The Court in Chen v Canada (Attorney General), 2019 FC 1435, seemed to accept that a taxpayer, to avoid late-filing penalties, could have filed a T1135 with estimates in it before the deadline and then filed an amended return later.…
Non-arm’s length interest
The shareholders of Opco loaned it money to permit it to acquire inventory. The loans were unsecured and bore interest at 10% yearly. The Court of Quebec, in light of the Quebec equivalent of section 67 of the ITA, denied…
Partnerships and being a relative
How does the presence of a partnership in a structure affect the analysis of whether persons are related under section 251 of the Income Tax Act (Canada)? A partnership is not a person for the purposes of section 251 Where…
Trusts need to watch out
The federal government has allocated significant additional funds to the CRA to permit it to enforce better compliance. The CRA has targeted family trusts (among other things). The CRA’s audit process for a trust involves accumulating documentation and information about…
Capital gains and excluded shares
The CRA believes that taxable capital gains are “income” for the purposes of paragraph (c) of the “excluded shares” definition in the TOSI rules. The CRA also states that the gains in question should be computed on a gross basis,…
Audit success
Automobile benefits are fish in a smaller barrel for CRA auditors. If all else fails, the auditor can recover something for his or her time by reassessing them. (My experience on the subject is probably not representative. Nevertheless, it’s the…
Due diligence reverses penalty
In Moore v R, 2019 TCC 141 (informal procedure), the taxpayer, in filing his 2016 return, realized that he needed to file a T1135 for shares he owned of a US corporation that he had acquired under an employee stock…
Section 160 butterflies
In Eyeball Networks Inc. v R, 2019 TCC 150, the court held that section 160 applied to a transferee corporation (the new operating company or “TC”) that had received property from a distributing corporation (the old operating company or “DC”)…
Bitcoin mining
The CRA, in technical interpretation 2018-0776661I7 (August 8, 2019), takes the position that a Bitcoin miner receives Bitcoin as barter for services rendered. The transaction is a barter transaction because Bitcoin isn’t legal tender (see IT-490 “Barter Transactions”). The receipt…
Handing over records to CRA
Clients sometimes complain to me that they have given records to a CRA auditor who then returns only some of the records or returns them in a disorganized state that makes them difficult to work with. Accordingly, if a client…