No results found
Balancing Comity and Convenience: Jurisdictional Issues Raised by Virtual Examinations
Genna Wood & Sam Lewis | January 20, 2025
This article describes the best practices for counsel seeking to adduce testimony in Tax Court of Canada proceedings from witnesses located in foreign jurisdictions. Virtual examinations can assist in securing the just, most expeditious and least expensive determination of the merits of a dispute. However, where a witness is examined virtually in Canadian proceedings while seated in a foreign country, it engages the international principle of comity.
Learn moreTax Court: BlackBerry’s Payments to US Affiliates Not Services FAPI Under Section 95
Julia (Zhuying) Zhuo, Torys LLP | January 16, 2025
In BlackBerry Limited v The King, the Tax Court of Canada found that the payments made by BlackBerry Limited to its US affiliates for research and development services were not foreign accrual property income under section 95 of the Act.
Learn moreThe Court’s Interpretation About the GST Implications on Loyalty Rewards Programs
Neti Jhatakia, EY Canada | October 11, 2024
The Goods and Services Tax (GST) implications on loyalty rewards programs have been a subject of debate in Canada. Recent court rulings have shed light on how GST applies to loyalty programs, particularly those involving royalty points. The Tax Court of Canada (TCC) and Federal Court of Appeal (FCA) have made significant decisions in the cases of Toronto-Dominion Bank v. His Majesty the King and Canadian Imperial Bank of Commerce v. Canada.
Learn moreCosts Awards in the TCC since Bowker v. Canada
Ben Grant, SV Law | October 11, 2024
In June 2023, the Federal Court of Appeal in Bowker v. Canada provided guidance on the appropriate amount of costs that an unsuccessful party should pay in an appeal to the Tax Court of Canada. This article will review the range of costs awarded by the Tax Court since the decision in Bowker and will briefly review whether two factors in particular correlate to higher costs awards: the litigation conduct of the losing party and the amounts at issue in the appeal.
Learn moreWhat is the Proposed Canadian Entrepreneur's Incentive (“CEI”)?
The Department of Finance Canada (“Finance”) announced the new Canadian Entrepreneur’s Incentive (“CEI”) in its 2024 Federal Budget. In August 2024, Finance announced certain changes and released draft legislation in respect of the CEI. The CEI gives certain owners of eligible businesses access to a reduced capital gains inclusion rate when they sell shares of their business. This article provides a short overview of the proposed CEI and the changes announced in August 2024.
Learn moreMilosz Zak and Gaya Berkaine | May 27, 2024
The decision in Canada v. Chad, saw Mr. Chad meet the “reasonable efforts” threshold when unsuccessfully obtaining information of non-residents. Consequently, the Court refused to grant a compliance order sought by the Minister. The decision is a study of the Income Tax Act compliance order process and a reminder of the limits of the CRA’s audit powers where taxpayers are unable to obtain the documents requested from others outside of Canada.
Learn more3295940 Canada Inc.: FCA overturns TCC GAAR ruling
Danielle Karlin | May 15, 2024
In 3295940 (2024 FCA 42; rev’g 2022 TCC 68) (“3295”), the FCA provides welcome guidance on the court’s application of the General Anti-Avoidance Rule (the “GAAR”) in section 245 of the Income Tax Act (Canada) (the “Act”). 3295 is one of the few GAAR cases that has been decided in favour of the taxpayer after a long string of decisions following the Supreme Court of Canada’s decision in Deans Knight (2023 SCC 16).
Learn moreExpropriations and the Proposed Increased Capital Gains Inclusion Rate
Special rules of disposition apply for involuntary dispositions such as expropriations. These rules can lead to a deferral of the recognition of capital gains pending a final resolution of the compensation amount. The expropriated party may wish to consider the value of the potential deferral versus crystallizing capital gains in advance of the proposed increase of the capital gains inclusion rate from one-half (1/2) to two-thirds (2/3) on June 25.
Learn moreNew Trust Reporting Rules for Taxation Years Ending After December 30, 2023
The new trust reporting rules, enacted in December 2022, are now in effect, for taxation years ending after December 30, 2023. The new rules will require a greater number of trusts to file both a T3 Trust Income Tax and Information Return and a new Schedule 15. Trustees of a wide variety of trusts, including bare trusts and non-resident trusts, now have the additional onus of determining which trusts (that were previously exempt from filing a T3 Return) are captured by the new rules.
Learn moreGlencore: Break Fee Received was “Inducement” Income under Paragraph 12(1)(x)
In Glencore Canada Corporation v. The Queen (2024 FCA 3), the Federal Court of Appeal (“FCA”) dismissed the taxpayer’s appeal on whether fees related to a failed bid were received on income or capital account. The FCA held that the fees were included in income as an inducement payment pursuant to paragraph 12(1)(x).
Learn moreFirst TCC Loss-Trading Case Applying Deans Knight
Sameer Nurmohamed and Ravish Gupta | April 03, 2024
In Madison Pacific Properties Inc. v The King, the Tax Court of Canada found that the GAAR applied to deny the appellant’s deduction of net capital losses, citing the Supreme Court of Canada’s decision in Deans Knight for the first time in a loss-trading case. Two companies had acted in concert to fundamentally transform the appellant and use non-voting shares to access its losses without acquiring de jure control of the appellant contrary to the object, spirit, and purpose of subsection 111(4).
Learn moreJonathan Buckle and Marco Iampieri | April 02, 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.
Learn moreGaudreau c. Le Roi: Advice Provided by Accountants Not Sheltered by Privilege
Brian Studniberg | April 02, 2024
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.
Learn moreBautista v. the King, 2022-2718(IT)G
Sarah Spaner | January 09, 2024
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.
Learn moreMarta Porodko and Lisa Watzinger | January 09, 2024
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.
Learn moreClean Technology Investment Tax Credit
Kevin Yip, Katerina Ignatova, and Brian Cheng, Fasken | October 13, 2023
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.
Learn moreFederal Government Enhances GST Rental Rebate
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.
Learn moreThe Expanded Mandatory Disclosure Rules: An In-Depth Discussion
Michael Ding and Ryan Morris, WeirFoulds LLP, Toronto | October 13, 2023
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.
Learn moreSeth Lim, Goodmans LLP | June 15, 2023
Rectification is an equitable remedy that can be used to correct a written agreement that does not reflect the common intention of the parties. The availability of rectification was significantly curtailed by the Supreme Court of Canada’s decision in Canada (Attorney General) v. Fairmont Hotels Inc., 2016 SCC 56. The article discusses cases that followed and their effect.
Learn moreStrictly Speaking: Separate Corporate Entities in Emergis Inc. v Canada
Andrea Daly, associate, EY Law LLP | June 15, 2023
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.
Learn moreUnderstanding the Section 85 Rollover
Fayme K. Hodal | June 15, 2023
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.
Learn more3792391 Canada Inc v The King: A cautionary tale to tenants of residential rental apartments
Brittany Rossler | April 21, 2023
A recent decision by the Tax Court of Canada highlights the importance of tenants verifying the residency status of their landlords and complying with any obligations to withhold tax under Part XIII of the Income Tax Act.
Learn moreBeyond Single vs Multiple Supplies in GST/HST Context
Shahrukh Khowaja | April 21, 2023
The tax status of a particular supply usually relies on its categorization within the bracket of supplies, either taxable, zero-rated or exempt, under the Excise Tax Act. In the case of transactions involving various similar elements, the fundamental issue becomes determining whether it is a single supply or a multiple supply. As transactions in the modern world consist of multiple layers, the distinction is crucial and, more often, complicated.
Learn moreBrian M. Studniberg | April 21, 2023
Expert witnesses play an important, and often decisive, role in litigation. Tax disputes are no different, as experts regularly testify on matters such as those involving asset valuations, transfer pricing or scientific research and experimental development. It is a truism that the first obligation of the expert is to the court to which the expert is called to assist and not to the party calling the expert.
Learn moreAn Update on the Mandatory Disclosure Rules
The implementation of changes to the Mandatory Disclosure Rules as proposed in the 2021 federal budget continues to be a multi-year process. The proposed changes include broadening the scope of the existing reportable transaction rules, enacting notifiable transaction rules and enacting uncertain tax treatment rules. Recently, the government renewed its commitment to implementing the proposed rules, but their coming into force has mixed timing.
Learn moreA Brief Overview of the New Toronto Vacant Home Tax
Birute Luksenaite | January 16, 2023
Effective January 1, 2022, the City of Toronto has begun to levy an annual 1% property-value-based tax on vacant residential properties (the Vacant Home Tax or “VHT”). VHT was codified in the new Chapter 778 of Part 2 (General By-Laws) of the Municipal Code, which Part already contained, inter alia, the City’s property tax and land transfer tax provisions.
Learn moreForeign Property Buyer Tax Traps: Taxable Trustees and Resulting Trusts
Milosz Zak, BDO Law LLP | January 05, 2023
Applicable to contractual obligations arising or assumed as of January 1, 2023, pursuant to the Federal Prohibition on the Purchase of Residential Property by Non-Canadians Act, (the “Federal foreign buyer ban”) non-Canadian citizens, non-permanent residents, and others deemed to be “non-Canadian” have been barred from purchasing residential property across Canada for two years.
Learn moreBlockchain and Tax Law: Behind the Curve
Matthew Boyd | October 16, 2022
Blockchain was first theorized as a concept in the early 1990s. However, it took 20 years before blockchain was utilized to create Bitcoin, the first cryptocurrency, in early 2009. While the use of blockchain to create cryptocurrencies took nearly 20 years, its popularity has exploded since the creation of Bitcoin.
Learn more
