In Ritchie v R, 2018 TCC 113, the taxpayer owned land that he rented to a corporation he owned. The corporation carried on a farming business. Enbridge paid amounts to the taxpayer for easements across his land, including $255,790 as an “early signing bonus” (a bonus for signing the easement agreement before a certain date). The taxpayer reported the bonus as a capital gain. The CRA reassessed to include the full amount of the bonus in the taxpayer’s income. Was the bonus on capital account?
A valuable envelope
S 244(15) of the Income Tax Act (Canada) provides that an assessment is deemed to have been made on the date that it is sent, and the date on which an assessment is sent by first class mail “or its…
Acting in concert
In HLB Smith Holdings Limited v R, 2018 TCC 83, each of Holdco and a family trust (“Trust1”) held 50% of the shares in the capital of Opco. Another family trust (“Trust2”) held all of the issued shares in the capital of Holdco. Trust1 was for the benefit of W’s family; it appears Trust2 was for the benefit of M’s family. W and M were unrelated. They were the directors of Opco at all times. Opco paid dividends to its shareholders at a time when it owed income tax. Holdco paid dividends to Trust2, which allocated the dividends to M and his wife. Were the recipients of the dividends liable under section 160? Put another way, did Opco deal at arm’s length with its shareholders, who were unrelated to it?
What binds on an election form?
The following is a more detailed summary of a case about which I have written previously.
In R & S Industries Inc. v R, 2017 TCC 75, the Court held that the CRA and the taxpayers who file an election under s 85 or s 97 were bound by the agreed amounts set out in the election form (subject to the limits on agreed amounts set out in s 85). The Court, however, held that neither the CRA nor the taxpayers were bound by the other “key facts” set out on the form.
TOSI and “the provision of services”
In Kathryn Walker, “The Services Carve-Out from TOSI” Canadian Tax Focus 4:4 (May 2018), the author considers the meaning of business income from the “provision of services” in the definition of excluded shares in s 120.4(1). She notes that the…
Voluntary disclosure for many years gone wrong
In Gauthier, 2017 FC 1173, the taxpayer made a voluntary disclosure for 2005-2014 for income earned from funds he had transferred offshore in 1978. The CRA accepted the VD, waived penalties and cancelled interest for those years but then reassessed…
Rental income from a partnership as ABI
The CRA accepts that a business carried on by a corporation as a member of a partnership is not a specified investment business if the partnership employs more than five full-time employees. The authors suggest that a corporation could earn…
Effects of the new SBD clawback
From Jason Pisesky, “Incentive Effects of the New SBD Clawback” Canadian Tax Focus 4:4 (May 2018): an extra $1,000 of rental income creates $1,307 of immediate tax in Alberta, as…
Director liability
The taxpayer was not personally liable as a director of a corporation for unremitted HST and source deductions. She had signed the articles of the relevant corporation. But she had not signed an incorporation agreement, as required by BC law,…
Parking as a taxable benefit
An employee derives a benefit from free parking unless the employee must use the space “regularly” to perform his or her employment duties (ie for business purposes). Parking “to facilitate working irregular or extended hours is parking for business…