Tax Law

The applicant applied for an extension of time to file a Notice of Objection to a Notice of Assessment denying a new housing rebate.

The Minister argued the application was out of time, relying on the presumption of mailing for the Notice of Assessment dated December 15, 2016.

Applying the DaSilva framework, the court found the Minister failed to prove the Notice of Assessment was mailed on that date, as the affidavit evidence relied on hearsay without necessity.

The court concluded the applicant first received the Notice of Assessment in March 2018, making the extension application timely.

The application was granted.

The appellant appealed reassessments for his 2013 and 2014 taxation years, which added unreported income based on a bank deposit analysis.

The appellant claimed the unexplained deposits were from $70,000 in cash gifts he received from his late mother over 18 years and kept at home.

The Tax Court of Canada found the appellant's testimony implausible, internally inconsistent, and lacking documentary support.

The court concluded the appellant failed to prove on a balance of probabilities that the deposits came from a non-taxable source.

The appeals were dismissed without costs.

The appellant bank appealed assessments denying deductions for transaction fees paid to CDPQ and FSTQ under share subscription agreements.

The Minister argued the fees were not expenses incurred in the course of an issuance of shares, but rather discounts on the share price, or alternatively, that they were unreasonable.

The Tax Court of Canada allowed the appeal, finding that the fees were paid for financing services and were incurred in the course of an issuance of shares.

The Court also found the 4% transaction fee rate to be reasonable in the circumstances, as the Minister failed to prove otherwise.

The taxpayer appealed reassessments for the 2011 and 2012 taxation years that added unreported business income from an online auction and DVD business, and imposed gross negligence penalties.

The Minister used the deposit method to determine the taxpayer's income.

The taxpayer argued the amounts were unearned income or loans, and claimed additional advertising expenses.

The Tax Court of Canada dismissed the appeals, finding the taxpayer failed to demolish the Minister's assumptions or prove the additional expenses.

The Court upheld the gross negligence penalties, concluding the taxpayer's failure to keep adequate records and report significant income was a marked departure from the conduct of a reasonable businessperson.

The appellant corporation appealed a reassessment made beyond the normal reassessment period, which added $920,700 in unreported dividends to its income.

The appellant argued that the omission was due to a software error and the inattention of its external accountant, and that it had exercised due diligence.

The Tax Court of Canada dismissed the appeal, finding that the external accountant was negligent in failing to verify the tax return and that this negligence was attributable to the appellant.

Furthermore, the appellant's officers failed to exercise due diligence by not reviewing the tax return before it was filed.

The appellant appealed reassessments disallowing interest expense deductions for the 2013, 2014, 2015, and 2016 taxation years.

The appellant had borrowed money from family and friends to finance unexpected renovations on a commercial property, and later used personal lines of credit to repay those loans and fund ongoing construction.

The Tax Court of Canada allowed the appeal for 2013, 2014, and 2015, finding that the borrowed money from three lines of credit was used for the purpose of earning income from a business or property, and the commingling of funds did not preclude the deduction.

The appeal for 2016 was quashed as no notice of objection had been filed.

The Minister reassessed the appellant under the General Anti-Avoidance Rule (GAAR) to disallow the deduction of non-capital losses from prior years.

The Minister argued that the appellant's restructuring circumvented the loss restriction rules in subsection 111(5) of the Income Tax Act by avoiding an acquisition of de jure control while transferring effective control.

The Tax Court of Canada allowed the appeal, finding that the object, spirit, and purpose of subsection 111(5) relies on the bright-line test of de jure control.

Since there was no acquisition of de jure control, the transactions did not abuse the provision, and the GAAR did not apply.

The appellant brought an interlocutory motion under Rule 53(1) of the Tax Court of Canada Rules to strike portions of the respondent's Amended Reply.

The underlying appeal concerned the deductibility of a charitable donation to a tax shelter program.

The appellant argued that the respondent's pleadings contained immaterial facts, evidence, and assumptions beyond his knowledge.

The court reviewed the principles of pleading and held that most of the impugned paragraphs should remain, as issues of materiality and onus of proof are better left to the trial judge.

The motion was allowed only to the extent of striking the word 'domiciled' in three places, as it improperly mixed fact and law.

The appellant appealed reassessments for the 2004 to 2008 taxation years, arguing they were inconsistent with a 2017 consent judgment.

The Minister had issued multiple reassessments to correct errors.

The Tax Court found that the most recent reassessments were consistent with the consent judgment, except for a minor $29 error in the 2005 taxation year admitted by the respondent.

The appeal was allowed in part to correct the 2005 reassessment, and the Court recommended the Minister waive the accumulated interest due to the Canada Revenue Agency's repeated errors.

The appellant appealed a reassessment imposing a gross negligence penalty under subsection 163(2) of the Income Tax Act for failing to report a taxable capital gain from the sale of a condominium unit in his 2013 income tax return.

The appellant argued the omission was a simple error based on a misunderstanding of the principal residence exemption.

The Tax Court of Canada dismissed the appeal, finding that the appellant, an experienced businessman who engaged in sophisticated real estate transactions, demonstrated wilful blindness and gross negligence by failing to consult his professional advisors regarding the tax consequences of the sale.

The appellant appealed a decision by the Minister of Employment and Social Development regarding the calculation of her Guaranteed Income Supplement (GIS) for the July 2017 to June 2018 payment period.

The appellant argued that sums withdrawn from her late spouse's Registered Retirement Income Funds (RRIFs) should not be included in her income.

The Tax Court of Canada held that under the Old Age Security Act, the appellant's estimated income for 2017 must include her income from the base calendar year, calculated as though she had no pension income.

The Minister correctly calculated her estimated income, which exceeded the maximum threshold for GIS eligibility.

The appeal was dismissed.

The self-represented appellant appealed the Minister's redeterminations denying him the Canada Child Tax Benefit (CCTB), Canada Child Benefit (CCB), and Goods and Services Tax Credit (GSTC) for various periods between 2011 and 2015.

The Tax Court of Canada found that the Minister's pleadings were deficient in explaining why the appellant was no longer considered the primary caregiver.

Based on the appellant's uncontradicted evidence, the Court held he was the primary caregiver from January 2013 to March 2015.

However, claims for periods prior to January 2013 were dismissed because the application was filed late, and claims for the 2011 base taxation year were dismissed because the appellant failed to file a 2011 tax return.

The appeal was allowed in part, with costs awarded to the appellant due to the respondent's deficient pleadings.

The appellants' counsel brought a motion to be removed from the record just before the scheduled hearing on the merits.

The appellants also sought leave for a corporate appellant to be represented by its officer (a non-lawyer) for the motions, and requested an adjournment to retain new counsel.

The Tax Court of Canada granted the motion to remove counsel.

The Court also granted leave for the corporate appellant to be represented by its officer for the motions, interpreting section 30(2) of the Tax Court of Canada Rules (General Procedure) as compatible with the right to appear in person under section 17.1 of the Tax Court of Canada Act.

Finally, the Court granted the adjournment, awarding costs to the respondent and the removed counsel.

The appellant brought a motion to strike the respondent's reply in an Informal Procedure tax appeal, arguing that the reply was invalid because it was authored and signed by a Canada Revenue Agency (CRA) litigation officer rather than a lawyer from the Department of Justice (DOJ).

The appellant contended that the Department of Justice Act grants exclusive authority to the Attorney General of Canada to conduct Crown litigation.

The Tax Court of Canada dismissed the motion, holding that section 18.14 of the Tax Court of Canada Act and the Informal Procedure rules explicitly permit parties, including the Minister of National Revenue, to be represented by an agent.

The court found no prohibition against a CRA official acting as an agent to prepare and file a reply under these procedures.

The appellant, a non-resident corporation selling contact lenses online to Canadian consumers, appealed a GST/HST reassessment.

The appellant argued the sales were zero-rated supplies under section 9 of Part II of Schedule VI of the Excise Tax Act, which exempts contact lenses supplied under a prescription.

The Minister assessed the sales as taxable because the appellant did not verify or keep records of the consumers' prescriptions.

The Tax Court of Canada dismissed the appeal, holding that to qualify as a zero-rated supply, the registrant must obtain and keep a copy of a valid prescription or assessment record to prove the lenses were for the treatment or correction of a vision defect.

Without such documentation, the supply is taxable.

The appellant appealed a tax assessment that disallowed $33,653 in legal, accounting, and professional fees claimed as business expenses.

The fees were incurred to wind up an Individual Pension Plan (IPP) to comply with a family court order following a marriage breakdown.

The Tax Court of Canada dismissed the appeal, finding that the expenses were personal in nature and not incurred for the purpose of earning income from a business or property.

Furthermore, the Income Tax Act specifically disallows the deduction of legal expenses relating to the division of a pension plan arising out of a marriage breakdown.

The Insurance Institute of Ontario appealed a ruling by the Minister of National Revenue that an instructor was an employee rather than an independent contractor.

The Tax Court of Canada clarified the application of the two-step test from Connor Homes for determining employment status when the parties share a common intention.

The Court held that where the parties intend an independent contractor relationship, and the objective factors are inconsistent with that intention but the parties nonetheless act in a manner similar to what one would expect from their intentions, the relationship will be as intended.

Applying this standard, the Court found the instructor was an independent contractor and allowed the appeals.

The appellant appealed assessments for unremitted income tax source deductions and GST under the director's liability provisions of the Income Tax Act and Excise Tax Act.

The sole issue was whether the appellant had effectively resigned as a director more than two years prior to the assessments.

The appellant argued he resigned by handing a letter to his father, who managed the business.

The court held that under the Ontario Business Corporations Act, the resignation of a first director is not effective until a successor is elected or appointed.

Because no successor was appointed, and the deeming provisions for a managing person did not apply, the appellant remained a director.

The appeal was dismissed.