2 total
Appeals dismissed; taxpayer denied stock option deduction due to factual non-arm's length relationship with granting companies.
The appellant appealed reassessments denying a 50% deduction on employee stock option benefits under paragraph 110(1)(d) of the Income Tax Act.
The Minister denied the deduction on the basis that the appellant and the granting companies were not dealing at arm's length immediately after the options were granted.
The Tax Court of Canada found insufficient evidence to establish de jure control by either the appellant or his family trusts.
However, the Court concluded that the appellant had a factual non-arm's length relationship with the companies under paragraph 251(1)(c) due to his significant control and influence as a director, officer, and indirect shareholder.
The appeals were dismissed.
Summary judgment was dismissed because the underlying share purchase agreement remains in dispute.
The plaintiff sought summary judgment on a promissory note in the amount of $1,650,000 provided by the defendants as vendor takeback financing for the purchase of the plaintiff's company pursuant to a share purchase agreement.
The defendants are pursuing a separate Ontario action claiming rescission of the share purchase agreement and damages for alleged misrepresentations and non-disclosures.
The court dismissed the summary judgment motion, finding it inappropriate to grant judgment on the promissory note while the entire underlying transaction remains in dispute in the related proceeding.
The court ordered that the promissory note claim may be tried together with or consolidated with the defendants' counterclaim, or asserted as a cross-claim in the related action.
