Can a corporation trigger capital gains deliberately to increase its CDA and, as a result, facilitate surplus stripping? Using 55(2) for this purpose might problematic because of issues with the purpose test. A share exchange might be problematic as well.…
CDA timing and GAAR
If a corporation triggers a capital gain, pays a capital dividend using the resulting CDA balance and then triggers a capital loss that, in effect, offsets the gain, does the GAAR apply? In Gladwin Realty Corporation v R, 2019 TCC…
Interest payable
Amit Ummat has written a good article about Glatt v Canada (National Revenue), 2019 FC 738. The taxpayer was assessed a preparer penalty. To reduce risk, the taxpayer paid the assessed amount, which was later reversed, but without interest on…
Audit power
Sunita Doobay, “The MNR’s Audit Powers” Canadian Tax Highlights 27:3 (March 2019) reviews three important recent cases on CRA audit powers, namely Cameco, 2017 FC 763 (power to require oral interviews), BP Canada Energy Company, 2017 FCA 61 (power to compel…
Burden shifting
In Monsell v R, 2019 TCC 5, the taxpayer received payments for no consideration from a corporation to which she was related. The CRA subsequently reassessed the corporation for additional taxes for a number of years and then assessed the…
Pipeline and non-resident beneficiaries
New paragraph 212.1(6)(b) deems Newco to have paid dividends to non-resident beneficiaries of an estate that is implementing a pipeline so that Newco must pay withholding tax. The change is effective from budget day, 2018, even though nothing in the…
Oral questioning on audit
Canada (National Revenue) v Cameco Corporation, 2019 FCA 67, aff’g 2017 FC 763, held that the CRA, on an audit, cannot compel a taxpayer to submit to oral questioning. Of course, a refusal to answer oral questions can lead to…
Suspended losses and trust winding-up
Amanda Laren, in “Gap in Subsections 40(3.3) and (3.4) for Wound-Up Trust?” Canadian Tax Focus 9:2 (May 2019), notes that Subsections 40(3.3) and (3.4) stipulate whether the two parties remain affiliated after the transferor is dissolved or wound up, but only if…
TOSI and 20(1)(j)
The ability to use 15(2) and 20(1)(j) for income averaging has been impaired by the TOSI rules. What’s worse, if an individual includes an amount in income under 15(2) that is split income, he or she will not be entitled…
Ponzi schemes and bad debts
Although the CRA doesn’t mention Delle Donne v R, 2015 TCC 150 (discussed here), it recently considered when a victim of a ponzi scheme can write off a bad debt in respect of interest previously included in income. See 2017-0691941I7…