In Payette v. The Queen, 2009 TCC 348, the taxpayer, a retired accountant, was attempting to develop a novel propulsion system for interstellar exploration. He claimed business expenses and SRED tax credits for his efforts. The Minister was skeptical, perhaps because ‘Mr. Payette was able to prove the concept worked “to my satisfaction but not to anyone else’s”‘. Indeed, the Canadian Space Agency found the following, according to the Court:
Justice
It’s hard educating clients about the tax system and what they’re up against when disputing assessments. Clients will often complain not just about the assessments they are fighting but the attitude of the auditor, the delays caused by the CRA and the unfairness inherent in a tax system that only a very few understand really well. The taxpayers in Lauger v. The Queen, 2007 TCC 650, brought these complaints to Tax Court with them and asked the Court to do the Right Thing. To which the Court, in dismissing the appeals, responded “I must decide whether the assessments are well-founded or not”.
Offsetting Shareholder Benefits
In Coutre v. The Queen, 2009 TCC 456, the taxpayer tried to argue that, if an assessment under subsection 15(1) is made against a shareholder, then the Minister, to prevent double taxation, must reduce the benefit by the amount of any outstanding shareholder loan.
Lawyer joke
Every now and then I can’t resist a little legal humour. The following joke is relayed by the law blog Sui Generis:
Harmony
Harmony sounds like something we should all want, even when it comes to taxes. Be that as it may, the Ontario government has created a webpage that discusses the harmonization of its PST with the federal GST.
Loss Utilization That Doesn’t Work
Consider the position of Lossco and Profitco, each a wholly-owned sub of Parentco, where one has non-capital losses in a year equal to the taxable income of the other in that same year. Between them, they have not earned profits, but the Income Tax Act requires Profitco to pay taxes anyway because the Act does not permit related corporations to file consolidated returns. What to do?
Valid Appeals and Objections
The Tax Court, in Kubbernus v. The Queen, 2009 TCC 311, confirmed that a taxpayer cannot file an appeal to the Court for a reassessment issued at the taxpayer’s request pursuant to the taxpayer relief provisions.
Paying dividends with a note
In a post I wrote last year, I stated
According to the CRA, it is not necessary to use cash to pay the dividend. A corporation can pay a dividend using a note, but the payee must accept the note as absolute payment of the dividend.
Transfers of insurance
I’ve seen a number of transactions lately where the owner of a life insurance policy proposes to transfer it to a corporation controlled by the owner. The benefits of corporate-owned insurance are well-known, of course, but such a transfer could also permit the owner to withdraw significant amounts of money from the corporation tax free.
Related Business
A charity cannot carry on a business unless it is a “related business”, which is a business that is related to the objects of the charity and that employs only volunteers. After the decision in Alberta Institute on Mental Retardation…