In Rae v. The Queen, 2010 TCC 130, the taxpayer left his position as the controller of one corporation and joined another. Soon after he started his new employment, he discovered what he thought were serious improprieties in the financial statements and accounting practices of his new employer. He resigned his position but then negotiated a settlement under which he received a large payment for negligent misrepresentation and as damages for retaliation. The CRA took the position that the entire amount received was a retiring allowance. The taxpayer appealed; the Tax Court agreed with him in part.
Proceeds of Crime
The following article appeared in a recent edition of the Hamilton Law Association Law Journal.
The police execute a search at your client’s house. They find pot plants and a large amount of cash. They seize the cash and charge your client with trafficking, and he is later convicted of that crime.
Partnership freeze
Tax Topics number 1984 (March 18, 2010) has an interesting article on estate freezes using partnerships in light of Krauss v. The Queen, 2009 TCC 597.
84.1 Gotcha
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…
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.
Retail Loses Again
Taxpayers who participated in ‘retail’ donation tax shelters continue to fare poorly in the Tax Court. See Maréchaux v. The Queen, 2009 TCC 587.
Valuation redux
In a post I wrote about a year ago, I complained about the CRA’s then-recent pronouncements on control premiums. The CRA, at the most recent Canadian Tax Foundation BC Conference, recanted this position, at least in part, as follows:
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.