Timothy W. Clarke

Following a decision dismissing the appellant's appeal regarding tax on a business of trading qualified securities within a TFSA, the respondent sought enhanced costs.

The Tax Court of Canada reviewed the factors under Rule 147, noting the importance of the issue and the appellant's conduct which unnecessarily lengthened the proceedings.

The Court awarded the respondent enhanced costs fixed at 35% of total costs, amounting to $95,980.38 inclusive of disbursements.

The appellant, a TFSA trust, engaged in frequent trading of qualified investments, primarily speculative penny stocks.

The Minister reassessed the appellant for the 2009 to 2012 taxation years on the basis that it carried on a business of trading qualified investments, making its income subject to Part I tax under subsection 146.2(6) of the Income Tax Act.

The appellant argued that trading qualified investments does not constitute carrying on a business for a TFSA, pointing to the RRSP rules which explicitly exempt such income.

The Tax Court of Canada dismissed the appeals, holding that the text of subsection 146.2(6) is clear and unambiguous: a TFSA that carries on any business, including trading qualified investments, is not tax-exempt.

Parliament deliberately chose not to include the RRSP exemption in the TFSA regime.