Articles 2022

This summer saw the first case in which a court articulated the test for determining whether an interest amount is reasonable for purposes of paragraph 20(1)(c) of the Income Tax Act (Canada) (“ITA”). Jenny Mboutsiadis reviews the decision of the Alberta Court of Queen’s Bench in ENMAX PSA Corp. v. Alberta (2016 ABQB 334).

Over the course of the next 20 years, nearly 7 million Canadians will retire, a considerable portion with the benefit of a pension plan; some with defined benefit plans, others with annuities purchased with the funds they receive from a defined contribution plan. The sustainability of those plans, however, faces an uncertain future, as exemplified by the bankruptcy or insolvency proceedings concerning Indalex, Nortel and most recently, for the second time, U.S. Steel Canada (previously Stelco).

Two recent Supreme Court of Canada decisions, Canada v. Chambre des notaires du Québec, 2016 SCC 20, and Canada v. Thompson, 2016 SCC 21, confirm that a client's right to solicitor-client privilege applies prima facie to shield a lawyer's accounting records (including invoices and any other records disclosing facts about the client relationship) from disclosure to the Canada Revenue Agency.

The Federal Court of Appeal recently overruled a long-standing precedent and held that a dissolved corporation lacks the capacity to initiate a Tax Court of Canada appeal. John Sorensen reviews the decision of the FCA in 1455257 Ontario Inc. v. The Queen (2016 FCA 100).

The decision of the Ontario Assessment Review Board in Canadian Tire Corp. v. Municipal Tax Equity Consultants Inc., [2016] O.A.R.B.D. No. 2 provides the latest insight into conflicts of interest and confidentiality concerns as they arise in the context of assessment appeals.

The foreign affiliate dumping rules (the “FAD Rules”) are found in section 212.3 of the Income Tax Act. Enacted in December 2012, the FAD Rules have had a significant impact on Canada’s system of international taxation. The FAD Rules are primarily meant to deter foreign-controlled multinational groups from transferring (or “dumping”) shares of the group’s foreign subsidiaries to its Canadian subsidiaries in a manner that results in inappropriate erosion of the Canadian tax base.

As the tax practice ultimately becomes increasingly complex, practitioners will undoubtedly look for new ways of applying the Act. The benefits of creativity will certainly be reaped in many cases, but as Coast Capital Savings Credit Union v. Canada (2015 TCC 195) shows, applying the Minister’s arsenal of tools against her will not always be successful.

As the last quarter of 2015 proceeds, it is important for advisors and tax practitioners to be aware of several filing and administrative deadlines that, if not met, could resulted in unwanted administrative time and cost. This article discusses and highlights the requirements of and amendments to the section 156 “nil consideration elections” under the Excise Tax Act, R.S.C., 1985, c. E-15.

The article discusses the recent decision of Guindon v Canada, which is the first decided case that addresses the application of the preparer penalty in subsection 163.2(4) of the ITA.