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DEML Investments Limited v. Canada is a GAAR decision where the FCA found that a bump transaction involving Canadian resource properties abused paragraph 88(1)(d). The FCA applied the GAAR to deny only the portion of the capital loss that is attributable to the ACB bump, thereby revising the TCC decision in part.

Subsection 247(2.1) establishes that transfer pricing rules take precedence over other tax provisions when determining transactions for Canadian corporations with related non-residents. This subsection outlines three ordering rules, introduced in Budget 2019 and legislated under Bill C-30 – these rules can be pertinent to Canadian technology firms participating in Scientific Research and Experimental Development (“SR&ED”) initiatives, particularly when a related non-resident company is involved. This article addresses potential uncertainties associated with applying these ordering rules when calculating ITCs – and subsequent sale/disposition of a developed asset via SR&ED activities.

Tax disputes follow many stages and phases. Each phase of a tax dispute from CRA audit and appeals to appealing to the Tax Court of Canada includes different practical and qualitative considerations for taxpayers. Where a taxpayer disagrees with positions and processes while at the CRA audit and appeals steps, the Tax Court of Canada offers an important check on the application of tax law. In addition to more robust rules and procedures at the Tax Court of Canada, judicial oversight can help ensure a fairer process for taxpayers when compared to the Taxpayer Bill of Rights. Adding the perspective of Department of Justice lawyers when appealing to the Tax Court of Canada can also facilitate settlement by providing a new risk assessment for the Minister.

In its 2025 Federal Budget, the Department of Finance Canada proposed certain amendments to the Income Tax Act (Canada) that are intended to simplify the qualified investment regime for registered plans. This article provides a short overview and discussion of the proposed changes.

Astle v. The King, 2025 TCC 105 (Informal Procedure), is a recent decision from the Tax Court of Canada taking up a former company director’s liability for unremitted payroll source deductions. The Tax Court dismissed the taxpayer’s appeal, finding that the taxpayer had been validly assessed by the Canada Revenue Agency within two years after the taxpayer had last ceased to be a director of the corporation. The Tax Court also concluded that the taxpayer had not established due diligence to prevent the failure to remit. While the Tax Court’s decision in this case may be understandable on its facts, the Court has continued to adopt statements from prior authorities that, respectfully, extend the reach of tax legislation beyond an appropriate construction of its text, particularly in light of the need to resort to provincial corporate law to determine when a director has resigned. That provincial authority can, and should, determine when a director has validly resigned in accordance with the prevailing body of corporate law.

Free for OBA members, the OBA AI Academy offers self-paced modules, a secure practice space, and LawQi, an AI guide built for lawyers. After completing the lessons, I stress-tested LawQi on dense tax provisions like EIFEL and thin cap. The Academy also blends learning with a dash of fun, thanks to a points system and a leaderboard for bragging rights.

This article examines the recent Federal Court of Appeal decision in Canada v. Vefghi Holding Corporation, 2025 FCA 143 which provides the answer to a longstanding technical question, namely, the point in time governing the determination of “connected status” in respect of dividends received by a corporate beneficiary and payor corporation in a “trust sandwich” structure.

You know it is true love when the CRA finally lets you claim each other. Tracing the evolving relationship between queer Canadians and the Income Tax Act, through key cases and legislative reforms, Alain Azar explores how LGBTQ+ lives have been acknowledged, and at times constrained, by a tax system built around traditional views. While it remains our civic duty to file with pride, we should also reflect on the underlying normative assumptions embedded in the process.

Taxation law is a complicated, nuanced beast. When a criminal investigation is launched by the Canada Revenue Agency (CRA) into a taxpayer for alleged violations of tax law, the law’s complications become more pronounced. In these moments, it can be stressful for taxpayers and their advisors to be aware of certain collateral consequences that can arise from criminal investigations.

In Ayre v. The King, 2025 TCC 41, the Tax Court of Canada dismissed six lead cases, along with ninety-nine bound appeals, challenging the Minister of National Revenue’s denial of charitable donation tax credits. The Court found that the appellants participated in tax shelter gifting arrangements involving cash and pharmaceutical donations without the requisite donative intent. As such, they were deemed not to be entitled to tax credits under section 118.1 of the Income Tax Act. The case is currently under appeal to the Federal Court of Appeal.

Participation of third-party advisors, such as accountants, in client communications may impact the confidentiality of such communications. In two recent decisions, the Tax Court of Canada generally commented that communications between counsel and third-party advisors are protected by solicitor-client privilege when (i) the advisor is acting as agent of the client within the scope of their engagement, and (ii) the communications entail the seeking or giving of legal advice.

The Tax Court of Canada’s decision in Sim v. The King reinforces that, in some circumstances, a party in a tax appeal can obtain information from third parties. In this case, the Minister of National Revenue sought to examine the taxpayers’ father under s. 99 of the Tax Court of Canada Rules and obtain account records from a brokerage under s. 86. The Court granted both requests.

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.

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.

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.

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.

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.

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.

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).

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.

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.

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).

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).

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

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.

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.

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.