Valley Equipment Limited v. The Queen, 2006 TCC 510, is interesting reading in light of Bourgault Industries Ltd. v. The Queen, 2006 TCC 449. In Valley Equipment, the Tax Court judge stated that there was no need to resort to…
Salary and shareholder loan accounts
In Irmen v. The Queen, 2006 TCC 475, the taxpayer, a shareholder and key employee of a corporation, received amounts from the corporation throughout the taxation year. During the year, the corporation accounted for the amounts as salary, and CPP and tax was deducted and remitted. At the end of the year, however, the taxpayer and his accountant decided that he should really have taken amounts from the corporation as a draw on his shareholder loan. Adjusting entries were made accordingly, and the taxpayer reported only a small amount as employment income in the taxation year. The CRA, however, reassessed the taxpayer as if he had received salary and not a draw on his shareholder loan.
Redeemer Foundation
Some time ago, I wrote a post about M.N.R. v. Redeemer Foundation, 2006 FCA 325. At the time, an online version of the judgement had not yet been published. You can now find the judgement here.
Surrogatum
How to treat payments received as damages in a lawsuit—whether as a result of a judgment or pursuant to a settlement—can be a vexing question. The Supreme Court of Canada provided some guidance in Tsiaprailis v. Canada, [2005] 1 S.C.R. 113, 2005 SCC 8. The Tax Court applied Tsiaprailis recently in Bourgault Industries Ltd. v. The Queen, 2006 TCC 449. Justice Woods, in the latter case, characterized the analysis as follows:
Anchor Pointe
The CRA’s Appeals branch, according to P148 (“Resolving Your Dispute: Objection and Appeal Rights Under the Income Tax Act”), exists “to resolve disputes arising from decisions made under legislation administered by the [CRA] by conducting fair and impartial reviews.” In fact, Appeals sometimes ends up acting as if the objection process were a second chance to audit the taxpayer: sometimes officers of the branch appear to spend more time trying to repair deficiencies in the CRA’s case against the taxpayer than they do considering the taxpayer’s submissions. When this happens, is relief available to the taxpayer?
Beneficiaries gone wild!
As tax advisers, we regularly advise our clients to enter into various legal relationships in order to help them reduce the taxes they would otherwise incur. In providing such advice, however, we would do well to remind our clients that those legal relationships have more than just tax consequences. Rose v. Rose, 81 O.R. (3d) 349, 2006 CanLII 20856 (ON S.C.) could be the cautionary tale.
Suing the CRA
Two courts of appeal have recently considered attempts to litigate personal income tax disputes outside the Tax Court of Canada. Smith et al v. Canada (Attorney General) et al, 2006 BCCA 237, and The Queen v. Roitman, 2006 FCA 266,…
Redeemer Foundation overturned
Yesterday, the Federal Court of Appeal released its decision in M.N.R. v. Redeemer Foundation, 2006 FCA 325, which overturns the decision of the Federal Court in Redeemer Foundation v. M.N.R., 2005 FC 1361 (see my article on the latter case).
Yet more on third-party demands
I have written several posts about the difficulties posed for taxpayers and the CRA by subsection 231.2(2) of the Income Tax Act. Earlier this year, the Federal Court released another decision—All Saints Greek Orthodox Church v. M.N.R., 2006 FC 374—relating…
Accounting reality
For some reason, the CRA seems to want to believe that an accounting entry by itself is a real transaction that can give rise to tax consequences. The Tax Court, in Cook v. The Queen, 2006 TCC 344 was called on to remind the CRA, again, that an accounting entry as such does not create a taxable reality.