in the program, which the CRA later disallowed.

The court dismissed the motions, finding a genuine issue for trial regarding when the plaintiff discovered his claim, particularly given the ongoing solicitor-client relationship with the defendant law firm that was representing him against the CRA while potentially in a conflict of interest.

The defendants brought a motion for summary judgment to dismiss the plaintiff's claims for malicious prosecution, abuse of power, negligence, and Charter breaches arising from an income tax reassessment.

The plaintiff conceded the malicious prosecution claim.

For the remaining claims, the court held that the limitation period commenced when the plaintiff discovered the material facts underlying her claims, which occurred by 1998 or at the latest 2001 when she included them in her Notice of Tax Appeal.

The court rejected the argument that the cause of action only accrued after her tax appeal was successfully resolved in 2005.

As the action was commenced in 2007, it was statute-barred and dismissed.

The applicants invested in a Ponzi scheme through their companies.

They received payments that were reported as income and paid taxes on them.

After discovering the fraud, they applied for an order rectifying their corporate and tax records to show the payments as a return of capital, and for a declaration to that effect.

The court dismissed the claim for rectification because the documents accurately reflected the applicants' intentions at the time they were prepared.

However, the court granted a declaration that the moneys were a return of capital, without prejudice to how the payments should be treated for tax purposes by the tax authorities.