2 total
Appeal allowed; GAAR does not apply as the avoidance transactions were not abusive of the Income Tax Act.
The appellant appealed notices of determination for its 2007 taxation year, in which the Minister applied the general anti-avoidance rule (GAAR) to reduce the adjusted cost base of shares, add a capital gain, and disallow a capital loss.
The Tax Court of Canada allowed the appeal, finding that while the series of transactions resulted in a tax benefit and constituted an avoidance transaction, the Minister failed to demonstrate that the transactions were abusive of the provisions of the Income Tax Act.
Employee stock options gifted to charity are taxable at fair market value.
The appellants donated stock options to registered charities and claimed corresponding tax credits in their returns.
The tax authority reassessed the taxpayer to include the fair market value of the gifted stock options in his taxable income pursuant to ss. 50 and 422(c)(ii) of the Taxation Act.
The Court of Québec vacated the reassessments but the Quebec Court of Appeal restored them.
The Supreme Court of Canada unanimously affirmed the Court of Appeal, holding that s. 422(c)(ii) applies to the disposition of stock options by gift and that Division VI of the Taxation Act does not constitute a complete code that excludes the application of s. 422.
