Tax Law - ONCA

The appellant appealed a motion judge's decision requiring him to pay half of a gross negligence HST penalty pursuant to a supplementary investment agreement with the respondent.

The appellant raised new arguments on appeal that the gross negligence HST penalty did not form part of the HST assessment and arose solely from the respondent's alleged breach of fiduciary duties.

The Court of Appeal dismissed the appeal, finding that the appellant failed to meet the stringent test for entertaining new issues on appeal, as the evidentiary record was insufficient and no miscarriage of justice would result from refusing to entertain the new arguments.

The Court of Appeal for Ontario considered whether its prior decision in Religious Hospitallers of St. Joseph Housing Corp. v. Regional Assessment Commissioner should be overruled.

That case had interpreted s. 3(1)12(iii) of the Assessment Act to require a charitable, non-profit philanthropic corporation seeking a municipal tax exemption to show it provided relief to the poor by "some form of endeavour." The appellant, Stamford Kiwanis Non-Profit Homes Inc., argued that this requirement was not supported by the statute or legislative intent.

The Court agreed, finding that Religious Hospitallers was wrongly decided, had not been followed in subsequent jurisprudence, and introduced a vague and unworkable "endeavour" requirement.

The Court overruled Religious Hospitallers, clarified the applicable test for exemption, and allowed the appeal, granting the appellant a property tax exemption for its affordable housing properties.

The appellant, William Daniel Lewis, appealed a motion judge's decision dismissing a class action against Uber entities.

The core issue was whether the action, seeking a rebate of GST remitted to the government, was prohibited by the Excise Tax Act (ETA).

The Court of Appeal affirmed the motion judge's finding that section 312 of the ETA prohibits such actions, as the ETA provides a complete statutory framework for GST rebates, with exclusive jurisdiction vested in the Tax Court.

The court also agreed that section 224.1 of the ETA reinforces this statutory bar, extending protection from civil liability to tax collectors acting in compliance with the ETA.

The appeal was dismissed.

The appellant, a Muslim charity, appealed the dismissal of its application challenging a Canadian Revenue Agency (CRA) audit process, alleging violations of its Charter rights due to discriminatory targeting and Islamophobic attitudes.

The application judge dismissed the challenge as premature, citing an insufficient factual record and the availability of administrative appeal processes under the Income Tax Act.

The Court of Appeal upheld the dismissal, affirming the court's discretion to refuse to decide a case based on a preliminary and incomplete factual record, even for Charter relief.

While disagreeing with the lower court's suggestion that the Tax Court's jurisdiction would necessarily bar a subsequent Superior Court Charter challenge, the appellate court found the prematurity finding to be correct given the ongoing administrative process.

This appeal concerned a dispute over loan repayments within a complex tax shelter scheme.

The appellants, two corporations (Fincos), sought repayment of loans advanced to an investor.

The investor argued that earlier loans were statute-barred and later loans were satisfied by preferred shares held in trust.

The Court of Appeal upheld the trial judge's findings: the claims for earlier loans were statute-barred due to an agency relationship establishing the commencement of the limitation period, and the later loans were indeed repayable and satisfied by the transfer and cancellation of preferred shares, interpreting the various agreements holistically.

The court dismissed the appeal and the cross-appeal, finding the cross-appeal moot given the main findings.

The appellant, a heavy electricity user, challenged the constitutionality of the Global Adjustment component of Ontario's electricity pricing formula, which funds the Feed-in Tariff (FIT) program.

The appellant argued that the FIT program component was a colourable attempt to disguise a tax as a regulatory charge, designed to provide economic stimulus and subsidies to preferred communities (aboriginal peoples, co-operatives, and municipalities) rather than to regulate electricity generation.

The motion judge struck the applications, finding the Global Adjustment was a valid regulatory charge within a closed system.

The Court of Appeal allowed the appeal, finding the appellant's colourability challenge was sufficiently plausible that the applications should not have been dismissed on a pleadings motion and should proceed to a full hearing on the merits.

The appellants appealed a motion judge's order dismissing their summary judgment motions seeking to bar the respondent's claim as statute-barred under the Limitations Act, 2002.

The motion judge found that the respondent did not discover her claim until September 28, 2011, when the Canada Revenue Agency confirmed that her Independent Pension Plan did not comply with the Income Tax Regulations.

The respondent had established the IPP on the appellants' advice and transferred her commuted pension value to it.

The appellants argued the claim was discoverable by August 2009 when financial advisors and accountants opined the IPP would likely be revoked.

The Court of Appeal upheld the motion judge's decision, finding that the respondent's claim was essentially a tax case hinged on the CRA's determination, and it was legally appropriate to wait for the CRA's confirmation before commencing proceedings.

Self-represented appellants appealed the dismissal of their application in which they claimed a right under section 7 of the Canadian Charter of Rights and Freedoms to choose their relationship with Canada and to be exempt from federal and provincial laws without their consent.

The appellants argued they could distinguish between the geographic landmass of Canada and the "Juristic Federal Unit Canada" and that they were not bound by tax legislation or other laws of general application.

The Court of Appeal dismissed the appeal, holding that residents of Canada are subject to federal and provincial laws that apply to residents, and that the appellants' arguments were based on selective and improper interpretations of the Charter and international covenants.

The appellant appealed a summary judgment dismissing his professional negligence claim against a tax lawyer.

The appellant had retained the tax lawyer to advise on tax implications of a matrimonial settlement involving the purchase of his ex-spouse's shares in a family corporation.

The tax lawyer provided advice on two approaches: a direct purchase (which would trigger significant personal tax liability) and a redemption approach (which would avoid the tax hit).

The appellant ultimately settled using the direct purchase approach with a negotiated "tax discount" rather than the recommended redemption approach.

The appellant subsequently incurred approximately $1.3 million in tax liability and sued for negligence.

The motion judge granted summary judgment dismissing the claim, finding the tax advice was correct.

The Court of Appeal allowed the appeal, finding that partial summary judgment was inappropriate in these circumstances and that serious issues remained regarding the lawyer's professional obligations to ensure advice was communicated to and understood by the client.

The appellant challenged a summary judgment order requiring it to pay HST to the respondent supplier.

The central issue was whether a supplier can issue invoices disclosing HST payable after the supply transaction has occurred, or whether such disclosure must be made at the time of the transaction to comply with section 223(1) of the Excise Tax Act.

The respondent sold unrefined gold to the appellant over a two-year period without collecting or remitting HST.

After a CRA audit, the respondent issued invoices months later demanding payment of the HST.

The court held that section 223(1) is silent on timing and permits post-transaction invoices, affirming the summary judgment.

The applicant and its affiliates carried out a series of transactions in December 2007 designed to realize a tax loss to offset unrealized foreign exchange gains in the same taxation year.

The Canada Revenue Agency disallowed the claimed loss on the basis that section 98(5) of the Income Tax Act applied, rendering the transaction a tax-deferred rollover.

The applicant sought court orders to retroactively alter the transaction to achieve its intended tax purpose, relying on rectification and equitable jurisdiction to relieve against mistakes.

The application judge granted the order, but the Supreme Court's decision in Fairmont Hotels restricted rectification to written agreements.

The Court of Appeal held that the court will not exercise its equitable jurisdiction to retroactively alter corporate transactions to achieve tax objectives, whether characterized as rectification or relief from mistake.

The court also rejected rescission as an available remedy, finding it was not a voluntary disposition but a commercial contract, and that rescission is an all-or-nothing remedy that cannot be used for partial unwinding to achieve a specific tax outcome.

The Ontario Media Development Corporation (OMDC) denied Pong Marketing and Promotions Inc.'s application for a digital media tax credit on the grounds that its sweepstakes games were developed primarily to promote the sale of phone cards rather than to educate, inform, or entertain users.

The Divisional Court majority found the OMDC's decision unreasonable, holding that "primary purpose" must be assessed from the user's perspective rather than the developer's motivation.

The Court of Appeal allowed the OMDC's appeal, finding that the OMDC's interpretation was reasonable and that the Divisional Court erred in applying a residual presumption in favour of the taxpayer.

Capcorp Planning (2003) Inc. sold a health and welfare plan (HWP) that provided coverage for health, dental, vision, and hearing care, as well as protection against income loss due to illness or accident.

The plan was particularly attractive to owner-managers of small businesses who could not obtain equivalent coverage through traditional insurance due to pre-existing medical conditions.

The Minister of Revenue assessed Capcorp for failure to collect and remit retail sales tax (RST) on amounts paid by employers under the HWP, imposing a penalty of $278,625.31 including interest.

The Superior Court of Justice quashed the assessment, finding that the HWP was not subject to RST because participants could not obtain equivalent insurance coverage.

The Court of Appeal reversed, holding that the HWP constitutes an "unfunded benefits plan" under the Retail Sales Tax Act and is therefore subject to RST.

The court found that the statutory definition focuses on whether protection against risk "could otherwise be obtained" through insurance generally, not whether specific individuals could obtain such coverage.

The appellant was convicted of significant fraud involving the preparation of fraudulent tax returns for 241 taxpayers claiming non-existent business losses to obtain tax refunds from the Canada Revenue Agency.

The fraud resulted in wrongful federal tax refunds exceeding $2.7 million, with the appellant receiving over $149,000 for his role.

The appellant appealed both conviction and sentence, raising numerous grounds of appeal.

The Court of Appeal dismissed all grounds, finding no errors in the trial judge's handling of search warrant issues, Charter rights claims, jury charge, or sentencing.

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 Attorney General of Canada appealed a rectification order granted by the Superior Court of Justice that allowed Slate Management Corporation to restructure a single-step amalgamation of three subsidiaries into a two-step amalgamation to obtain a tax bump under the Income Tax Act.

The Court of Appeal found the appeal moot based on the principle established in Norcan Oils Ltd. v. Fogler, as the plan of arrangement had been implemented and third parties had relied on the financial consequences of the rectification order.

The court declined to exercise its discretion to hear the moot appeal and quashed it, awarding costs to Slate.

The respondent purchased the appellant's business in exchange for securities, with the appellant becoming a minority shareholder.

The acquisition agreement contained a representation and warranty regarding tax pools.

Years later, the Canada Revenue Agency disallowed the respondent's use of the tax pools and assessed approximately $11.8 million in additional taxes, interest, and penalties.

The respondent invoked an indemnity from the appellant, who argued the respondent had breached the tax pools representation and warranty.

The motion judge granted summary judgment for the respondent, interpreting the representation and warranty as directed solely to the accurate identification of tax pools and their values at closing, not as a guarantee of future tax utilization.

The appeal was dismissed.

These consolidated appeals arise from related class actions certified in 2012 concerning bingo license and administration fees charged by two municipalities.

The appellants, charitable organizations, sought to amend their pleadings after the opt-out period expired to claim disgorgement of all allegedly illegal fees received by the municipalities, including those paid by persons who had opted out of the class.

The Court of Appeal quashed appeals of interlocutory orders lifting protective orders that had shielded the identities of opt-outs during a reconsideration period, and dismissed appeals of orders refusing leave to amend the statements of claim.

The court held that the proposed amendments would fundamentally alter the nature of the certified claims and lacked reasonable prospect of success.

The respondents, a corporation and four individual shareholders, sued the Crown for damages arising from two theories of liability: forced incorporation and failure to enforce.

Under the forced incorporation theory, the respondents alleged that Crown misconduct forced them to incorporate their partnership, resulting in tax liability they would have avoided as Indians under section 87 of the Indian Act.

Under the failure to enforce theory, they alleged the Crown failed to properly implement an anti-smuggling initiative, causing them to compete unfairly against unlicensed contraband manufacturers.

The Crown appealed a motion judge's decision refusing to strike the claims.

The Court of Appeal dismissed the forced incorporation appeal, allowing it to proceed to trial, but allowed the failure to enforce appeal in part by striking the fiduciary duty claims while permitting the negligence and misfeasance claims to proceed.

An accounting firm filed a corporate client's tax returns after the due date, resulting in the denial of approximately $550,000 in tax credits by the Canada Revenue Agency.

The client received notices of assessment in April 2010 and pursued administrative remedies through the CRA appeal process, with the accountant's assistance, until May 2011 when the CRA advised it intended to confirm the assessments.

The client commenced a negligence action in August 2012.

The motion judge dismissed the action as statute-barred under the Limitations Act, 2002, finding the claim was discoverable in April 2010.

The Court of Appeal allowed the appeal, holding that the claim was not discovered until May 2011 when the CRA appeal process concluded, as it would not have been appropriate to commence proceedings while alternative remedies remained available.