The latest CCH Tax Topics contain summaries of two interesting recent cases, one (Truckbase Corporation v. The Queen, 2006 TCC 215) dealing with the deduction of fees paid to amend a shareholder agreement and the other (Canada (Minister of National Revenue) v. Ellingson, 2006 FCA 202) with the powers of the Minister to demand information “where a suspicion exists as to unreported income and illegal activity”.
GAAR and surplus stripping
Not long after the Tax Court released Evans v. The Queen, 2005 TCC 684, it released Archambault, J.’s decision in Desmarais v. The Queen, 2006 TCC 44, which came to a different conclusion about whether GAAR could apply to surplus strips.
Amalgamations, Long and Short
An amalgamation is an important tool in the tax adviser’s toolbox. He or she can use amalgamations to simplify corporate structures, get rid of unwanted shell corporations, permit the interest expense on debt used to acquire another corporation to be deducted in computing income from that corporation’s business or bump the cost of non-depreciable capital property for income tax purposes. Understanding the rules that govern amalgamations, then, is important for a tax practitioner, and an understanding of those rules begins with an understanding of the nature of an amalgamation from a corporate law perspective.
Rectification again
The Ontario Reports just published another rectification case. See Di Battista v. 874687 Ontario Inc., 80 O.R. (3d) 136, 2005 CanLII 51220 (ON S.C.). The report is sketchy on the details, but it contains a useful list of the relevant…
Intention and dance
Sometimes my clients like to tell me that “in tax, intention is everything”. In fact, the courts have always been quite careful to limit the role that mere subjective intention plays in determining the tax consequences of a transaction. For a recent example, see my article on Makuz v. The Queen, 2006 TCC 263. Royal Winnipeg Ballet v. M.N.R., 2006 FCA 87, rev’g 2004 TCC 390, however, seems to mark something of a new direction in this regard.
CRA “Service”
I am back from holidays now and back to having to deal with the many-headed Hydra that is the CRA.
Over the last few years the CRA has been “rationalizing” its services to cut costs and, supposedly, improve its services. A recent example of these changes is the reduction of services available at the counters at tax services offices. The CRA explains this change as follows:
PCs and Personal Service Businesses
Under the Income Tax Act (Canada) (the “Act”) significant tax advantages may be available to a professional who derives his or her income through a corporation, of which he or she is both a shareholder and an employee, rather than directly from a practice operated in his or her name.
Tax shelters
Chief Justice Bowman of the Tax Court of Canada just does not like tax shelters much. He has released a number of decisions over the last few years in which he has ruled against taxpayers who purchased shelters of one kind or another. Makuz v. The Queen, 2006 TCC 263, is another recent example.
Control and groups
Crystal Beach Park Limited v. The Queen, 2006 TCC 183 is an interesting case with some local roots
Fees, audits, objections and appeals
When can a taxpayer deduct fees paid to contest an assessment or reassessment? As is usual in tax matters, the answer is neither simple nor obvious.