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.
Tax deals re-visited
I wrote previously about Rosenberg v Canada (National Revenue), 2016 FC 1376. Kathryn Walker and Robert G. Kreklewetz “Deals with the CRA” Canadian Tax Highlights 25:3 (March 2017) discusses the cases. After discussing Rosenberg, the authors argue that Galway v…
Bulk Sales Act repealed
The Bulk Sales Act has been repealed with effect from March 22, 2017, the date of Royal Assent for Bill 27, which was enacted as SO 2017, c 2.
LLP negative ACB
Since 2006, the partners of Ontario limited liability partnerships (LLPs) have enjoyed “full shield” protection, which means that they are protected from most liabilities of the partnership except those arising from their own professional negligence. As a result, an LLP…
T1135 for part-year resident
In CRA technical interpretation 2015-0611141E5 (July 11, 2016), the CRA stated that a T1135 filed for a part-year resident should report property and transactions relating to the property for the person’s entire year that includes the time when the person…