The Tax Court continues to be unimpressed by clever planning. Brian Arnold thinks that the current generation of tax judges is much more willing to apply the GAAR or other anti-avoidance rules to planning that reduces tax. Mady v R, 2017 TCC 112, is another case that supports his thesis.
Extension of time
A taxpayer fails to meet the 90-day deadline for filing an appeal to the Tax Court apparently because he was badly advised by a professional about procedural matters. Should the Court grant his application to late-file the appeal? The Federal Court of Appeal said ‘yes’ in Bygrave v R, 2017 FCA 124.
ASPE appraisal increments
I wrote here about the effect that ASPE could have on the retained earnings of a private corporation. An appraisal increment could render retained earnings a very poor indicator of safe income. The CRA is now saying that such an…
More s 55 nonsense
Tax Interpretations has translated a technical interpretation (2017-0683511E5) in which the CRA states that using a redemption of shares to avoid s. 55(2.1)(b) is potentially GAAR-able. I have another translation: the government needs to invoke GAAR to cooper up its…
Accommodation party
The Federal Court of Appeal has affirmed the Tax Court’s finding that an employee-controlled buyco acted as an “accommodation party” that allowed a key shareholder to use the capital gain exemption to strip out corporate surplus. As a result, section…
Election errors
In R & S Industries Inc. v R, 2017 TCC 75, both the CRA and the taxpayer agreed that they were bound by the elected amount shown on a T2059. That amount cannot be altered unless the CRA permits the…
WIP for pros
Neil Armstrong notes that the CRA believes that WIP under contingent fee arrangements is not income for the purposes of the Income Tax Act until the client receives amounts under a settlement or court order (when the liability of the…
Shareholder loans
I just posted a brief introduction to shareholder loans, which introduction you can find here.
55(2) Gone Bad
Michael Welters “Results Test in Subsection 55(2)” Canadian Tax Highlights 25:3 (March 2017) discusses 101139810 Saskatchewan Ltd. v R, 2017 TCC 3. The court applied 55(2) to intercorporate dividends paid to two holdcos even though the individual who owned them…
Objections
Ken Griffin and Marc Vanasse, “Income Tax Objection Process” Canadian Tax Highlights 25:3 (March 2017), summarizes the Auditor General’s report on the CRA objection process. Not surprisingly, the report found the process lacking in a number of ways. Objections take too long. The CRA does not learn effectively from the results of objections. In addition, the CRA does not have any standards for resolving objections in a timely manner.