Over the last decade or so, thousands have reduced their tax bills by millions of dollars by purchasing prints, paintings, comic books, medical supplies and other items at one price and then donating the items to a charity at another, higher price. The CRA has aggressively attacked these donation arrangements to try to claw back the tax. Will it succeed? It might, if Canada (Attorney General) v. Nash, 2005 FCA 386, is any indication.
Tax Cases of Interest
On Thursday, November 3, I will be presenting at the CRA’s quarterly Tax Practitioner’s Consultation Group meeting at the Royal Botanical Gardens. In my presentation, I will discuss recent “Tax Cases of Interest” including the Supreme Court of Canada decisions…
Supreme Court Releases GAAR Decisions
The Supreme Court of Canada, in Canada Trustco Mortgage Co. v. The Queen, 2005 SCC 54 and Mathew v. The Queen, 2005 SCC 55, released its first judgments on the general anti-avoidance rule yesterday. The Court unanimously dismissed the Crown’s…
More on CRA Demands for Information
Redeemer Foundation v. M.N.R., 2005 FC 1361, represents an interesting coda to my article on CRA demands for third-party information. In this decision, the Federal Court quashed reassessments that were based on information obtained pursuant to an improper demand for third-party information.
Fraud and Income Tax
A rogue convinces you to “invest” in a “business” and you lose the money you invest because the business really consists of stealing your money. Will you be entitled to a deduction in respect of the money you have lost? The Federal Court of Appeal, in Hammill v. The Queen, 2005 FCA 252, said no.
CRA Demands for Third-Party Information
Section 231.2 of the Income Tax Act (Canada) (the “Act”) authorizes the CRA to demand information from any person for any purpose related to the enforcement of the Act. What do you need to know about a demand for information about an unnamed third party, if the CRA comes knocking at your door with one in hand?
The Perils of Large Corporation Appeals
When drafting a notice of objection for a large corporation, it is essential to ensure that you cover all of the issues in dispute between your client and the CRA. If you fail to cover all of the issues, your client’s ability to contest them at the Tax Court could be curtailed. Newmont Canada Limited v. The Queen, 2005 TCC 143, is a harsh reminder of this possibility.
Safe Income and Partial Rollovers, Again
At the end of our article on 729658 Alberta Ltd. v. The Queen, 2004 TCC 474, we speculated that the case might create new opportunities for taxpayers. A CRA technical interpretation dated February 5, 2005, suggests that the Agency disagrees.
Safe Income and Partial Rollovers
For many years, the CRA has maintained that the partial realization of a gain on shares in the capital of a corporation would reduce the “safe income” attributable to those shares pro rata. As a result, a vendor of shares was often required to choose between claiming the $500,000 capital exemption and using safe income to reduce taxes on the sale of shares. 729658 Alberta Ltd. v. The Queen, 2004 TCC 474, suggests that the CRA position might be wrong and that a vendor might be able to have his exemption cake and eat it too.