Articles 2023

Allison Blackler answers questions about her unique experiences as a woman in tax law. The article gives other lawyers and law students insight into potential career choices in tax law and words of advice on how to build a successful tax practice.

The 2022 Federal Budget, tabled on April 7, 2022, proposes the introduction of the substantive Canadian-controlled private corporation rules. The change provides that non-Canadian-controlled private corporations that meet the definition of a “substantive CCPC” will also be subject to the refundable tax on investment income regime that Canadian-controlled private corporations are subject to.

The article discusses two latest decisions by the Tax Court of Canada: Raymond Stewart v Her Majesty The Queen, 2021 TCC 94, which resulted in the removal of subsection 163(2) of the Income Tax Act gross negligence penalties levied against the appellant and allowed substantial subcontractor expenses in the context of a net worth audit; and Pansy Halls v Her Majesty The Queen, 2022 TCC 14, which dealt with a net worth audit of an unincorporated restaurant business owned by two spouses.

Bill C-208 received Royal Assent on June 29, 2021, and brought amendments to section 84.1 which allows for transfers of qualified small businesses, family farms, and fishing corporations to receive the same tax treatment when transferred between family members, as when the business is sold to an unrelated third party.  From an economic policy perspective, these amendments are positive to say the least.

On May 17, 2022, the Federal Court of Appeal delivered its decision in HMQ v The Estate of Pasquale Paletta, 2022 FCA 86 which applied the “pursuit of profit” source test in Stewart by ruling that an activity devoted solely to tax avoidance cannot give rise to a source of income in the form of a business under the Income Tax Act (Canada). This is true even if the activity lacks a personal or hobby element and appears to be purely commercial in nature.

The 2022 Budget shows once again Canada’s ongoing commitment to the investigation and prosecution of financial crime including money laundering and tax evasion, including by injecting substantial funds into expanding the CRA’s audit and enforcement activities.

The author of this article discusses the implications of taxation of non-residents’ inheritance of Canadian real estate including dealing with Taxable Canadian Property, rental income taxation and the new Underused Housing Tax.

When the government disregards its contractual or settlement obligations, taxpayers who fall short of receiving relief under private law usually pin their hopes on public law (or restitutionary) remedies. However, these are typically a last resort and only available in exceptional circumstances.

In Robillard (Estate) c. The Queen, the Estate of Mr. Robillard implemented a “post-mortem pipeline” strategy. The Minister sought to apply subsection 84(2) of the Income Tax Act. With reluctance, the Tax Court followed the Federal Court of Appeal decision in Canada v. MacDonald and found that subsection 84(2) applied. However, it strongly criticized the FCA’s broad interpretation of subsection 84(2) and indicated that it may be time for the FCA to reconsider its MacDonald decision.

In 2021, I transitioned from practicing primarily in an income tax controversy role to an indirect tax advisory role. This led to many discoveries about the misconceptions surrounding indirect tax laws, regulations and practice. Having evaluated my own assumptions and discussing with mentors and colleagues, here are a list of some considerations when comparing and contrasting income tax to indirect tax.