Joel A. Nitikman

The Appellants brought a motion to strike portions of the Respondent's replies to their notices of appeal.

The impugned paragraphs advanced an alternative argument under subsection 152(9) of the Income Tax Act, alleging the Appellants were required to include foreign accrual property income (FAPI) in their assessments.

The Tax Court of Canada granted the motion, finding it plain and obvious that subsection 152(9) does not permit the Minister to advance an alternative FAPI argument based on entirely new transactions and income earned by foreign affiliates that formed no part of the initial assessment.

The appellant corporation sold real estate and realized a significant capital gain.

Prior to closing, it continued into the British Virgin Islands to avoid tax under section 123.3 of the Income Tax Act and to claim a general rate reduction under section 123.4, arguing it was no longer a Canadian-controlled private corporation (CCPC).

The Tax Court of Canada dismissed the appeal, finding that under the statutory definition in section 89(1)(b), the appellant remained a Canadian corporation and thus a CCPC.

Alternatively, the Court held that the General Anti-Avoidance Rule (GAAR) would apply to deny the tax benefits, as the continuation was an abusive avoidance transaction.

The appellants brought a motion seeking an order under subsection 135(2) of the Tax Court of Canada Rules (General Procedure) to reverse the order of proceedings at trial so the respondent would present evidence first.

The motion judge dismissed the motion as premature, holding that such a determination must be made by the trial judge rather than a motion judge.

Following a judgment allowing its appeal, the appellant sought costs of $197,527.69 based on 75% of its solicitor and client costs, while the respondent argued for tariff costs.

The Tax Court of Canada awarded the appellant a lump sum of $19,600 plus disbursements, representing approximately double the tariff amount, noting the appellant's complete success, the importance of the issue to other credit unions, and a late concession by the respondent.

The appellant credit union appealed assessments requiring it to collect and remit GST on fees received for services provided to mutual fund and securities dealers.

The Tax Court of Canada allowed the appeal, finding that the services provided were not merely preparatory in nature.

The predominant element of the single compound supply was arranging for the sale of financial instruments, which qualifies as an exempt financial service under the Excise Tax Act.

Two family trusts petitioned for equitable rescission of transactions that had resulted in unanticipated income tax liability after the Canada Revenue Agency changed its interpretation of s. 75(2) of the Income Tax Act following the Tax Court's decision in Sommerer.

The majority held that a limiting principle of equity and the principles of tax law stated in Fairmont Hotels and Jean Coutu bar taxpayers from resorting to equity to undo freely agreed upon transactions in order to avoid unanticipated adverse tax consequences arising from the ordinary operation of a tax statute.

The prohibition against retroactive tax planning applies broadly to all equitable remedies, including rescission, not only rectification.

Côté J. dissented, holding that rescission is available in strictly limited circumstances where there is a clear causative mistake of sufficient gravity, and that neither Fairmont Hotels nor Jean Coutu generally precludes equitable remedies in a tax context.

The appellant credit union challenged tax reassessments following an amalgamation structured to avoid statutory flow-through of tax attributes.

The Court held the amalgamation met the statutory conditions for a qualifying amalgamation under the Income Tax Act because provincial amalgamation law vested all predecessor property and liabilities in the amalgamated entity by operation of law.

As a result, the appellant could not avoid flow-through treatment for capital cost allowance and preferred rate amount calculations.

Concurring reasons agreed in result based on legal continuity at amalgamation and cautioned against broader holdings on provincial corporate law.

The appeal was dismissed with costs.