In 4432002 Canada Inc. c La Reine, 2022 CCI 101, the corporate taxpayer appealed from CRA reassessments that had included amounts in its income under 12(1)(g) of the Income Tax Act (Canada) and imposed Part III tax liability for excess capital dividends. The taxpayer had sold rights it owned in some project management software. The agreement governing the sale provided for a lump sum amount plus amounts based on the subsequent sales of the software. The agreement limited the total purchase price to a maximum amount. The taxpayer had reported the amounts received as gains realized on eligible capital property. The Tax Court dismissed the appeal. It held that, contrary to the appellant’s submissions, 14(1)(b) did not override 12(1)(g), and the earnout amounts did not constitute a reverse earnout.
Caroline Harrell “4432002 CANADA INC. v The Queen, 2022 DTC 1071” Tax Topics no 2638 (Sep 27, 2022)
