Tax Law - TCC

The appellant purchased a 50% interest in computer software for $2.8 million, paying $700,000 by cheque and $2.1 million by promissory note.

He claimed capital cost allowance of $1.4 million in each of his 1997 and 1998 taxation years.

The Minister reassessed to disallow the deductions on the basis that the investment was an unregistered tax shelter.

The Tax Court of Canada dismissed the appeal, finding that the valuation report provided to the appellant contained statements and representations regarding the tax status of the software, satisfying the definition of a tax shelter under subsection 237.1(1) of the Income Tax Act.

As the tax shelter was unregistered, subsection 237.1(6) prohibited the deduction of the capital cost allowance.

The appellants, registered Indians who resided and worked in Winnipeg, appealed reassessments of their 2012 and 2013 taxation years.

They claimed their employment income was exempt from tax under section 87 of the Indian Act because their employer, a corporation owned by Tribal Councils, was resident on a reserve and provided benefits to First Nations.

Applying the connecting factors test, the court weighed the residence of the employer against the fact that the appellants resided, worked, and were paid in Winnipeg.

The court concluded that the location of the employment duties in Winnipeg was the predominant connecting factor, outweighing the employer's connection to a reserve.

The appeals were dismissed.

The appellant corporation appealed the Minister's determinations that two workers, who were family members of the corporation's shareholders, held insurable employment.

The workers were building managers with significant autonomy, no set schedules, and were paid above-market salaries.

The Tax Court of Canada allowed the appeals, finding that the Minister failed to properly consider the family context and the fact that the workers were beneficiaries of a family trust intended to take over the business.

The Court concluded that the corporation would not have entered into a substantially similar contract of employment with an unrelated person, and therefore the employment was not insurable.

The appellant appealed an assessment under subsection 160(1) of the Income Tax Act in respect of $224,500 transferred to him by his brother, who had an outstanding tax liability.

The appellant argued the funds were a loan, not a transfer of property.

The Tax Court of Canada rejected this argument, finding the appellant and his brother lacked credibility and failed to establish the existence of a loan.

However, the Court allowed the appeal in part, reducing the appellant's liability to $183,532 to reflect interest on the brother's tax debt that was subsequently forgiven by the Minister, holding that a transferee's joint and several liability cannot exceed the transferor's actual tax liability.

The appellants appealed the Minister's decisions that they were employed in insurable and pensionable employment with Serve Media Inc., a company owned by their parents.

The appellants performed internet marketing tasks, such as posting ads on Kijiji, and invoiced the company for their work.

The Tax Court of Canada allowed the appeals, finding that the appellants were independent contractors bound by contracts for services.

The court noted that the company did not exercise control over the timing and manner of the work, the appellants provided their own equipment, and there was an opportunity for profit.

The appellant appealed the Minister's decision regarding the calculation of his Guaranteed Income Supplement (GIS) benefits under the Old Age Security Act.

Due to a previous CRA error denying a medical expense claim, the appellant was forced to withdraw funds from his RRSP to meet living expenses.

This withdrawal increased his income for the base calendar year above the allowable threshold, resulting in the denial of his GIS entitlement for the subsequent payment period.

The Tax Court of Canada dismissed the appeal, finding that under the Old Age Security Act and the Income Tax Act, RRSP withdrawals must be included in the calculation of income, despite the unfortunate circumstances caused by the CRA's initial error.