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Tax Court rules allow the Court to order the defeated party to pay some of the other’s legal fees.  The Court has broad discretion in the amount it orders.  (See Spruce Credit Union v. The Queen, (2014 TCC Boyle) (Costs order).)  In deciding how much to order for a costs award, the Court will consider whether a party made a settlement offer which the other side… Read More »Harvey v. The Queen, (2014 TCC Graham) (Costs order)–CRA can’t agree to a settlement offer based on waiving part of a penalty

The TCC has the power to award costs to a successful party.  There are limits on this discretion for Informal Procedure appeals but much more flexibility under r. 147 of the General Procedure rules. In this case, Justice Boyle made the extraordinary costs award of about $410,000 (subject to adjustments for a motion and three discoveries).  This was about 1/2 the Appellant’s lawyers’ billed fees of… Read More »Spruce Credit Union v. The Queen, (2014 TCC Boyle) (Costs order)–$400,000 of legal costs for 2700 hours of work (on principle)?

This is appeal involves investors in a software partnership loss scheme from the early 2000s.  The appellants were investors, whose tax losses CRA denied.  In General Procedure cases, the parties can “discover” one another in writing or orally (subject to restrictions for appeals where $50,000 or less of tax is at issue.)   The taxpayers couldn’t answer the government’s questions during discovery.  They were investors;… Read More »Mould v. The Queen, (2014 TCC Rip CJ) — You can examine a non-party to get information before your hearing — if the Court agrees

Can you split long-term disability payments with your spouse, just as you can split the pension amounts you get?  No.   In 2009, Mr. Cantin got about $16,000 from Hydro-Quebec’s long-term disability insurer.  He tried to split that amount with his wife, to reduce income.  He relied on ITA s. 60.03 which allows you to reduce your taxable income for a year by splitting your “eligible pension income”… Read More »Cantin c. La Reine, (2014 CCI Masse)–You can’t split long-term disability payments with your spouse

If you invest $100,000 in a business run by a man later proven to be a fraud, and you claim you lost your $100,000 but you write off the debt within days of its becoming due, you take no action to collect it, and you’re still speaking with the fraudster, may you claim an “allowable business investment loss” and reduce your income for the year… Read More »Affordable Sign Service Ltd v. The Queen, (2014 TCC Woods)–You must have a real loss to claim an “allowable business loss”

The taxpayer missed the deadline for filing a Notice of Appeal.  His accountant represented him at Court and got an extension of time allowing him to file a proper Notice of Appeal in 30 days.  They did nothing for 600 days.  Then, discovering that CRA was collecting the taxes due for the appealed years, they applied to the TCC for another extension of time.  The… Read More »Salari Kamangar v. The Queen, (2013 TCC V. Miller) — If the TCC gives you an extension of time to file an appeal but you don’t bother, you can lose your appeal right

The charity, effectively, got only about 0.5% of the cash donations in this scheme.  Promoters would get most of the rest, net of money set aside to fight the CRA.  For that, the participants in the program expected to get about 18% more in tax credits than the cash amount they paid.  So, the scheme was funded by the Government of Canada through tax credits… Read More »Kossow v. Canada, (2013 FCA Near) — You can’t get a tax deduction for giving nothing.  

Courts in Canada can “award costs” to the successful party.  These awards make the opposing party pay some of the legal expenses of the successful party, on the basis that the losing party should not have pressed its objections so far.  One of the goals of these awards is to encourage parties to settle without going to a trial (or appeal), using up the court’s… Read More »Transalta Corporation v. Canada, (2013 FCA Blais CJ)  — If you make a settlement offer to CRA, you can get extra costs at trial — but only if CRA could legally accept the offer

This is an odd technical case.  It turns on the rule that you can’t appeal a “nil assessment” — i.e., one which says you don’t owe taxes.  But it can affect how you think about whether you should object to a reassessment or, instead, ask CRA to amend your return.   CRA reassessed Nottawasaga for about $150,000 in extra income. Half of that arose because CRA thought… Read More »Nottawasaga Inn Ltd. v. The Queen, (2013 TCC Pizzitelli) – You can’t use loss carrybacks to eliminate a tax debt, but then appeal the tax debt

Can you get a tax receipt for giving a charity free rent at your property? Possibly.   You might be able to get a receipt if: (a) you take the rent and donate it back to the charity (including the rent in income, then claiming the donation tax credit against the tax payable) or  (b) you give the charity a formal lease, giving it a… Read More »Carson v. The Queen, (2013 TCC C. Miller) — You might be able to get a tax credit for giving a charity a right to use your property

Suppose you miss the normal 90-day deadline for filing your objection and also you miss the 1-year deadline for asking for an extension, but you have very good excuses for your failure, what can you do?  Nothing.   The FCA has been clear:  Tax Courts have no power to extend the objection deadline beyond the statutory 90 days plus 1 year, no matter how compelling… Read More »Hanson v. The Queen, (2013 TCC Woods) — If you miss the 1-year extension deadline to file your notice of objection, you lose your right to object and appeal; there is no exception

If you have two ways to interpret a contract, should you read it so that GST will apply twice or only once?  Hogan J. says, choose the “interpretation [that] avoids double taxation”.  (Para. 25.) Casa Blanca agreed to buy 14 parcels of land from a developer.  It paid a deposit for each purchase.  Then, for 12 of the properties, Casa Blanca assigned its purchase rights to… Read More »Casa Blanca Homes Ltd. v. The Queen, (2013 TCC Hogan) — GST — Courts will interpret tax laws to avoid double taxation

If you have not reported income for 8 years, though you tell your bank and other creditors that you earn hundreds of thousands, and though you have properties offshore, unexplained deposits to your bank account, and CRA thinks you owe $5 million in taxes, may CRA put a lien on your $1.2 million home to prevent you from escaping collection, without first giving you a… Read More »Tassone v. Canada (National Revenue), (2013 FC Gleason)  — If you’re a collection risk, CRA can take collection action without telling you or waiting for you to have a chance to object to the assessment

A dividend is a distribution of a corporation’s profits.  This case asks: Can you distribute the same profits twice, tax-free, despite the anti-avoidance rule in ITA s.  55?  Justice Graham says: Yes, you can.    Income tax rules allow dividends to pass tax free from one Canadian corporation to another.  Why?   Because the paying corporation (or a company from which it got the money as a… Read More »D & D Livestock Ltd. v. The Queen, (2013 TCC Graham)  — You can pay a dividend of the same profits twice, tax-free, to save extra capital gains tax, despite the ITA anti-avoidance rule

If your child lives with your separated spouse most of the time under a court order, can you claim the Child Tax and GST refundable credits?  Probably not, unless you could show that, even though the child lives more with your spouse, you are “the parent who primarily fulfils the responsibility for the care and upbringing of the [child]”.   (See the definition of “eligible individual”… Read More »Hrushka v. The Queen, (2013 TCC Woods) — if your child lives primarily with your spouse under a written agreement or court order, probably you can’t claim the Child Tax Benefit and GST refundable credit

Can you claim a reduction in your net tax for GST/HST/QST if you write off a contract debt where there was no payment made for a year, the debtor’s directors had declared it insolvent, and it had made an arrangement with suppliers (including you) to avoid bankruptcy?  Sure, under ETA s. 231.   If your written evidence shows that you only wrote off part of the debt,… Read More »Vivaconcept International Inc. c. La Reine, (2013 CCI Tardif) — You can recover GST net tax on a bad debt either by writing it off or by issuing a credit note

If you move to a home 60 kilometres from your workplace but four years later you move back to be nearer to your work where you “performed new duties with the same employer at the same business location”, can you deduct the moving expenses from your taxable employment income?  No.   Ms. Langelier moved around a lot but she never changed employers from 1996 to 2012.… Read More »Langelier v. The Queen, (2013 TCC Favreau)  — If you move far from work, then move back later without more workload, you can’t deduct the moving expenses from employment income

Can you claim the medical expense tax credit for a full-time attendant without a medical certificate attesting “that the impairment is a severe and prolonged impairment in physical or mental functions the effects of which are such that the individual’s ability to perform a basic activity of daily living is markedly restricted”?  No.   Though the rules for this credit are complicated, this was an… Read More »Arciresi c. La Reine, (2013 CCI Favreau) — You need a physician’s certificate to claim the medical expense credit. 

This decision is most interesting to lawyers involved in tax litigation because it details: the proper practice for judicial review applications and  when it’s proper to ask for judicial review in the Federal Court and when, instead, you must file an objection and appeal through the Tax Court of Canada.  CRA taxpayer relief discretion is one of the common areas for judicial review in tax law.… Read More »Canada (National Revenue) v. JP Morgan Asset Management (Canada) Inc. (2013 FCA, Stratas) — If you don’t like CRA conduct, you can appeal to the TCC or sue, but, generally, you cannot get judicial review

The Guaranteed Income Supplement (GIS) under the Old Age Security Act is an income-based benefit, as is the refundable GST credit and the Child Tax Benefit and other refundable credits.   Ms. Brighton, who estimated her annual income (after her business failed) was under $10,000, did not realize that the RRSP withdrawal she made in 2011 “would affect her GIS entitlement.”  Because of it, her income exceeded the… Read More »Brighton v. Canada (Human Resources ans Skills Developement), (2013 TCC Paris) — Large RSP withdrawals can deny you Old Age Security payments

CRA Collections officers have great powers and sometimes they use them harshly, where they feel a taxpayer has been dishonest and especially, as here, where the tax debtor had been involved in drug trafficking.   Faced with harsh CRA Collections practices, people have asked the Federal Court judges to intervene to stop or reverse CRA’s action.  (The process is called “judicial review”.)  But, as this case… Read More »Johnson v. HMTQ, (2013 FC Manson) — Don’t expect the Federal Court to help you stop or reverse collection action.  

This case involved a claim for the landlord’s GST rebate for new residential rental property.  Ms. Tsenkova got it, even though her lease was for “temporary accommodation”.   Under ETA s. 256.2, if you pay GST when you buy a new home, you may claim a GST/HST rebate if you plan to use the home or part of it to lease to residential tenants and the lease will be… Read More »Tsenkova v. The Queen, (2013 TCC Sheridan) — To get the Landlord’s GST rebate, you must expect to rent for at least a year (but you don’t need many witnesses to prove that)

Suppose your spouse  lives in the family house in San Francisco and you live in Vancouver.  Your child occasionally visits you.  Are you entitled to claim the Child tax credit for that child?  Justice Woods says you can.   The unusual feature of this credit in ITA s. 118(1)B(b.1) is that it applies where “at any time in the year” your child is “wholly dependent for support… Read More »Severinov c. La Reine, (2013 CCI Woods) — You can claim a credit for a dependent child, even if she doesn’t live with you or live in Canada