Tax Law - SCJ

The applicant, The Corporation of the Township of Nipigon, sought a declaration that its Municipal Accommodation Tax By-law 1940 was properly enacted and that the respondents were in contravention of its terms.

The applicant also sought payment of outstanding municipal accommodation tax amounts.

The respondents argued that they should be compensated for the costs of collecting and remitting the tax.

The court found that the by-law was properly enacted pursuant to the Municipal Act, 2001, and that no statutory provision required the municipality to compensate businesses for tax collection efforts.

The court granted the application and ordered the respondents to pay the outstanding amounts plus costs.

Air Canada challenged the Ontario Minister of Finance’s decision to deny repayment of taxes levied under s. 2(4.1) of the Gasoline Tax Act on fuel transfers at the Ottawa airport.

Air Canada argued the tax was constitutionally inapplicable under the doctrines of interjurisdictional immunity and territorial jurisdiction.

The court held that the tax does not trench on or impair the core of federal aeronautics jurisdiction and that the transaction had a sufficient connection to Ontario to ground the province’s jurisdiction.

The applications were dismissed.

The Atlas Group, undergoing CCAA proceedings, sought approval for a Reverse Vesting Order (RVO) for its AgMedica business, which was opposed by the Canada Revenue Agency regarding deemed trust claims.

The court approved the RVO, finding that the secured creditors' claims (DIP Lender and first mortgagee) had priority over the CRA's deemed trust for source deductions, consistent with the CCAA and relevant legislation.

For the GreenSeal business, the court granted the appointment of a Chief Restructuring Officer (CRO) to facilitate negotiations, rather than a full receivership, allowing secured creditors more direct control.

The husband brought a motion to correct the calculation of a spousal support award previously set aside and substituted by the court on appeal.

He argued for a "netting-down" of the retroactive sum to account for after-tax costs and benefits, or to address an undecided issue.

The court dismissed the motion, finding that present-value calculations were inappropriate for arrears and that the income tax implications did not warrant a reduction.

The judge emphasized that the husband had deliberately avoided paying spousal support and should not benefit from tax advantages he forewent, citing public policy against rewarding such conduct.

The applicant, Heather Miller, sought to enforce an undertaking given by the respondents, Telemaco Matrundola and 1000125576 Ontario Inc., concerning the applicability of Harmonized Sales Tax (HST) to the sale of real property.

The parties had agreed that the purchase price would be readjusted based on a tax ruling from the Canada Revenue Agency (CRA).

The applicant obtained a CRA ruling confirming the transaction was HST exempt, but the respondents refused to comply, alleging the ruling request contained inaccurate or incomplete information regarding commercial activity on the property and the applicant's HST registration status.

The court found that the applicant had complied with the undertaking and that the information provided to CRA was accurate and complete for the purpose of the ruling.

The court emphasized its limited jurisdiction in tax matters, which fall under the Tax Court of Canada.

The application was granted, ordering the respondents to pay the withheld portion of the purchase price to the applicant with interest.

This interim ruling addresses a motion for court approval of a minor settlement, management of net settlement funds, and solicitor-client account.

While the solicitor-client account was approved, the court adjourned decisions on the minor plaintiffs' specific contributions to the account and the detailed management of Brayden's structured settlement funds due to insufficient evidence regarding tax implications and the proposed structure.

The court also denied the plaintiffs' request to dispense with service of motion records on the defendant, emphasizing the need for proper procedural compliance and the defendant's right to review the full terms of the proposed order and release.

The defendants moved for summary judgment to dismiss the plaintiffs' action as statute-barred under the Limitations Act, 2002, arguing that the plaintiffs' former lawyer had sufficient knowledge of the potential claim more than two years before the action was commenced.

The plaintiffs contended that the information available to their lawyer was insufficient to trigger the limitation period, requiring further expert investigation.

The court dismissed the defendants' motion, finding that the information known to the plaintiffs' lawyer was merely a suspicion and not enough to establish a plausible inference of liability, especially given the complex technical nature of the tax issue and conflicting professional opinions.

The limitation period was held to have commenced either when further due diligence was decided upon (February 22, 2016) or when a comprehensive expert opinion was provided (February 24, 2017), both dates being within the two-year period.

The applicant sought a determination on whether an "air parcel" constitutes assessable "land" under section 1(1) of the Assessment Act, R.S.O. 1990, c.

A.31.

The court concluded that an air parcel, as defined in a strata plan, is not "land" for the purposes of the Act until a physical structure is affixed to the ground.

The decision emphasized that the statutory definition of "land" is paramount, not common law or conveyancing practices, and that legislative amendment would be required to include air parcels for taxation.

The applicant's request for an order was granted, and costs were awarded.

The plaintiffs in a class action sought court approval for a settlement agreement with certain defendants, class counsel fees and disbursements, and honorariums for the representative plaintiffs.

The settlement amount was $37 million.

The court approved the settlement, finding it fair and reasonable given the litigation risks, including dissolved corporate entities and limitations issues.

The court also approved the 30% contingency fee for class counsel and $50,000 honorariums for each representative plaintiff, recognizing their exceptional involvement and exposure to costs.

The Fund brought a motion seeking payment of $1 million in deferred proceeds under a share purchase agreement and a declaration that Newbury's removal of the general partner of a limited partnership contravened a CCAA stay order.

The court granted the order for deferred proceeds, interpreting the agreement's clear language and factual matrix to mean payment was contingent only on the absence of Canadian Exit Tax, not on profit or loss from the sale of securities.

The court dismissed the request regarding the stay order, finding it did not extend to the general partner or partnership.

Costs were awarded to the Fund.

The Minister of Finance reassessed BFL Canada Risk and Insurance Services Inc. for a late retail sales tax return, imposing an administrative penalty.

BFL sought an extension and penalty waiver based on extenuating circumstances, which the Minister rejected.

BFL appealed to the Superior Court of Justice, challenging the Minister's refusal to apply its Extenuating Circumstances Policy.

The Minister argued the Superior Court lacked jurisdiction, asserting the matter should proceed by judicial review in Divisional Court.

The motion addressed the question of law regarding the Superior Court's jurisdiction under s. 25(1) of the Retail Sales Tax Act to vacate or vary a tax assessment based on the Minister's discretionary decisions.

The court found that the Superior Court has jurisdiction, as the RSTA's appeal mechanism is broad and not limited to the validity and correctness of an assessment, nor does it immunize discretionary decisions.

The appellants, placement agencies, appealed tax assessments by the Minister of Revenue under the Employer Health Tax Act, arguing they were not the employers of temporary workers supplied to the federal government.

The court considered the tripartite relationship between the agency, the worker, and the client, and the definition of "employer" under the EHTA.

The court found that the appellants were the only entities with contractual obligations to pay the workers, and therefore were the employers for the purposes of the Act.

The appeals were dismissed.

The plaintiffs, Michael and Solbyung Coveley, brought a professional negligence action against their former law firm, Thorsteinssons LLP, and several lawyers, alleging negligent advice regarding tax appeals.

The defendants moved for summary judgment, arguing the action was statute-barred under the Limitations Act, 2002.

The court found that the plaintiffs knew or ought to have known of their claim by October 27, 2010, when they received advice that fundamentally contradicted earlier assurances about the strength of their tax appeals.

As the action was commenced on November 2, 2012, more than two years after discovery, the claim was statute-barred.

The defendants' motion for summary judgment was granted, and the action was dismissed.

The applicant, a registered charity focused on poverty relief through public advocacy, challenged the Canada Revenue Agency's (CRA) interpretation and enforcement of section 149.1(6.2) of the Income Tax Act.

This section limits non-partisan political activities to "substantially all" of a charity's resources, which the CRA interpreted as 90% or more, effectively capping political activities at 10%.

The applicant argued this restriction infringed its freedom of expression under section 2(b) of the Canadian Charter of Rights and Freedoms.

The court found that the CRA's 10% rule and the distinction between charitable and non-partisan political activities were unconstitutional, as they burdened the applicant's effective pursuit of its charitable purpose through advocacy.

The Plaintiff, a numbered corporation, sought summary judgment for HST payment on a property sale to the Defendant, Lucia Pessoa Park, amounting to $364,000.

The Defendant brought a cross-motion for summary judgment regarding municipal development fees owed by the Plaintiff.

The court dismissed the Plaintiff's claim for HST, finding the sale was exempt as a used residential unit under the Excise Tax Act, and that even if HST were payable, the Plaintiff was deemed to have collected it due to a statutory declaration.

The court granted the Defendant's cross-motion for development fees, which the Plaintiff had conceded.

The plaintiff brought a motion to enforce a settlement agreement in a wrongful dismissal action, specifically disputing the statutory deductions made by the defendant from a $25,000 payment.

The plaintiff argued the payment should be treated as a "retiring allowance" with lower tax, CPP, and EI deductions, while the defendant treated it as employment income based on the settlement wording "payable as wages and subject to all necessary statutory deductions." The court found that the parties had an enforceable settlement and that the defendant had met its obligations, as the agreement left it to the defendant to make "necessary deductions." The court clarified that the ultimate authority to characterize the payment and determine appropriate deductions rests with the Canada Revenue Agency and the Tax Court, not the Superior Court on a motion to enforce settlement.

The appellant, William Mori, appealed convictions and sentences for income tax evasion and making false statements under the Income Tax Act.

The trial judge found Mori guilty of evading tax for three years, imposing consecutive four-month imprisonment terms and fines.

Mori argued errors in declining to exclude evidence obtained during a tax audit and in finding the requisite mens rea, and that the sentence was unfit.

The appeal court upheld the trial judge's findings on the audit's predominant purpose, concluding it was a civil audit until specific evidence of all invoices was received, and rejected Mori's "natural person" tax protestor theory as a valid defence to mens rea.

The court also found no errors in principle in the sentencing, affirming the 12-month imprisonment and fines, emphasizing general and specific deterrence against tax evasion, particularly in light of the growing "natural person" movement.

The court determined ongoing and retroactive child and spousal support following an earlier judgment on property and income issues.

Key issues included the appropriate income for retroactive calculations, the duration and quantum of ongoing spousal support, and whether retroactive spousal support should be adjusted for tax consequences due to non-deductibility.

The court fixed ongoing spousal support at the lower end of the mid-range, ordered it indefinitely subject to review, and applied a 30% reduction to retroactive spousal support for non-deductibility.

The defendants brought a motion for summary judgment seeking to dismiss the plaintiff's action for indemnity under a share purchase agreement.

The action was based on alleged breaches of a tax representation and warranty.

The defendants argued the action was statute-barred and that the plaintiff's claim for "loss of use of funds" was limited by contract.

The court granted summary judgment, finding the action was statute-barred because the six-year limitation period began when the plaintiff knew the material facts of the breach and the resulting "claim" (Revenue Canada's reassessment), not upon a demand for indemnity or its refusal.

The court also dismissed the claim for loss of use of funds beyond the contractually agreed prime rate.

This application sought rectification of a corporate resolution declaring a dividend.

Due to a clerical error, the resolution and Canada Revenue Agency election form were incorrectly dated, resulting in a 60% tax liability under the Income Tax Act instead of the intended tax-free capital dividend.

The court granted the rectification, finding a clear and specific intention to achieve a tax-free distribution that was frustrated by a simple mistake in implementation.