Brandon Siegal

The appellant appealed reassessments for its 2014 and 2015 taxation years regarding its failure to withhold and remit Part XIII tax on rental payments made to a UK resident company for subsea mooring chains.

The Tax Court of Canada found that the UK company was the beneficial owner of the rental payments and was not acting as an agent for its Norwegian affiliate.

Consequently, the payments were subject to a 10% withholding tax under the Canada-UK Tax Convention.

The Court also upheld the penalties imposed under subsection 227(8) of the Income Tax Act, finding that the appellant failed to establish a due diligence defence.

The appeal was dismissed with costs.

The Minister of National Revenue brought a motion to strike three affidavits filed by Gold Line Telemanagement Inc. in opposition to an application under section 311 of the Excise Tax Act.

The Court struck portions of the expert affidavit of Timo Vainionpaa that directly challenged the CRA's analysis of call detail records, finding them irrelevant to the preliminary stages of the application.

However, the Court declined to strike the balance of the Vainionpaa affidavit or the factual affidavits of Joel Bowers and Alexei Tretiakov, finding they provided necessary technical background and foundational evidence.

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.

Corporate applicants sought equitable rectification of directors’ resolutions relating to the redemption of preference shares in a corporate reorganization.

The redemption had triggered an unintended foreign exchange gain and resulting tax assessment due to a mistaken belief that earlier tax planning steps had been implemented.

The applicants argued the transactions were always intended to be tax‑neutral, while the respondent contended the request amounted to impermissible retroactive tax planning.

The court held that a common continuing intention that transactions occur on a tax‑neutral basis was sufficient even if the precise mechanism had not been determined at the time.

Rectification was granted to replace the share redemption with loan transactions consistent with the original tax‑neutral objective.