Assume that Corp X owes tax to the CRA. Assume that, while it owes that tax, Corp X pays a dividend to Mr. X who deals not at arm’s length with the corporation. What can the CRA do about it…
Procedure
In Corsi v. The Queen, 2008 TCC 472, the CRA sent a 160 assessment to the taxpayer by registered mail in June, 2004, to her home address, which was not the address the CRA had on file for the taxpayer. For whatever reason, the taxpayer didn’t pick up the mail, and it was returned to the CRA. The CRA did nothing more with the assessment, but some time thereafter CRA Collections started calling the taxpayer. This was the first she heard about the assessment. The CRA then mailed a copy of the assessment to the taxpayer’s accountant in October, 2005, more than one year and 90 days after the first assessment was supposedly sent.
Mutual fund tax bomb?
Someone forwarded to me an email from a local accountant who was warning his clients who own mutual funds about large capital gains distributions that funds will be required to make at the end of this year because of record redemptions of units during the recent market slide.
Michigan taxes
Michael Van Severen, who is a member of the cross-border tax services group at KPMG in Hamilton, was kind enough to forward to me a “Tax Tip-Off” (I thought it said “Tax Rip-Off” when I first received it). The tip…
Directors and revival, again
In Leger v. The Queen, 2007 TCC 322 (which I discussed here) the Court held that the dissolution of a corporation that was later revived did not engage the two-year limitation period otherwise applicable under subsection 227.1(4) of the Income Tax Act. Mr. Justice Bowie arrived at a different conclusion in Aujla v. The Queen, 2007 TCC 764, in respect of a company under the British Columbia Company Act.
Control Premiums
David Louis at Minden Gross has an interesting article in the October 16 issue of Tax Topics on control premiums for “thin voting shares” (shares that do not participate significantly in the earnings or assets of a corporation but that confer voting rights on the holder). The CRA, at the 2007 CTF Tax Conference, when asked about such shares responded that “It is the opinion of the CRA that a hypothetical purchaser would be willing to pay some amount for the voting control of a company.”
Yubnub
I’ve found yubnub.org to be a pretty useful tool especially after I integrated it with Firefox, my browser of choice. With a few keystrokes, I am able to perform searches, including Google and Google Maps searches, without having to go to the search engine websites.
Yubnub allows a user to create custom commands, and I have created three that are tax-related.
The Cottage as a Principal Residence
The following article appeared in the latest edition of the Hamilton Law Association Law Journal.
In many families, the summer cottage is something like an institution. It provides happy memories of lazy days spent on the water and cool nights with only the crickets to disturb one’s sleep. A cottage, however, can also present a tax problem. We are regularly consulted by taxpayers concerned about how their estates will pay the Canada Revenue Agency (the “CRA”) when it comes calling about the cottage after the death of its owner.
Jeopardy
Generally speaking, the CRA cannot collect an income tax debt from a taxpayer while the taxpayer disputes the assessment from which the debt is derived before the Tax Court renders a judgment on the assessment. The CRA, however, can apply to a court for a jeopardy collection order “ex parte” (without the taxpayer having the right to appear to contest the application) that will allow the CRA to proceed to take collection action. The taxpayer can then apply to have the ex parte order set aside. In Alexander (Re), 2008 FC 902, the taxpayer succeeded in having the order overturned by the Federal Court.
Rectification, again
The Niagara region seems to be doing its part to contribute to the law of rectification in the tax context. Juliar v. Canada (Attorney General), 1999 CanLII 15097 (ON S.C.) originated in the peninsula. Now comes QL Hotel Service Limited v. Ontario (Finance), 2008 CanLII 15226 (ON S.C.). In the latter case, one corporation incorporated another and then transferred intangible property to the other for one common share and tangible property for one million Class A Special Shares. The transferor then sold the shares of the transferee to an arm’s length purchaser.