K. Lyons

The appellants appealed penalties assessed by the Minister of National Revenue under subsection 163(2) of the Income Tax Act for fictitious business and capital losses reported in their 2010 tax returns.

The returns were prepared and filed by a third-party tax preparer, DeMara Consulting Inc., without the appellants' review or signatures.

The Tax Court of Canada found that the Minister failed to prove that the appellants knowingly made false statements or were wilfully blind, as they did not review the returns and relied on the preparer.

The Court also found that the appellants were not grossly negligent.

The appeals were allowed and the penalties were vacated.

The appellant, Zomaron Inc., appealed GST/HST assessments on fees it received from payment processors (Elavon and First Data) for its services in negotiating and securing merchant commitments for credit and debit card processing.

The Minister assessed the fees as taxable supplies.

The Tax Court of Canada allowed the appeal, finding that Zomaron provided a single compound supply whose predominant element was acting as a financial intermediary 'arranging for' a financial service within the meaning of paragraph (l) of the definition of 'financial service' in subsection 123(1) of the Excise Tax Act.

The services were therefore exempt from GST/HST.