Mark Tonkovich

The applicant corporation sought judicial review of a decision by the Canada Revenue Agency (CRA), acting as agent for the Minister of Finance for Ontario, refusing to take further action under an intergovernmental Memorandum of Understanding (MOU) to resolve a double taxation issue with Revenu Québec.

The double taxation arose because the applicant filed inconsistent tax returns in Ontario and Quebec for the 2011 taxation year.

The Divisional Court dismissed the application, finding that the CRA's interpretation of the MOU—that it only applies when a tax authority proposes to change a taxpayer's allocation formula, not when the taxpayer files inconsistently—was reasonable.

The court also found no breach of procedural fairness.

The Respondent moved to amend its Amended Reply to add an alternative transfer pricing argument under paragraphs 247(2)(a) and (c) of the Income Tax Act.

The Tax Court granted the motion, finding that the amendment would assist in determining the real questions in controversy and would not cause non-compensable prejudice to the Appellant.

The Appellant was awarded costs for the motion and any additional pre-trial steps required.

The appellant, a dentist, claimed input tax credits (ITCs) for HST paid in respect of his dental practice, arguing that he made single, zero-rated supplies of artificial teeth to his patients.

The Minister assessed the appellant, disallowing the ITCs on the basis that the appellant made multiple supplies, including exempt dental services.

The Tax Court of Canada found that the appellant made a single supply to each patient, but that the predominant element of the supply was the provision of exempt dental services, not zero-rated artificial teeth.

As the business involved making exempt supplies, it was not a commercial activity, and the appellant was not entitled to the ITCs.

The appeals were dismissed.

The appellant brought a motion to strike subparagraphs 12.w) and x) of the respondent's reply, which pleaded that the "controlling mind and management" of two third-party corporations was in Canada as assumptions of fact.

The Tax Court of Canada held that the location of a corporation's central management and control is a conclusion of mixed fact and law, not a pure fact.

Consequently, pleading it as an assumption of fact was improper because it failed to extricate the underlying factual components, leaving the appellant to speculate on what facts it needed to demolish.

The motion was granted, the subparagraphs were struck without leave to amend, and costs were awarded to the appellant.

The appellant brought a motion to strike a subparagraph in the respondent's reply which assumed that the controlling mind and management of a third-party corporation was in Canada.

The Tax Court of Canada allowed the motion, finding that the location of a corporation's central management and control is a conclusion of mixed fact and law, not a pure fact.

As such, it was improperly pleaded in the section for assumptions of fact, and the Minister was required to extricate the underlying factual components.

The appellant brought a motion to strike a subparagraph in the respondent's reply which assumed that the controlling mind and management of a third-party corporation was in Canada.

The Tax Court of Canada allowed the motion, finding that the location of a corporation's central management and control is the legal test for residency and therefore a conclusion of mixed fact and law.

As such, it was improperly pleaded as an assumption of fact under the Tax Court of Canada Rules.

The offending subparagraph was struck without leave to amend.

Enterprise Rent-A-Car appealed four tax assessments totaling approximately $1.5 million for unremitted Ontario retail sales tax (RST) on insurance premiums.

Enterprise brought a motion for summary judgment, arguing it had collected and remitted federal Harmonized Sales Tax (HST) to the Canada Revenue Agency, not RST.

The court evaluated the credibility of Enterprise's affiant and found that Enterprise had in fact collected RST but mistakenly remitted it to the federal government.

The court granted boomerang summary judgment in favour of the Minister and dismissed the appeals.

The Insurance Institute of Ontario appealed a ruling by the Minister of National Revenue that an instructor was an employee rather than an independent contractor.

The Tax Court of Canada clarified the application of the two-step test from Connor Homes for determining employment status when the parties share a common intention.

The Court held that where the parties intend an independent contractor relationship, and the objective factors are inconsistent with that intention but the parties nonetheless act in a manner similar to what one would expect from their intentions, the relationship will be as intended.

Applying this standard, the Court found the instructor was an independent contractor and allowed the appeals.

The moving party, Ford, sought summary judgment on its appeal of a tax reassessment by the Minister of Finance.

The Minister had issued a Notice of Assessment in 2017 seeking repayment of an excess refund of over $6.2 million from the 1999 taxation year.

Ford argued the reassessment was statute-barred under subsection 82(11) of the Corporations Tax Act.

The court agreed, finding that unlike other provisions, subsection 82(11) did not include the phrase 'at any time,' meaning the normal assessment period applied.

The court granted summary judgment in favour of Ford, declaring the reassessment statute-barred.

The appellant trust appealed from a summary judgment motion dismissal regarding a reassessment of provincial income tax under the Ontario Income Tax Act for the 2007 taxation year.

The central issue was whether waiver form T2029, a prescribed form under the federal Income Tax Act, operated to waive the limitation period for reassessing Ontario income tax.

The appellant argued that T2029 had never been prescribed for Ontario purposes and that government advice calling into question its prescription status prevented the waiver from operating.

The Court of Appeal upheld the motion judge's decision, holding that section 48(15) of the Ontario Act deems any form purporting to be prescribed by the Provincial Minister to be a prescribed form unless called into question by the Provincial Minister.

The court found that T2029 clearly purports to be a prescribed form and had not been called into question by the appropriate authority.

The Aubrey Dan Family Trust (ADFT) brought a summary judgment motion to allow its income tax appeal for the 2007 taxation year and vacate a reassessment issued by the Minister of Finance.

The motion focused on whether the reassessment was issued outside the statutory limitation period and, if so, whether the limitation period was properly waived.

The court found that the original notice of assessment triggered the normal reassessment period, which expired before the reassessment was issued.

However, the court also found that the T2029 waiver form signed by ADFT was valid under the Ontario Income Tax Act, deeming it a prescribed form and thus effectively waiving the limitation period.

Consequently, ADFT's motion for summary judgment was dismissed.

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.