Ian J. Gamble

The Appellant brought a motion for a lump sum costs award following its successful appeal at the Federal Court of Appeal regarding the deduction of US withholding taxes.

The Tax Court reviewed the factors under section 147(3) of the Rules, noting the importance and complexity of the issue.

The Court departed from the Tariff and awarded the Appellant lump sum costs fixed at 20% of its solicitor-client costs, totaling $65,086, plus $6,000 for the costs of the motion.

The appellant, Emergis Inc., appealed reassessments for its 2000 and 2001 taxation years that disallowed deductions claimed under subsection 20(12) of the Income Tax Act for U.S. withholding taxes paid on interest income received from a U.S. partnership.

The Tax Court of Canada dismissed the appeal, finding that the U.S. tax paid could reasonably be regarded as having been paid in respect of income from a share of the capital stock of a foreign affiliate, thus triggering the exclusionary clause in subsection 20(12).