What is due diligence for the purposes of a penalties that apply “automatically” such as under subsection 167(2)? Due diligence depends on whether the person believed on reasonable grounds in a non-existent state of facts which, if it had existed,…
A Voluntary Disclosure Gone Wrong
The following article was published by the Canadian Tax Foundation. John Loukidelis “A Voluntary Disclosure Gone Wrong” (2021) 21:3 Tax for the Owner-Manager 10. In 4053893 Canada Inc. v. Canada (National Revenue) (2021 FC 218), the court dismissed an application…
Crypto situs
While the UK Inland Revenue is prepared to treat cryptocurrency as property with a situs in the country of residence of its holder, the CRA has stated that it is still reviewing the matter (2021-0896021C6 – answer to question 11…
Section 160 and 50-50 shareholders
The appellant in Veilleux c R, 2022 CCI 69, was one of two unrelated individuals who were the 50/50 shareholders and only directors of Opco. The CRA assessed the appellant under section 160 for Opco’s unpaid tax debts in respect…
No rollover to alter ego trust with bankruptcy provision
The CRA says that a rollover under subsection 73(1) is not available for an individual’s transfer of property to a trust supposedly governed by subparagraph 73(1.01)(c)(ii) (an “alter ego” trust) if the trust provisions prohibit the distribution of income to…
Corporate appellants need lawyers
The following article was published by the Canadian Tax Foundation. “John Loukidelis, “Corporate Appellants Need Lawyers” (2021) 21:2 Tax for the Owner-Manager 13-14″ In Canada v. BCS Group Business Services Inc. (2020 FCA 205), the FCA held that a lawyer…
Corporate incest
The following article was first published by the Canadian Tax Foundation in 2022 vol 22, no 2, Tax for the Owner-Manager (April, 2022) Suppose that, after an estate freeze, Mr. X owns all of the freeze shares and thin-voting shares…
55(2) and T5s
Opco pays a dividend to Holdco, and part of the dividend is re-characterized as a capital gain under subsection 55(2). Does that affect the amount of the dividend reported on the T5 for the dividend? I have not been able…
Paletta: The Pursuit of Profit
The author writes: Based on the Tax Court’s finding that Paletta’s trading activity was carried on solely for tax purposes without any pursuit of profit, the FCA concluded that Paletta’s trading activity could not constitute a source of business income,…
Collins Family Trust
Here’s the final word from the Supreme Court on rectification and rescission. Shorter SCC: Don’t send us tax-related cases; we don’t like them. Canada (Attorney General) v Collins Family Trust, 2022 SCC 26 On appeal from the BCCA, were the…