The General Anti-Avoidance Rule (GAAR) in subsection 245 of the Income Tax Act has been amended to add a preamble to the rule, to change the avoidance transaction standard, to add an economic substance test as part of the GAAR analysis and to add a significant penalty which will apply where, subject to a limited exclusion, GAAR is assessed and the CRA has not been notified of the transaction or series of transactions. This paper reviews the implications of the amendments to the GAAR on tax planning and transactions (such as estate freezing) relevant to owner-managers, their families, corporations and family trusts. Taking a practical approach, this review considers the Department of Finance Technical Notes and the CRA technical interpretations and commentary regarding specific transactions to which the GAAR does or does not apply.

This article examines the recent decision in Active Asset Management Inc. v. The King (2024 TCC 87), in which the Tax Court examined whether certain deemed dividends under subsection 84(1) of the ITA and certain declared dividends (in respect of which promissory notes were issued but remained outstanding) constituted transfers of property that gave rise to liability under section 160 of the ITA. The case is noteworthy both for the narrow technical question it addresses and for certain concerns regarding the broader question of when the issuance of a demand promissory note constitutes payment for tax purposes.

This recent article examined two recent CRA technical interpretations addressing the effect of the revised general anti-avoidance rule (GAAR) on tax planning: (1) CRA document no. 2024-1008251I7, February 28, 2024, titled “IC 88-2 and New GAAR” (“the planning TI”); and (2) CRA document no. 2023-0987941I7, February 29, 2024, titled “Amendments to GAAR and Advance Income Tax Rulings” (“the pipeline TI”). The article provided some general comments on the implications of this CRA commentary for tax planning and included practical commentary on how taxpayers and their advisors should address the uncertainty associated with the amended GAAR.

This article discusses the recent case of Stackhouse v. The King (2023 TCC 156), with a focus on Owen J’s comments on the “source of income” concept in view of the FCA’s decisions in Brown v. Canada (2022 FCA 200) and Canada v. Paletta (2022 FCA 86).

This article supplements our article in Tax for the Owner Manager’s October 2023 issue, regarding the reporting regime commonly known as the mandatory disclosure rules (MDRs). The MDRs encompass two distinct regimes: the reportable transaction rules (in section 237.3 of the ITA) and the notifiable transaction rules (in section 237.4). Our previous article set out a high-level summary of how the MDRs worked, and it highlighted commentary provided in the CRA’s guidance (“the guidance”), which was released online and recently updated. This article comments on several critical changes to the guidance and highlights certain legal issues raised by the interaction between the MDRs and the guidance.

– Presented by Manjit Singh, Aird Berlis and Adam Friedlan, Friedlan Law

This article discusses the revised reporting regime for avoidance transactions, which is in section 237.3 of the ITA, and the new reporting regime for notifiable transactions, which is in section 237.4—both of which took effect on June 22, 2023, when the Budget Implementation Act, 2023, No. 1 received royal assent (Bill C-47). Shortly thereafter, the CRA released guidance on these new rules. This article highlights certain issues raised by these mandatory disclosure rules and identifies some of the critical administrative guidance set out in the guidelines. This article also highlights the considerable uncertainty inherent in this new legislative regime and in particular the challenges it poses to tax advisers.

This article examines certain comments made by the Department of Finance relating to the reporting regime for avoidance transactions in section 237.3 of the Income Tax Act (Canada)) in Bill C-47 (Budget Implementation Act, 2023, No. 1; royal assent June 22, 2023) and its accompanying explanatory notes. In particular this article examines the interaction between adviser fees and the new reportable transaction regimes and highlights the new challenges presented by the uncertain application of this revised reporting regime.

This article examines the recent decision in Brown v. Canada (2022 FCA 200) which dealt with whether there was a source of income relating to management services that had been provided by a taxpayer. At first blush, this decision does not appear very significant except as a restatement of the source-of-income test articulated in Stewart v. Canada (2002 SCC 46). But this first impression is somewhat misleading. Carefully reviewed, the Brown decision appears to confirm a significant change in the way the source-of-income test in Stewart is to be applied.

This article examines the recent August 9, 2022 legislative proposals (now found in sections 38 and 39 of Bill C-32, which received royal assent on December 15, 2022) which contains consequential amendments to section 160 of the ITA, including a new penalty provision (“the planning penalty”) in subsection 160.01(2) in respect of section 160 avoidance planning.

This article examines Question 3 of the recent 2022 CALU CRA-Roundtable (May 2022) which provided some much needed clarification of certain ambiguities in the Bill C-208 legislation (which was intended to provide relief to intergenerational business succession planning that was adversely affected by, among other provisions, section 84.1 of the ITA). In addition to covering the CRA’s perspective the article offers commentary on what the future may hold for the this particular legislative scheme.

This article deals with recent case of Cliff v. Canada (2022 FCA 16) which dealt with the question of what constitutes, for the purposes of the Business Corporations Act (Ontario) (OBCA), a “written resignation” that can give rise to a legally effective director’s resignation for the purposes of the ITA and the ETA (including comments on the efficacy of electronic resignations, and certain issues relating to the validity of a “form 1” under the OBCA as a written resignation”.

This article examines the recent decisions in the Preston cases—The Preston Family Trust II v. The Queen (docket no. 2020-641(IT)G), John Preston v. The Queen (docket no. 2020-642(IT)G), and Monika Preston v. The Queen (docket no. 2020-643(IT)G)— which dealt directly with a question of litigation procedure. However our article did not focus on the direct issue being litigated in the Preston cases but, instead, examined the minister’s assessing position with respect to some of the planning undertaken to deal with the “21-year rule”. The planning identified relates to the use of a resident Canadian corporation to indirectly distribute assets from a Canadian resident trust to non-residents that would otherwise be subject to a deemed disposition upon distribution from the trust. This article may be of particular interest because of the recent designation of this type of planning—that is, planning designed to avoid the application of subsection 107(5) pursuant to section 237.4 of the ITA—under the new “notifiable transaction” regime (see draft legislation released on February 4, 2022).

This article examines a recent technical interpretation issued by the CRA which addresses the interaction between the so-called “TOSI” regime with the election under 82(3). This article is useful both for highlighting the complex interaction between the two provisions and for providing general insight into the challenges associated with interpreting interacting but distinct tax regimes within the ITA.

The recent case of Bresse Syndics Inc. v. Canada(2021 FCA115) dealt with the issue of whether CO 2 Solutions Technologies Inc. was a CCPC in its 2009 taxation year. The case was decided prior to the 2017 amendment of the Act, which added subsection 256(5.11). This provision expanded the circumstances that can be considered in determining whether de facto control exists.  Although this decision sheds little light on how the recently amended de facto control test in subsection 256(5.11) of the ITA will apply in future, this decision does act as welcome reminder of the complexities of applying the  de jure  control test as well as determining de facto control.

This article examines the recent case of  DiCaita v. The Queen, 2021 TCC 5, an informal procedure case (and thus of no precedential value but nonetheless a helpful reminder of the law) which illustrates the law regarding two fundamental issues that arise under the Act—namely, whether a taxpayer has a source
of income and whether an expense is on income or capital account.

This article examines the recent case of  Yorkwest Plumbing Supply Inc. v. The Queen, 2020 TCC 122, which addressed the narrow technical question of whether the Act permits a taxpayer to write down and/or deduct the value of inventory in a taxation year after the goods are sold but also raised an interesting question being: how should our tax system address situations in which there is a clear tension between an equitable outcome and a technically correct outcome.

This article examines the recent case of  Callaghan v. The Queen, 2020 TCC 28, which was concerned primarily with the question whether the activities of the appellants (Michael Callaghan and his spouse, Barbara Van Rassel) were a source of income—namely, a business.

This article examines the recent case of  Brown v. The Queen, 2020 TCC 45, in which the TCC considered whether transfers made by Mr.  Levoy to his spouse, Ms.  Brown, were given for valid consideration or were made merely in respect of non-enforceable moral obligations, and consequently whether such transfers attracted the application of section 160 .

This article examines the recent case of  Canada v. Colitto, 2020 FCA 70 in which the FCA overturned the decision of the TCC reversing the taxpayer’s victory at Tax Court. The decision deals with the interaction of subsection 160(1) and subsections 227.1(1) and (2). In the note the reasoning of the FCA which employs a purposive analysis to arrive at the meaning of subsections 227.1(1) and (2) is analyzed and consideration is given as to whether a more appropriate interpretive method would be to employ a textual analysis.

This article examines the recent case of Muir v The Queen, 2020 TCC 8 an informal procedure decision which while having no precedential value, does provide some interesting comments regarding section 160 and its application. In particular obiter comments by Justice Boyle stating that it was not the intention of Parliament or the Federal Court of Appeal in Livingston  to have  section 160 apply in circumstances where the Minister wasn’t  in any different position whatsoever as a result of the  impugned transfer, may be of interest.

This article discusses the recent case of Richards v The Queen, 2020 DTC 1005 (TCC), which provides a helpful review of issues relating to the deductibility of professional fees incurred in respect of litigation involving both income and capital related purposes.

This article examines the recent case of Eyeball Networks Inc v The Queen, 2019 TCC 150 which addresses the application of section 160 to a so-called “related-party butterfly transaction”

This article examines the recent case of Colitto v The Queen, 2019 TCC 88. The case clarifies the when an assessment for director’s liability under section 227.1 crystallizes such that it can give rise to a derivative assessment under section 160.

This article reviews the recent decision of Jencal Holdings Ltd. v The Queen, 2019 TCC 16 which concerned the application of subsection 256(2.1), an anti-avoidance provision that deems two or more corporations to be associated if it may reasonably be considered that one of the main reasons for the separate existence of the corporations is to reduce the amount of taxes that would otherwise be payable under the Income Tax Act (Canada).

This article reviews the recent decision of the Divisional Court in Milne Estate (Re), (2019 ONSC 579) which reversed the decision of the Superior Court (2018 ONSC 4174), which had refused to grant probate to wills containing a certain kind of allocation clause used in Ontario as part of planning designed to mitigate exposure to the Estate Administration Tax Act, 1998 (Ontario).

This article discusses the recent case of Ritchie v The Queen (2018 TCC 113), which was concerned the with tax treatment of certain signing bonuses reported on the appellant’s personal tax return and provides a review of the jurisprudence on the taxation of incentive and inducement payments.

This article discusses the recent case of Aeronautic Development Corporation v Canada (2018 FCA 67), in which the FCA dismissed the taxpayer’s appeal of the TCC’s decision (2017 TCC 39) in which it found de facto control under subsection 256(5.1) after the decision in McGillivray Restaurant Ltd. v Canada (2016 FCA 99). This case represented the final decision interpreting the meaning of subsection 256(5.1) prior to the introduction of subsection 256(5.11).

This article highlights a CRA audit project targeting “other employment expenses” claimed on line 229 of the T1 tax returns of employee-shareholders, which although subsequently withdrawn, was based on a dubious interpretation of Adler v The Queen (2009 TCC 613).

This case comment reviews the case of Presidential MSH Corporation v Marr Foster & Co. LLP (2017 ONCA 325) in which the issue in dispute was whether the claim of negligence made by MSH against its accountant and his firm was statute barred. This case is of interest to tax practitioners in Ontario who deal with situations in which ameliorative efforts may mitigate or eliminate a possible claim in negligence.

This article discusses the recent case of Evoy Estate where the issue in dispute was whether the Minister of National Revenue had properly treated the Appellant (being one of three testamentary trusts created in the will of the late George Kenneth Evoy (“George”)) along with two other trusts created pursuant to that will as one individual pursuant to subsection 104(2) of the Income Tax Act (Canada).

This article discusses the recent case of BC Trust v Canada (Attorney General), 2017 BCSC 209, which concerned an application by BC Trust seeking a declaration giving retroactive effect to a trust minute to be dated December 31, 2012 allocating the income of BC Trust to its income beneficiary the Alta Trust in respect of its 2012 taxation year. BC Trust was the first application of the doctrine of rectification in a tax context after the decision of the Supreme Court of Canada in Canada (Attorney General) v Fairmont Hotels, 2016 SCC 56.

This article discusses the recent case of Her Majesty the Queen v Sally Anne Chriss and Her Majesty the Queen v Donna Elizabeth Gariepy, 2016 FCA 236, in which the main issue was whether the Tax Court of Canada had had erred in finding that certain persons had resigned as directors of 1056922 Ontario Ltd. and were therefore not personally liable for the corporation’s unremitted tax withholdings. This case highlights the requirements necessary for a director’s resignation to be legally effective.

This case comment reviews the recent case Kruger Incorporated v Her Majesty the Queen, 2016 FCA 186, which was an appeal of the decision of Rip J. in 2015 TCC 119 stemming from a reassessment of Kruger Incorporated’s (Kruger) 1998 taxation year by the Minister of National Revenue on the basis that the realization principle applied to determine income and loss pursuant to section 9 of the Income Tax Act (Canada) of Krueger’s dealings in foreign exchange options entered into one year and but exercised in the following year. Kruger had employed the mark to market accounting method in computing its income from such options. The FCA found that there was no authority for the Tax Court’s proposition that the Realization Principle applies to the exclusion of the mark to market method unless the Income Tax Act(Canada) provides otherwise. Therefore, the FCA held that mark to market method could not be excluded as an acceptable method for computing income pursuant to section 9. Certain amendments to the tax law were introduced in the 2016 Federal Budget possibly in response to the holding in this case.

This article discusses the recent case of McInnes v The Queen, 2014 TCC 247 (Informal Procedure), where the issue in dispute was whether certain income earned by the Appellant from a cottage was business income or rental property income, and consequently whether losses incurred from earning such income was subject to the restriction contained in the Income Tax Regulations, C.R.C., c. 945, which prevents capital cost allowance on a rental property from creating or increasing a rental loss.

This article discusses the case of Delle Donne v The Queen (2015 TCC 150), in which the issue in dispute was whether $137,500 of interest was properly included in the appellant’s income and was deductible by virtue of subparagraph 20(1)(l)(i) or 20(1)(p)(i).

The 2017 Federal Budget and recent cases have affected the meaning of de facto control under the Income Tax Act (Canada). The concept of de facto control under subsection 256(5.1) of the Income Tax Act (Canada) continues to be important as it relates to various aspects of the Act such as CCPC status. This paper explored the current meaning of de facto control and its implications for tax planning.

This paper, presented at the 2015 Ontario Tax Conference by Phil Friedlan and Carol Fitzsimmons of Hodgson Russ LLP surveys a series of issues a selection to Canadians holding and disposing of U.S. vacation property through the lens of several practical case studies.

This paper, presented at the 2013 Ontario Tax Conference, surveys a series of issues related to tax planning pertaining to principal and cottage residences. These issues included the use of an inter vivos trust to hold a cottage residence and the treatment of excess-land as it relates to claiming the principal residence exemption. The paper also offers a review of the ownership requirement contained in the definition of principal residence pursuant to section 54 of the Income Tax Act (Canada) as it applies to condominium units during the occupancy-period.

This paper reviewed the jurisprudence relating to subsection 256(5.1) and the concept of de facto control as it existed at the time.

This paper provided a review of the then existing non-employer provided tax-advantaged saving plans and exempt life insurance and a detailed review of the RDSP and the TFSA and offered a discussion some of the benefits and the disadvantages of the later plans as compared to the former plans.