In Balanko Estate v R, 2015 TCC 66, an informal procedure case, the taxpayer could not claim the principal residence exemption for a property because she had never divorced her husband, from whom she had been living separate and apart…
The S 160 Family Law Exception
Subsection 160(4) of the Income Tax Act (Canada) in effect provides an exception to the “long arm” of section 160 where at any time a taxpayer has transferred property to the taxpayer’s spouse or common-law partner pursuant to a decree,…
Partnership negative ACB
In general, the negative ACB of an interest of a general partner does not trigger a capital gain at the end of a fiscal year. The negative ACB does not give rise to a capital gain until the partner disposes…
Form matters, again
In David Anthony v Canada (National Revenue), 2016 FC 955, the taxpayer applied for judicial review of a decision of the Minister. The taxpayer had requested that the Minister adjust his return for 2001 to permit the deduction of lease…
Narrow De Facto Control
Ashvin Singh, “FCA Reinstates Narrow View of De Facto Control” 6:3 Canadian Tax Focus (August 2016): The potential expansion of de facto control in McGillivray Restaurant Ltd. (2014 TCC 357) … has been curtailed by McGillivray Restaurant Ltd. v. The…
Fiscal Arbitrators update
Carolyn Hogan, “Escaping Penalties After Admitting False Statements” 6:3 Canadian Tax Focus (August 2016) is a good snapshot of the state of play in the ongoing Fiscal Arbitrators fiasco.
Important safety tip
Neal Armstrong alerts us to a nasty trap. Suppose Opco pays a dividend to a trust-shareholder, which immediately distributes an amount to Holdco, a beneficiary of the trust. Suppose that the trust then sells its shares of Opco, before the…
Dividend caps
I like dividend caps on fixed-value shares. I’ve complained before about the odour emanating from shares that are entitled to unlimited dividends but that are redeemable and retractable for a fixed amount. The CRA seems to smell something too, in technical interpretation 2016-0626781E5.
Estates vs Trusts Coda
As a coda to my article on “trusts vs estates”, I offer the following from Chow and Pryor, Taxation of Trusts and Estates (Toronto: Carswell, 2016) at 9.2.2(c)(ii): The residue is not ascertained until the debts and other liabilities of…
US grantor trust
Neal Armstrong notes that the CRA continues to maintain that a US grantor trust is not a bare trust for Canadian tax purposes. See his summary of the CRA response to question 10 at the 2016 STEP conference.