Katie Beahen

The appellant law firm appealed a GST/HST assessment that disallowed a claimed bad debt deduction of $37,283.11 for its April 1 to June 30, 2017 reporting period.

The Minister disallowed the deduction on three grounds: insufficient collection efforts, failure to write off the debts in the books of account, and failure to remit all net HST for the periods when the debts were rendered.

The Tax Court of Canada dismissed the appeal, finding that the appellant failed to establish that the debts were bad, failed to write them off in its books of account, and failed to remit the required net tax by the time the deduction was claimed.

The appellant appealed reassessments for her 2012 and 2013 taxation years that were issued beyond the normal reassessment period.

The Minister alleged the appellant made misrepresentations attributable to neglect by claiming disallowed rental, employment, and charitable expenses prepared by a third-party tax preparer.

The Tax Court found that the appellant's failure to review her tax returns before signing constituted neglect, validating the reassessments beyond the normal period.

However, based on concessions by the Minister regarding the charitable donations and certain rental expenses, the appeals were allowed and referred back for reconsideration.

The appellant and respondent jointly brought a motion under Rule 58 of the Tax Court of Canada Rules (General Procedure) to determine a question of mixed fact and law before the hearing of the appeals.

The question asks whether interest payable by the appellant to foreign tax authorities in the United States in respect of overdue tax liabilities is deductible under section 9 of the Income Tax Act and not precluded by subsection 18(1).

The Court granted the motion, finding that the question is one of mixed fact and law, is raised in the pleadings, and its determination may dispose of all or part of the proceeding or result in a substantial saving of costs.

The appellants, husband and wife, were the sole shareholders of a corporation.

The corporation had unpaid tax liabilities for its 2010 to 2013 taxation years.

During those years, the corporation paid dividends to the appellants.

The Minister assessed the appellants under section 160 of the Income Tax Act for the corporation's tax debt, as the dividends were non-arm's length transfers for no consideration.

The appellants argued the underlying corporate assessments were incorrect and that the dividends should be considered remuneration for services rendered.

The Tax Court of Canada dismissed the appeals, finding the appellants failed to prove the underlying assessments were incorrect and reaffirming established case law that dividends are paid without consideration and cannot be recharacterized as salary.

The Minister reassessed the appellant beyond the normal reassessment period for the 2009 to 2012 taxation years using the net worth method, adding unreported business income and assessing gross negligence penalties.

The appellant argued the discrepancy was due to loans and gifts from family and friends.

The Tax Court found the Minister met the burden to reassess beyond the normal period and to assess penalties, as the appellant made misrepresentations attributable to wilful default.

However, the Court allowed the appeal in part, referring the matter back to the Minister to adjust the net worth calculations for certain proven loans, deposits, and business expenses.

The Minister of National Revenue moved to appeal a prothonotary's order refusing to strike a judicial review application filed by Iris Technologies Inc. The Federal Court found no error in the prothonotary's determination that the application raised administrative law issues regarding procedural fairness, which were within the Court's jurisdiction, and was not plainly bereft of any chance of success.

The Minister appealed a Prothonotary's decision dismissing a motion to strike a judicial review application by an employer regarding the denial of CEWS benefits.

The Federal Court dismissed the appeal, finding no palpable and overriding error in the Prothonotary's refusal to admit an affidavit under s. 244(9) of the ITA, nor any error of law in finding the application challenged discretionary administrative conduct rather than an issue falling within the exclusive jurisdiction of the Tax Court.