Articles 2024

This article explores the uncertain income tax consequences facing Canadian taxpayers involved in the lending and borrowing of crypto assets on Decentralized Finance (DeFi) lending protocols. CRA's guidance is urged to be upholstered and increased to mitigate against the risk that taxpayers will incorrectly report and file crypto-asset transactions.

The Tax Court of Canada’s decision in Gaudreau c. Le Roi, 2023 CCI 115 (currently under appeal to the FCA), addresses whether a taxpayer may be compelled to produce an accounting firm’s memo in the context of the taxpayer’s examination for discovery. The taxpayer resisted disclosure on the basis that the accounting firm’s memo was not relevant to the CRA’s assessing position. The Tax Court nevertheless concluded that there is no accountant-client privilege and that the memo should be disclosed.

In this brief article, Neti Jhatakia provides an overview of the income tax implications of the staking of cryptocurrency in Canada.

In June, the National Post publicized a tax appeal by Toronto sports icon José Bautista. Because the appeal deals with how non-resident, high-income earners save for retirement and protect their income from Canadian taxes, commentators have speculated that a dismissal by the TCC could eliminate certain financial enticements for athletes to play in Canada. This article summarizes the facts and tax issues at stake in this appeal.

In The King v. MMV Capital Partners Inc., the Federal Court of Appeal (FCA) found that the general anti-avoidance rule (GAAR), section 245 of the Income Tax Act (Act), applied to a series of loss utilization transactions. According to the FCA, the transactions were structured to allow a third-party purchaser to access the taxpayer’s losses, and the GAAR applied because the transactions frustrated the object, spirit, and purpose of the loss restriction rules in subsection 111(5) of the Act.

The expanded mandatory disclosure rules that came into effect on June 22, 2023 capture a broad range of business transactions and impose reporting obligations on taxpayers, advisors, and promoters. Lawyers should review these rules carefully as non-compliance may result in legal and financial consequences for both themselves and their clients.

To help address a growing shortage of rental housing, the Canadian government announced, on September 14, 2023, an enhancement to the Goods and Services Tax Rental Rebate, commonly referred to as the landlord’s rebate. The enhanced GST Rental Rebate will provide full relief for the 5% GST paid by builders and purchasers of new purpose-built rental housing.

On August 4, 2023, the Department of Finance released draft legislation in respect of the clean technology investment tax credit (“Clean Technology ITC”). The Clean Technology ITC allows qualifying taxpayers to claim up to a 30% refundable tax credit on the capital cost of clean technology property. This article discusses the proposed requirements to claim the Clean Technology ITC, including the detailed labour requirements that must be satisfied to obtain the full 30% tax credit.

Relatively speaking, section 85 is not new to Canada’s Income Tax Act.  Even so, as of the date of this writing, section 85 has been discussed, at varying depths, in a mere 314 court decisions; the number of decisions suggests that, once understood, it is likely one of the less obscure sections in the Act.  To this end, as a technically operative section, understanding what is informally known as the section 85 rollover is better done as a disciplined and systematic exercise.

In one of its most recent tax decisions, Emergis Inc. v. Canada, 2023 FCA 78, the Federal Court of Appeal was unwilling to adopt the broad interpretation of the Tax Court of Canada applied to subsection 20(12) of the Income Tax Act regarding foreign non-business income tax.