Dina Elleithy

The Appellant was substantially successful in its appeals regarding the deductibility of losses from straddle trading.

The parties could not agree on costs.

The Court considered the factors in Rule 147(3) of the Tax Court of Canada Rules (General Procedure), including the result of the proceeding, the amounts in issue, the importance of the issues, the volume of work, and the complexity of the issues.

The Court awarded the Appellant costs in a lump sum of $2,241,025, reflecting 45% of its legal fees and adjusted disbursements.

The taxpayer engaged in forward foreign exchange straddle trading on the over-the-counter market to generate non-capital losses to offset his other income.

The Minister reassessed the taxpayer beyond the normal reassessment period, disallowing the losses on the basis that the trading was a sham and did not constitute a source of income, and assessed gross negligence penalties.

The Tax Court allowed the appeals for all years except 2002, finding that the trading was not a sham and constituted a source of income under the Stewart test.

For 2002, the Court found the taxpayer was grossly negligent in failing to report over $8 million in gains, justifying the reopening of that year and the imposition of a penalty.