Jason DeFreitas

The appellant purchased properties and executed vendor take back mortgages and a development agreement, paying land transfer tax on the total amount including the development milestones.

The development milestones were never met, the agreement was terminated, and the mortgages were discharged.

The appellant sought a refund of the land transfer tax paid on the development amounts.

The court dismissed the appeal, finding that the obligations under the development agreement formed an integral part of the consideration given on closing, and the contingent nature of the liability did not exclude it from the value of consideration under the Land Transfer Tax Act.

A corporation incorporated in the British Virgin Islands appealed Ontario tax reassessments requiring it to include interest received from a related Canadian company as taxable corporate income under the Corporations Tax Act.

The interest arose from specialty debt instruments issued as part of a corporate tax planning structure intended to replace retained earnings with intercompany borrowings.

The court considered whether the interest constituted income from a business carried on in Canada, whether the Ontario General Anti-Avoidance Rule applied, and whether the income triggered corporate minimum tax.

Relying on the Court of Appeal’s decision in Inter-Leasing, the court held the interest was income from property rather than business income and therefore not taxable under the applicable provisions.

The GAAR did not apply and the corporate minimum tax regime was also inapplicable.