Assume that A and B, who deal at arms length, own 55 and 20 common shares in the capital of Opco respectively. A and B also own 95 and 5 common shares in the capital of Holdco respectively. Assume that B’s tax adviser suggests to her that she can sell her common shares in the capital of Opco to Holdco for a purchase price equal to $400,000 cash. What could possibly go wrong? See Emory v. The Queen, 2010 TCC 71, for the answer to that question.
Famliy Members as Directors
I’ve seen a number of cases where a family member consents to be a director of a corporation—exactly why nobody seems to know after the fact—and then ends up being assessed for unremitted source deductions. The family member might be uneducated and barely able to speak English, but that won’t stop the assessments. The CRA and the Ministry of Revenue are unsympathetic. The courts are less cold-blooded it seems.
Litigation
Tax Court litigation—or any other kind of litigation for that matter—is inherently unpredictable. Take Pigeau v. The Queen, 2009 TCC 582, for example. In that case, a key issue was the value of a property transferred from an individual to…
Limit on the right of appeal
In Skinner v. The Queen, 2009 TCC 269, the taxpayer had reported as income in 2001 a large shareholder loan that had not been repaid. In 2002, the taxpayer attempted to deduct the amount previously included in income because the shareholder loan had been repaid. The Minister reassessed to reduce the taxpayer’s income in 2001 by reversing the inclusion for the shareholder loan. The Minister also reassessed to deny the deduction in 2002 because, after giving effect to the reassessment for 2001, the requirements of paragraph 20(1)(j) had not been met. The taxpayer appealed to the Tax Court of Canada, but the appeal was dismissed essentially on procedural grounds.
Tax cases of interest
Last week I gave a speech to the CRA tax consultation group on tax cases of interest. Joe Monaco and I wrote the speech. You can get a pdf copy here. I believe that all of the cases mentioned in…
Donato donates
The cartoonist Andrew Donato donated his cartoons and claimed a tax credit for the fair market value of them. The CRA didn’t dispute the amount of the credit he could claim, but it took the position that he had realized a capital gain on making the gift. The Tax Court agreed with the CRA in Donato v. The Queen, 2009 TCC 590.
Why Clients Hate Lawyers
Some clients hate lawyers because the lawyers insist on charging more than $0.99 per hour. I can live with that kind of hatred. On the other hand, some clients “hate” lawyers for good reason, at least according to this post:…
ABILs
Given the economic climate, it’s not surprising that we are receiving a lot questions about allowable business investment losses (ABILs). Nor is it surprising that many taxpayers find it difficult to claim ABILs, given the many pitfalls.
New blogger
I’ve been posting articles to this blog for more than four years, and, to my surprise, it hasn’t become old for me yet. That said, I am pleased to welcome a new blogger to the site. Nathan Green is a…
Double Taxation in US Health Care Reform
A recent Tax Court of Canada decision raises concerns of double taxation in proposed US health care reforms. The case is Niemeijer v. The Queen, 2009 TCC 624.