Tax Law - OCA

The appellant was charged with offences under the Taxation Act, 2007 and brought a certiorari application that was dismissed.

After filing a notice of appeal from that dismissal, the appellant entered guilty pleas and was sentenced.

The Court of Appeal held that the appeal was moot, as any decision on the certiorari ruling would have no impact on the guilty pleas, convictions, and sentence.

The appeal was dismissed without adjudication on the merits.

The appellant's application for a publication ban on his full name was also dismissed, as he failed to establish that court openness posed a serious risk to an important public interest.

The respondent sought to rectify corporate resolutions after an accounting error resulted in an unintended tax liability under Part III of the Income Tax Act.

The application judge granted rectification, finding that the objective was to pay a tax-free capital dividend.

The Court of Appeal allowed the appeal, holding that rectification is not available to correct an agreement that failed to achieve an intended fiscal objective, as the executed documents accurately reflected the parties' agreement to pay a $1.4 million dividend.

The Municipal Property Assessment Corporation (MPAC) appealed a Divisional Court decision that affirmed an Assessment Review Board (Board) ruling.

The Board had found that MPAC failed to meet its burden of proving the "highest and best use" (HBU) of properties for assessment purposes, instead accepting the respondents' valuation based on current use.

MPAC argued the Board erred by relying on a presumption of current use and by not independently determining current value based on comparable sales.

The Court of Appeal dismissed MPAC's appeal, holding that the Board did not make a legal error.

The Board correctly found MPAC failed to prove financial feasibility for its proposed HBU and was entitled to accept the respondents' valuation evidence, especially since MPAC's own expert conceded its appropriateness if their HBU was not established.

The court clarified that while no legal presumption of current use exists, the Board's role is to determine current value based on the evidence and submissions presented, with MPAC bearing the onus.

The appellant, a representative plaintiff in a class action, appealed the dismissal of his motion to certify a class action against Olympia Trust Company.

The action alleged that Olympia Trust, as a custodial trustee for syndicated mortgage loans (SMLs) held in registered savings accounts, breached trust and fiduciary duties by failing to ensure the SMLs were "qualified investments" under the Income Tax Act.

The motion judge found it plain and obvious that the claims for breach of trust and fiduciary duty could not succeed, and that other certification criteria were not met.

The Court of Appeal upheld the motion judge's decision, confirming that the Income Tax Act provisions and the Declaration of Trust did not impose the extensive "gatekeeping" or "watchdog" duties alleged by the appellant on Olympia Trust.

The appeal was dismissed with costs.

This appeal concerned a post-closing dispute over HST liability following the sale of a mixed-use property.

The purchasers' counterclaim, alleging HST liability, was dismissed at trial on the basis that they suffered no loss and arguably benefited from a windfall.

The Court of Appeal upheld the trial judge's finding that the purchasers suffered no loss, which justified the dismissal of the counterclaim.

Consequently, the appeal was dismissed, and it was deemed unnecessary to address other legal arguments regarding the Excise Tax Act or post-closing readjustment.

This is an appeal concerning indemnification for pre-closing tax liabilities following a share purchase agreement (SPA).

The appellants (FQM) sold shares of a Finnish mining company (Kevitsa) to the respondents (Boliden).

A Finnish tax reassessment increased Kevitsa's taxable income for 2012-2016, leading to additional tax liabilities for those years and consequential liabilities for 2017-2018 due to the effective loss of accumulated tax losses.

The application judge found FQM liable under both a general indemnification provision (for breach of representation that there were "no grounds for reassessment") and a tax-specific indemnity.

The Court of Appeal dismissed FQM's appeal, upholding the application judge's finding of liability under the general indemnification provision, specifically confirming that the "no grounds for reassessment" warranty was absolute and that the loss of tax losses was a reasonably foreseeable consequential loss under Ontario contract law principles.

The appellant was convicted of forgery-related offences and tax fraud arising from his operation of a fake identification business and failure to report income.

On appeal, he argued the trial judge erred by preventing him from reopening his case, improperly finding him vicariously liable as a 'directing mind', misapplying the co-conspirators' exception to the hearsay rule, relying on inadmissible affidavits, unevenly scrutinizing evidence, reversing the burden of proof for tax fraud, and dismissing a stay application for pre-charge delay.

The Court of Appeal dismissed the appeal, finding the trial judge made no legal errors, properly assessed the evidence, and correctly concluded that the appellant directly controlled the illegal business and deliberately evaded taxes.

This appeal concerned whether taxes collected by Enterprise Rent-A-Car on insurance products were Retail Sales Tax (RST) or Harmonized Sales Tax (HST) for assessment purposes.

Enterprise had collected and remitted these taxes as HST to the Canada Revenue Agency (CRA).

The Minister of Finance assessed Enterprise for RST, arguing Enterprise had erroneously remitted RST as HST.

The Court of Appeal found the motion judge erred by focusing on Enterprise's belief about the tax collected, rather than the factual question of what tax was actually collected.

The Court concluded that Enterprise had, in fact, collected HST, based on its invoicing practices and remittances.

As the Minister's assessments were based on "tax collected" under the Retail Sales Tax Act, and Enterprise had collected HST, the assessments had no legal basis.

The appeal was allowed, and the Minister's assessments were set aside.

Jayco, Inc. appealed the dismissal of its action against the Canada Revenue Agency (CRA) and Her Majesty the Queen in Right of Canada.

Jayco sought recovery of legal costs and interest incurred while successfully contesting a GST/HST assessment.

The claims were based on theories of common law indemnity (as a statutory agent under the Excise Tax Act) and private law duty of care (negligence) owed by the CRA during an audit.

The Court of Appeal dismissed the appeal, affirming that no common law right to indemnity exists for statutory agents in this context, nor does the CRA owe a private law duty of care to taxpayers during administrative audits, distinguishing such audits from criminal investigations.

The appellants restructured family trusts, incorporating "Child Corporations" and subscribing for shares without actual payment, leading to a significant tax reassessment by the Canada Revenue Agency (CRA) for taxable benefits.

They sought a declaration from the Superior Court that the shares were invalidly issued under the Ontario Business Corporations Act (OBCA) and an order for rectification of share registers, aiming to negate the tax assessment.

The Superior Court declined jurisdiction, deferring to the Tax Court of Canada, and also indicated it would not have granted the requested relief.

The Court of Appeal upheld the Superior Court's discretionary decision to decline jurisdiction, finding no reviewable error.

The Court emphasized that the primary dispute was between the appellants and the CRA, falling within the Tax Court's specialized expertise, and that the corporate parties did not require a binding order from the Superior Court to resolve internal corporate issues.

The Court of Appeal for Ontario issued supplementary reasons to its earlier judgment in Nemchin v. Green, 2021 ONCA 238, which had allowed the appellant's appeal regarding the "top-up" of long-term disability benefits assigned to the respondent's insurer, Aviva.

This addendum addresses the treatment of potential tax refunds from Sun Life's remittances and the allocation of expenses related to pursuing such refunds.

The court clarified that while Aviva is not compelled to seek tax refunds or cease tax deductions, if Aviva chooses not to pursue a tax refund, it must reimburse the appellant's reasonable expenses for bringing such an application, as Aviva would ultimately receive the benefit of any tax refunds.

The appellant appealed a trial judge's order requiring her to "top up" assigned long-term disability benefits to account for income tax deductions, arguing procedural unfairness and misinterpretation of s. 267.8 of the Insurance Act.

The Court of Appeal found the "top up" order procedurally unfair as it was not requested by parties and misinterpreted the statutory trust and assignment provisions.

The court held that the assignment applies to net after-tax payments, and the respondent's insurer, as assignee, must bear the burden of addressing tax implications with the insurer and CRA.

The appeal was allowed, and the "top up" order was set aside.

The appellant, Stonehouse Group Inc., appealed a motion judge's decision denying enhanced refund interest on an overpayment of provincial tax.

The overpayment resulted from a disallowed loss carry back under the Corporations Tax Act, which was later reversed.

The motion judge interpreted s. 79(7) of the Act as precluding enhanced interest for loss carry back refunds.

The Court of Appeal allowed the appeal, finding the motion judge's interpretation incorrect.

The Court held that such an interpretation would unfairly deny any refund interest, contrary to the legislative intent of the interest payment provisions, which aimed to balance the rights of government and taxpayers and provide enhanced interest for compelled overpayments arising from disputes.

Placement agencies that supplied temporary workers to the federal government appealed assessments requiring them to pay employer health tax under the Employer Health Tax Act.

The agencies argued they were not employers of the workers because the Government of Canada managed and directed the workers.

The appeal judge found the parties were involved in a tripartite relationship and determined the agencies were the employers because they paid remuneration to the workers, held contractual obligations to the workers, and the government's contractual documentation indicated its intention that the workers be employees of the placement agencies.

The Court of Appeal upheld the decision, finding the appeal judge undertook a comprehensive review of all circumstances and did not err in concluding the agencies were employers for tax purposes.

The appellant appealed the dismissal of his professional negligence action against a lawyer and an accounting firm on summary judgment.

The appellant had sold his software company to Microsoft in 1999 and received approximately $4.8 million through a family trust.

The Canada Revenue Agency reassessed him for approximately $2.4 million in taxes, interest and penalties, claiming section 75(2) of the Income Tax Act applied.

The appellant obtained rectification orders and ultimately had his tax liability reduced to approximately $57,000 after the Federal Court of Appeal ruled that section 75(2) did not apply.

The appellant claimed damages from the respondents for professional negligence, alleging they failed to advise him of the CRA's position and the likely expenses of disputing it.

The motion judge dismissed the claim against the lawyer for lack of evidence of retainer regarding the trust, and dismissed the claim against the accounting firm for failure to provide expert evidence establishing a breach of the standard of care.

The Court of Appeal upheld the dismissal, finding no error in the motion judge's application of the expert evidence requirement for professional negligence claims.

The appellants commenced a civil action for misfeasance in public office against a Canada Revenue Agency investigator and the Attorney General of Canada, alleging that the investigator had intentionally sworn a false Information to Obtain search warrants.

The action was discontinued on consent during trial after the appellants failed to establish key elements of their claim.

Approximately one month later, the appellants received Notices of Reassessment from the Minister of National Revenue reversing the original tax assessment.

The appellants moved to set aside the discontinuance based on these reassessments as fresh evidence.

The motion was dismissed, and the appeal was dismissed on the grounds that the reassessments could not establish the elements of misfeasance in public office and did not meet the high threshold for setting aside a consent discontinuance.

The appellant, a tobacco manufacturer on the Six Nations reserve, appealed a Divisional Court decision dismissing its application for judicial review of the Minister of Finance's demand for security under section 12(2)(f.1) of the Tobacco Tax Act.

The appellant manufactured tobacco for export and for sale on First Nations reserves, neither of which were subject to Ontario's tobacco tax.

The appellant argued the Minister's interpretation of the security requirement was unreasonable and that the provision was unconstitutional as an indirect tax on exported goods.

The Court of Appeal upheld the Divisional Court's decision, finding the Minister's interpretation reasonable and the provision constitutionally valid as incidental to a valid direct taxation scheme.

The offender was convicted of tax evasion and failing to remit GST after earning approximately $3,000,000 over four years without filing tax returns.

He was sentenced to one year in jail and fined $687,000 with ten years to pay.

The offender appealed his convictions, arguing the jury charge failed to distinguish between tax evasion and tax avoidance.

The Crown appealed the sentence, seeking a penitentiary term and a shorter time to pay the fines.

The Court of Appeal dismissed the conviction appeal, finding the jury charge accurate.

The Court upheld the custodial sentence but allowed the Crown's appeal regarding the fines, reducing the time to pay from ten years to two years.

The Attorney General appealed a decision discharging the bankrupt, arguing that the bankrupt's personal income tax debt exceeded the threshold under s. 172.1 of the Bankruptcy and Insolvency Act.

At the time of the discharge hearing, the bankrupt had unpaid income tax assessments totalling approximately $4.478 million, of which $4.424 million was subject to outstanding appeals to the Tax Court of Canada.

The Court of Appeal held that assessed amounts of personal income tax under appeal are contingent claims that the trustee can refuse to admit as proven claims.

Therefore, these amounts are not included in calculating the bankrupt's personal income tax debt under s. 172.1(1).

The appeal was dismissed.

The plaintiffs brought a proposed class action alleging that Air Canada improperly collected U.S. transportation taxes on tickets purchased in Canada and between Canada and the U.S., thereby giving extra-territorial effect to U.S. tax laws.

The motion judge found the Ontario court had jurisdiction but stayed the claims of passengers who paid in the U.S. on the basis of forum non conveniens.

On appeal and cross-appeal, the Court of Appeal held that while Ontario courts have jurisdiction to determine if a foreign law is being enforced extra-territorially, the entire action should be stayed on the basis of forum non conveniens.

The principle of comity requires that the interpretation of the U.S. Internal Revenue Code be undertaken by U.S. authorities first.