Adobe PDF Format - Canadian Tax Foundation

c a n a d i a n
t a x
Editor: Alan Macnaughton, University of Waterloo
([email protected])
fo c u s
Volume 6, Number 2, May 2016
service corporation, which would then enter into an agreement
with the partnership to provide services as an independent
contractor. Because the service corporation was not a member
of the partnership, it was not subject to the SPI rules, and each
such corporation could claim the full SBD (see page 29 of the
budget’s “Tax Measures: Supplementary Information” for a
helpful diagrammatic example). The new rules expand the SPI
definition and thereby restrict the SBD claimed by participants
in these structures.
Although the new rules have a significant impact on many
taxpayers, they are less restrictive than expected; many observers thought that the federal budget would eliminate the SBD
for all single-person corporations, as Quebec has done. Further, the transition to the new rules is fairly gentle: they take
effect for taxation years of partners or their corporations (referred to as “designated members”) commencing on or after
budget day, March 22, 2016. Because these partnerships commonly use calendar year-ends, this provision will usually defer
the application of the new rules into 2017.
Although no one can be certain until the amending legislation is introduced and enacted, it is possible that alternative
structures such as joint ventures or cost-sharing arrangements
may also allow access to the SBD as before; only partnerships
and corporations were included in the budget changes. Also,
some professionals might be able to retain full access to the
SBD by restructuring their billing practices. For example, consider a group of medical professionals who have formed a
partnership that bills a hospital for the professionals’ services.
If the professionals restructure so that each of them bills the
hospital directly, the full SBD should be available to each professional’s service corporation as long as the professionals deal
at arm’s length with the hospital.
Even if the new proposals succeed in eliminating SBD multiplication, professionals can still benefit from using service
corporations. Remember that when income is to be distributed
as dividends, the loss of the SBD has almost no effect on after-tax
shareholder income; there is nearly perfect integration in most
Canadian jurisdictions for both SBD-eligible and SBD-ineligible
income. Instead, the impact of the loss of the SBD is felt through
the reduction of tax deferral on income accumulated in the corporation. However, there is still some deferral, because top
corporate rates are lower than top personal rates. A second benefit of service corporations, which is not affected by the budget,
is that they allow income splitting with family members.
If a service corporation is to be retained, there can be
­compliance-cost benefits in simplifying the business structure
by transferring the partnership interest to the corporation—
Budget 2016: Professionals and
SBD Multiplication
The March 22, 2016 federal budget proposed changes to the
calculation of specified partnership income (SPI) to eliminate
the use of structures that allow members of a partnership to
access the full small business deduction (SBD) for each partner, without any sharing of the business limit. These
structures, which were most commonly used by professionals,
had received favourable CRA opinions (2004-0104681R3; and
2015-0565531R3, which was released but has since been removed). In some situations, appropriate responses to the
budget might include revisions in the structure to preserve
the former tax advantage; in other situations, the loss of this
advantage might suggest simplification of the structure to
reduce ongoing compliance costs.
Under the old SPI rules, corporations that were members of
a partnership were required to share the SBD, thereby limiting
their access to lower corporate tax rates. In one planning strategy commonly used to obtain access to the SBD, individuals
who were members of the partnership would incorporate a
IN THIS ISSUE
Budget 2016: Professionals and SBD Multiplication
1
CRA E-Services: For Lawyers Too
2
Interest Deductibility: FCA Sidesteps Novel TCC
Reasoning in TDL
3
Country-by-Country Reporting: Are You Ready?
3
La déclaration pays par pays : Êtes-vous prêts?
4
Foreign Rectification Orders
5
Apportioning the Tax Burden on Death Among the
Beneficiaries6
Difficulties with the Quebec Non-Resident Trust Rules
6
Les problèmes associés aux règles québécoises sur les
fiducies non résidentes
7
Investment Income Earned Personally or Through a
Corporation8
Stock Options in Merger and Acquisition Transactions
9
Section 119: Flawed Relief from Departure Tax
9
The Missing Provincial Tax Credit for Foreign
Business-Income Tax
10
Supreme Court Docket Update
10
Dossiers portés en appel devant la Cour suprême —
Mise à jour
11
1
©2016, Canadian Tax Foundation
Pages 1 – 13
that is, the corporation rather than the individual becomes the
partner. This outcome can be achieved on a tax-deferred transfer under subsection 85(1). Note, however, that other effects
of this transfer should be considered (for example, a partner
may have accumulated limited partnership losses that could
be lost on the transfer).
individuals’ specific RepIDs rather than the law firm’s
business number.) If the client does not use My Business
Account, the law firm can instead submit a request for
online authorization and then follow the directions; the
CRA generally processes such requests in two days, which
is much faster than the response obtained when form
RC59 is mailed or faxed to the CRA. The authorization
can be at three different levels, but the relevant choice is
level 2—to access taxpayer information and act on the
taxpayer’s behalf, but without the ability to name an additional representative for the taxpayer. Perhaps one might
use level 1 (viewing of information only) for a non-tax
lawyer.
Nick Korhonen
MNP LLP, Ottawa
[email protected]
CRA E-Services: For Lawyers Too
Although accounting firms routinely access client data online
in order to prepare tax returns and deal with CRA correspondence, many law firms either phone the CRA or go through the
accounting firm to get this information. Law firms can benefit
from setting up their own online connection so that they can
have instant access to client information. Such information is
available for individuals, corporations, charities, and partnerships, but not for estates and trusts.
The CRA website sets out the process of registering for access. The most common method of obtaining access to a
corporate client’s information is as follows.
Some individuals associated with law firms have expressed
concern that online access to client information is linked to
the authorized representative personally rather than to the law
firm generally. However, it seems that the CRA sees this practice as an essential security feature: if any inappropriate
conduct occurs, it can be traced to a specific individual, not
just to the law firm generally.
After the steps above are completed, the law firm can access
a vast amount of GST, payroll, and income tax information
about the client. For corporate income tax, one can
• Each individual associated with the law firm who will
need access to client information goes to the CRA’s Represent a Client page and registers to obtain a CRA user ID
and password. This process requires that the individual
enter his or her postal code and access code (shown at
the top right of his or her personal notice of assessment).
Once the individual receives the security code from the
CRA (which is sent by postal mail), he or she can then sign
in to the Represent a Client page and obtain a RepID.
• A principal of the law firm (business owner, partner, or
director) logs on through the Represent a Client page,
selects “business,” and enters the law firm’s business
number and some personal information. The law firm is
now registered as a potential representative of taxpayers
(although not yet for any specific taxpayer). The principal
then enters the RepID for each individual who needs access to client information. There is one list of RepIDs for
the entire law firm; the list is not specific to particular
clients (though this access structure could be set up
through the use of GroupIDs).
• The law firm provides its business number to the client.
The client (through its business owner, partner, or director) connects to the CRA through its My Business Account.
The client then authorizes the law firm to act on its behalf
by entering the firm’s business number in the correct
place; processing of this request is instantaneous. (If
clients want to restrict access to their data to certain individuals whom they choose, they can register just the
Volume 6, Number 2
• register a formal dispute;
• submit documents (for example, notice of objection, voluntary disclosure programs and taxpayer relief, office
audit, and supplementary examination);
• view return status (by year-end, status of return, and
status date);
• view return balances (RDTOH, GRIP, non-capital losses,
and capital gains and losses);
• view account balance and activity by year-end (interim
balances, balance owing, and amounts in dispute);
• view notices of assessment and reassessment (but not
proposals);
• transfer payments between accounts, request a refund,
request an interest review, initiate a payment search, and
submit an inquiry;
• use an instalment payment calculator; and
• manage the client’s mailing address.
Access to tax information for an individual is similar, except
that the client authorizes the law firm’s access through My
Account or form T1013. Tax slips going back to 2006 (depending
on the type of slip) are said to be generally available, including
T4, T4A, T4A(P), T4A(OAS), T4E, T4RSP, T4RIF, T5007, T3, T5,
T5008, and (sometimes) RRSP contribution receipts.
Jamie Herman
Hennick Herman LLP
Richmond Hill, ON
[email protected]
2
May 2016
purpose of determining the income-earning purpose, nor did
it examine the trial judge’s suggestion that potential share appreciation (that is, capital gains) satisfies the income-earning
test (such an interpretation could facilitate the deductibility of
interest when non-dividend-paying shares are acquired). Even
though certain aspects of the TCC’s decision were not addressed, many taxpayers are surely relieved by the fact that the
ambiguity of the decision has been resolved swiftly.
Interest Deductibility: FCA Sidesteps
Novel TCC Reasoning in TDL
In overturning the TCC’s decision in TDL (2015 TCC 60), the
FCA (2016 FCA 67) bypassed much of the TCC’s controversial
reasoning, leaving it in a state of suspended animation—neither
alive nor dead. In TDL, the taxpayer was denied the deduction
of interest on borrowed funds used to purchase common
shares of its already wholly owned subsidiary. The TCC judge
took the unprecedented step of examining the use of the funds
received by the subsidiary to determine whether the interest
was deductible to TDL. (For a summary of the TCC decision and
a review of its wider implications, see “Interest Deductibility
Denied on Intra-Group Loan for Novel Reasons,” Canadian Tax
Focus, May 2015.)
The FCA focused on subparagraph 20(1)(c)(i), which states
that for interest to be deductible, borrowed money must be
used for the purpose of earning income. On the basis of this
subparagraph, the FCA concluded that interest incurred by
TDL was deductible.
In reaching its conclusion, the FCA reinforced the principles set out in the SCC’s decision in Ludco Enterprises Ltd. v.
Canada (2001 SCC 62), which stipulate that the purpose of
using borrowed monies is to be assessed at the time that the
monies are used. The FCA pointed out a paradox in the TCC’s
decision—namely, that the TCC found no income-earning
purpose to exist for the first seven months of the loan, yet it
found one to be present thereafter. In essence, the FCA appears to suggest that a taxpayer either has an income-earning
purpose at the relevant time or does not have one at all.
The FCA found two legal errors on the part of the TCC.
First, the TCC erred when it incorporated into subparagraph
20(1)(c)(i) a requirement that the appellant have a reasonable
expectation of receiving income on account of the newly acquired shares within the first seven months of ownership. The
second error stemmed from the TCC’s concern with tax avoidance: the TCC had concluded that for the seven-month period
in question the only purpose of the borrowed funds was to
facilitate an interest-free loan while creating an interest deduction. The FCA, quoting from Shell (1999 CanLII 647 (SCC)), said
the following:
Joelle Kabouchi and Alex Klyguine
Borden Ladner Gervais LLP, Toronto
[email protected]
[email protected]
Country-by-Country Reporting:
Are You Ready?
The country-by-country (CbC) reporting requirement for
multinational enterprises (MNEs) is progressing on several
fronts—in the 2016 federal budget in Canada, in a draft regulation in the United States, and in an electronic format for
data submission prepared by the OECD. The plan is that each
MNE will submit a CbC report to the tax authority in the jurisdiction in which it is headquartered, and countries will then
exchange this information with each other under the authority
of the applicable tax treaties. Because the planned use of this
data appears to be to assist governments in audits, MNEs will
have to review their transfer-pricing policies to ensure that
they can withstand the expected scrutiny by the tax authority.
They may also have to withstand scrutiny by the public: on
April 12, 2016, the European Commission proposed that MNEs
operating in the European Union be required to make public
less detailed versions of their CbC reports.
The 2016 federal budget commits the government to introducing a CbC requirement, with a promise to release draft
legislation over the next few months. These CbC reporting
rules will apply to groups with global sales of €750 million
(currently, approximately Cdn$1.1 billion) for taxation years
starting on or after January 1, 2016; reports will be due within
12 months of the taxation year-end.
The IRS released a draft regulation (REG-109822-15) on
December 23, 2015; March 22, 2016 was the due date for comments, and the IRS appears to be bent on going ahead. However,
there has been pushback from Congress; therefore, because
legislation (and thus the agreement of Congress) could be
required, there is some uncertainty about the adoption of the
proposed rules in the United States. If implementation is later
in the United States than it is in other countries, in the interim
US-headquartered MNEs might submit CbC reports to Canada
as a surrogate jurisdiction. Canada would then distribute the
reports to other countries.
Other countries continue to move forward. On January 27,
2016, 31 countries, including many members of the European
“[The court’s] overriding concern with tax avoidance not only
coloured its general approach to [the] case, but may also have
led it to misread the clear and unambiguous terms of
s. 20(1)(c)(i) itself.” In my view, the same error led the Tax
Court to its conclusion with respect to the purpose for which
the borrowed monies were used.
Although some observers had hoped that the appeal would
shed light on some of the more novel aspects of the TCC’s
decision, the FCA limited its discussion of the trial judgment
and took a pragmatic approach. The FCA did not address the
TCC’s inquiry into the plans of the investee corporation for the
Volume 6, Number 2
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May 2016
Union (but not Canada or the United States), signed the Multi­
lateral Competent Authority Agreement for the automatic
exchange of CbC reports.
On March 22, 2016, the OECD released its standardized
electronic format for the exchange of CbC reports between
jurisdictions (referred to herein as “the CbC XML schema”) and
the related user guide, which explains the information that
must be included in each data element and shows how to
make corrections. The CbC XML schema was primarily designed for use by tax authorities, and it will be interesting to
see whether domestic legislation will require taxpayers to rely
on the CbC XML schema for transmitting CbC reports to their
tax authorities.
Canadian-owned MNE groups should upgrade or implement information technology systems so that they will be able
to retrieve and produce the required data. Canadian subsidiaries of an MNE group, to the extent that they are covered by
CbC reporting rules, should be equipped to do the same, because the CbC report will have to include data for every
jurisdiction in which the MNE group operates.
CbC reporting is encouraging MNEs to standardize their
internal pricing and policies across all jurisdictions. Given
that most countries will have access to the CbC reports, tax
authorities will likely question MNEs if entities within the
group with apparently similar functional profiles report significantly different transfer prices or profitability margins.
MNEs will be asked to explain how differences in functions,
risks, and assets affect transfer prices and resulting margins
within the group.
Conversely, as a result of this increased but partial visibility
of financial results, MNEs will probably be more reluctant to
resolve cases on audit if it requires significant concessions,
even when special circumstances might warrant it (because
such circumstances may not be reflected in CbC reports).
Taxpayers may be more reluctant to enter into advance pricing
arrangements for the same reason.
de ces données est de prêter main-forte aux gouvernements
dans le cadre de leurs vérifications, les entreprises
multinationales devront réviser leurs politiques en matière
de prix de transfert afin que ces dernières puissent résister
aux examens des autorités fiscales. Ces politiques devront
même peut-être devoir résister à un examen du public : le
12 avril 2016, la Commission européenne a proposé que les
entreprises multinationales opérant au sein de l’Union
européenne soient tenues de rendre publique une version
plus générale de leurs rapports pays par pays.
Aux termes du budget fédéral de 2016, le gouvernement du
Canada s’est engagé à établir une obligation de la déclaration
pays par pays, et à rendre public un projet de loi dans les
prochains mois. Ce régime de déclaration pays par pays
s’appliquera aux groupes qui ont des ventes mondiales de
750 millions d’€ (l’équivalent actuel d’environ 1,1 billions $ CA)
pour les années d’imposition débutant après le 31 décembre
2015. Les rapports devront être produits dans les 12 mois
suivant la fin de l’année d’imposition.
L’IRS a rendu public un projet de règlement le 23 décembre
2015 (le projet de règlement 109822-15); la période des
commentaires se terminait le 22 mars 2016, et l’IRS semble
déterminé à aller de l’avant. Toutefois, le Congrès américain
a émis certaines réserves. Ainsi, puisqu’une législation — et
par conséquent l’aval du Congrès — pourrait être requise,
l’adoption de ces règles proposées aux États-Unis n’est pas
chose faite. Dans l’éventualité où certains pays adopteraient
ces règles avant les États-Unis, les entreprises multinationales
dont le siège social est aux États-Unis pourraient devoir
produire dans l’intérim leurs rapports pays par pays au
Canada en tant que pays subrogé. Le Canada distribuerait
alors les rapports aux autres pays.
D’autres pays continuent à aller de l’avant. Le 27 janvier
2016, 31 pays, dont plusieurs sont membres de l’Union
européenne (à l’exclusion du Canada et des États-Unis) ont
signé l’Accord multilatéral entre autorités compétentes pour
l’échange automatique de rapports pays par pays.
Le 22 mars 2016, l’OCDE a rendu public son format
électronique uniforme pour l’échange de rapports pays par
pays entre les pays (ci-après le « schéma XML pays par
pays ») et le guide de l’utilisateur y afférent qui précise
l’information qui doit être comprise dans chaque élément
de données qui doit être rapporté et qui indique comment
effectuer les corrections. Le schéma XML pays par pays a été
principalement conçu pour être utilisé par les autorités
fiscales et il sera intéressant de voir si la législation interne
exigera des contribuables qu’ils se fient à leurs schémas
XML pays par pays afin de transmettre leurs rapports pays
par pays aux autorités fiscales.
Les groupes d’entreprises multinationales de propriété
canadienne devraient apporter des améliorations à leurs
systèmes de technologie de l’information, ou mettre en
place de tels systèmes, afin de pouvoir récupérer et produire
Karen Leiter
Barsalou Lawson Rheault, Montreal
[email protected]
La déclaration pays par pays :
Êtes-vous prêts?
L’obligation de la déclaration pays par pays pour les entreprises
multinationales progresse à plusieurs égards : au Canada dans
le budget fédéral de 2016, aux États-Unis dans un projet de
règlement, et dans un format électronique préparé par l’OCDE
pour la transmission de données. L’objectif est que chaque
entreprise multinationale soumette un rapport pays par pays
à l’autorité fiscale du pays où elle a son siège social. Par la
suite, les pays s’échangeront cette information en vertu des
conventions fiscales applicables. Puisque l’utilisation prévue
Volume 6, Number 2
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May 2016
les données requises. Les filiales canadiennes d’un groupe
d’entreprises multinationales, dans la mesure où elles sont
régies par les déclarations pays par pays, devraient être en
mesure de faire de même puisque les rapports pays par
pays devront inclure les données de toutes les juridictions
dans lesquelles opère le groupe d’entreprises multinationales.
La déclaration pays par pays encourage les entreprises
multinationales à normaliser leurs pratiques et politiques
internes en matière d’établissement de prix, et ce, dans tous
les pays. Puisque la plupart des pays auront accès aux
rapports pays par pays, les autorités fiscales interrogeront
probablement les entreprises multinationales si des entités
à l’intérieur du groupe, aux profils fonctionnels par ailleurs
semblables, déclarent des prix de transfert ou des marges de
rentabilité qui varient de façon significative. Les entreprises
multinationales devront expliquer comment les différences
au niveau des fonctions, des risques et des actifs influent
sur les prix de transfert et les marges de rentabilité qui en
découlent au sein du groupe.
Inversement, en raison, même partielle, de cette plus
grande visibilité de leurs résultats financiers, les entreprises
multinationales hésiteront probablement plus à régler des
dossiers sous vérification si elles doivent accepter
d’important compromis, et ce, malgré la présence de
circonstances uniques (car de telles circonstances pourraient
ne pas se refléter dans les rapports pays par pays). Pour les
mêmes raisons, les contribuables risquent d’être moins
enclins à conclure des arrangements préalables en matière
de prix de transfert.
declared that the amounts transferred from the foreign affiliates to the taxpayer were not dividends but rather were transfers
that resulted in indebtedness to the foreign affiliates. The
taxpayer obtained the foreign judgments without having given
notice to the CRA. (Presumably, proceedings were initiated
in foreign courts rather than in a Canadian court because the
foreign affiliates were incorporated outside Canada, and therefore the laws of those foreign jurisdictions applied.)
The taxpayer brought an application under rule 58 of the
Tax Court of Canada Rules (General Procedure) for the TCC
to determine whether or not the CRA was bound by the foreign
judgments. Lamarre ACJ began her analysis by determining
which conflict-of-laws rules applied to determine the enforceability of the foreign judgments. Because Quebec was the only
Canadian province with which the appellant had a nexus, the
law of Quebec applied.
After reviewing the relevant provisions of the Civil Code of
Quebec and the Quebec Code of Civil Procedure, Lamarre ACJ
found that foreign rectification orders are akin to non-money
foreign judgments. Thus, in order to enforce the foreign judgment, the taxpayer must apply to the competent tribunal in
Quebec and have the foreign judgments “homologated” by
that tribunal. In considering such an application, a domestic
court must consider relevant factors so as to ensure that the
foreign judgments did not disturb the structure and integrity
of the Canadian legal system and did not conflict with domestic
law (Pro Swing Inc. v. Elta Golf Inc., 2006 SCC 52). Alternatively,
it remained open to the taxpayer to rely on the foreign judgments in presenting its evidence before the TCC at trial; the
weight given to the foreign judgments was to be determined
by the presiding trial judge.
Further, Lamarre ACJ suggested that in the circumstances,
the taxpayer’s failure to give the CRA notice of the rectification
proceedings heightened the need for a competent tribunal in
Quebec to review the foreign judgments to ensure that they
did not disturb the structure and integrity of the Canadian
legal system and did not conflict with domestic law. She suggested that the minister’s right to participate in a rectification
proceeding as a creditor may begin prior to the sending of a
notice of assessment—possibly as early as the time when a
proposal letter is sent to the taxpayer. This view is in contrast
to that set out in Canada (Attorney-General) v. Brogan Family
Trust (2014 ONSC 6354), in which the court appeared to suggest that the CRA is required to be given notice of a proposed
rectification proceeding only after a notice of assessment has
been issued. Therefore, the question of exactly when the CRA
must be given notice of a rectification proceeding, domestic
or foreign, remains an open question and may depend on the
circumstances.
Karen Leiter
Barsalou Lawson Rheault, Montréal
[email protected]
Foreign Rectification Orders
In Canadian Forest Navigation Co. Ltd. v. The Queen (2016 TCC
43, under appeal), the court found that the minister was not
bound by rectification orders granted to a taxpayer by foreign
courts. The court noted that the taxpayer has two choices: (1) it
may seek an order from the relevant provincial superior court
declaring the foreign judgment enforceable, or (2) it may proceed to the TCC, where the presiding judge will determine the
weight to be given to the foreign judgment. The Canadian
Forest decision also touches on the issue of when the CRA has
a right to participate in a rectification proceeding and suggests
that such a right may arise as early as the time when an assessment is proposed.
The taxpayer was assessed on the basis that the transfers
of funds from its foreign affiliates were dividends within the
meaning of sections 12 and 90 of the Act. After the assessments
were proposed, the taxpayer obtained rectification orders from
courts in Barbados and Cyprus (“the foreign judgments”) that
Volume 6, Number 2
John Dickieson
Legacy Tax + Trust Lawyers, Vancouver
[email protected]
5
May 2016
drafting a will that took into account the tax consequences of
beneficiary designations. The court expressed concern about
whether investment advisers are providing this type of tax
information to their clients.
If beneficiaries of an estate find themselves in a similar
situation and it is agreed that one beneficiary is to pay a portion of the taxes assessed in the estate, it may be prudent to
obtain a court order properly characterizing the payment.
Otherwise, the payment could be considered a contribution,
thereby tainting a graduated rate estate.
Apportioning the Tax Burden on
Death Among the Beneficiaries
The deemed disposition of property on death can create a
mismatch between the person who receives the property and
the person who pays any associated tax. A classic example is
that in which a mistress is the beneficiary of an RRSP, and the
wife, who is the sole beneficiary of the estate, effectively bears
the burden of the associated tax liability. Although there is
generally no solution to such a problem other than a carefully
drafted will, the court in Morrison Estate (Re) (2015 ABQB 769)
took a novel approach: it applied the common-law principle
of unjust enrichment and the remedy of constructive trust.
This judgment is not being appealed.
The deceased had four children, and his estate was to be
divided equally between them, except that the share given to
one son, Robert, was to be reduced by $11,000 that Robert had
received earlier as a loan. The $11,000 left over was to be divided
equally between the deceased’s grandchildren. In addition, the
deceased designated another son (Douglas) as the beneficiary
of a RRIF. The problem was that the estate was required to pay
the tax liability associated with the disposition of the RRIF,
with the result that the estate was unable to fulfill the specific
bequests to the deceased’s grandchildren.
After finding that Douglas was not holding the RRIF in trust
for the estate under the doctrine of presumption of resulting
trust, Graesser J found, on a balance of probabilities, that the
deceased did not intend that Douglas benefit from the estate
paying the tax arising from the RRIF. Accordingly, Graesser J
found that the common-law principle of unjust enrichment
applied: the tax paid by the estate conferred a benefit on
Douglas, who was unjustly enriched by that payment, to the
detriment of the estate. Although the estate was under a legal
obligation to pay the associated tax, it was under no legal obligation to Douglas to pay it for him. Graesser J found that the
deceased was mistaken about, or unaware of, the tax consequences of the RRIF beneficiary designation and that the
deceased would not have wanted any tax related to the RRIF
to be paid by the estate. Graesser J found that a constructive
trust existed in respect of the proceeds of the RRIF equal to the
amount of tax paid by the estate on account of the RRIF, and
Douglas was ordered to reimburse the estate for the tax that it
had paid on his behalf. Although Graesser J recognized that
his approach in this case might be viewed as extraordinary, it
is permitted under Alberta’s Judicature Act, which gives the
courts broad discretion to grant equitable remedies.
Graesser J commented on his inability to question the deceased on his understanding of the tax implications of the
RRIF beneficiary designation and his intentions as to who was
to ultimately bear the associated tax. Guesswork about such
intentions was the only option in the circumstances, but the
deceased could have avoided this uncertainty by carefully
Volume 6, Number 2
Colleen Ma
Parlee McLaws LLP, Calgary
[email protected]
Difficulties with the Quebec
Non-Resident Trust Rules
Part of Bill 69, enacted on December 4, 2015 (referred to herein
as “the Quebec NRT rules”), harmonized the Quebec legislation
in respect of non-resident trusts (NRTs) with the federal NRT
rules. NRTs that are currently subject to the federal rules should
determine whether the Quebec NRT rules apply by carefully
reviewing the nature of the contributions made to the trust
and ascertaining whether any of the beneficiaries reside in
Quebec. Note that transactions occurring outside Quebec
could trigger the application of the Quebec NRT rules, and the
combined provincial and federal tax rate could be as high as
75 percent.
Both the federal and Quebec NRT rules apply retroactively
to taxation years ending after December 31, 2006. Trusts that
are subject to the Quebec NRT rules must file their Quebec
tax returns for years prior to 2016 on or before April 3, 2017.
Under the federal rules, a NRT that is not an exempt foreign
trust is deemed to be resident in Canada if it has either (1) a
resident contributor or (2) a resident beneficiary under the
trust and a connected contributor. A NRT deemed to be resident is liable to tax on its worldwide income unless it elects
to be an electing trust; in that case, the NRT is liable to tax in
Canada only on its resident portion. An electing trust at the
federal level is also an electing trust for Quebec tax purposes.
The Quebec NRT rules are identical to the federal rules and
refer to the same concepts with the exception of the new definition of “tax-liable taxpayer,” which defines the nexus of NRTs
with Quebec. A tax-liable taxpayer is (1) a person (other than
a corporation) that is resident in Quebec or (2) a corporation
that has a permanent establishment (PE) in Quebec.
Generally, a NRT that is deemed to be resident in Canada
under the federal rules because it has a Canadian-resident
contributor will also be deemed resident in Quebec if the resident contributor is a tax-liable taxpayer (QTA section 595(f )).
If Canadian residence under the federal rules occurs because
6
May 2016
the NRT has a resident beneficiary and a connected contributor,
the NRT will be deemed resident in Quebec if both the beneficiary and the connected contributor are tax-liable taxpayers.
In the event that the NRT is deemed resident in Quebec and
is an electing trust, the revenue taxable in Quebec will be limited to the portion of the trust’s income that may reasonably
be considered attributable to property that was contributed to
the trust by (1) a resident contributor to the trust who is a
tax-liable taxpayer in respect of the trust, or (2) a connected
contributor to the trust who is a tax-liable taxpayer in respect
of the trust (if there is a resident beneficiary under the trust
that is a tax-liable taxpayer in respect of the trust). Surprisingly,
there is no more complete mechanism to limit the income
subject to tax to the contributions made by a tax-liable taxpayer.
For example, if a corporation that has a head office outside
Quebec and a PE in Quebec makes a contribution to a NRT, the
NRT will be liable to tax in Quebec on the same revenue that is
subject to tax under the federal rules, even if the contribution
is not attributable to the Quebec PE. Is Quebec exceeding its
direct taxation powers provided under section 92(2) of the
Constitution Act, 1867, which limits the province’s taxing powers to “Direct Taxation within the Province”?
Another anomaly is high rates, which occur because the
48 percent federal surtax on income not earned in a province
(ITA subsection 120(1)) applies to a NRT’s income in addition
to the Quebec tax. For 2016, a 48.84 percent rate (33% × 1.48)
applies federally, and the 25.75 percent Quebec tax brings the
total to 74.69 percent. The CRA has suggested that relief from
the 48 percent surtax will be considered on a case-by-case basis
pursuant to the Income Earned in Quebec Tax Remission
Order, 1988. However, the CRA statement is silent on the application process and on whether the taxpayers must first pay
the tax and then seek a refund.
l’application des règles québécoises sur les FNR, et que le
taux d’impôt combiné fédéral-provincial peut atteindre
jusqu’à 75 pour cent.
Tant les règles fédérales que les règles québécoises sur les
FNR s’appliquent rétroactivement aux années d’imposition
se terminant après le 31 décembre 2006. Les fiducies qui
sont assujetties aux règles québécoises sur les FNR doivent
produire leurs déclarations de revenus du Québec pour les
années antérieures à 2016 au plus tard le 3 avril 2017.
Selon les règles fédérales, une FNR qui n’est pas une
fiducie étrangère exempte est réputée être résident au Canada
si elle a 1) un contribuant résident, ou 2) un bénéficiaire
résident de la fiducie et un contribuant rattaché. Une FNR
réputée être résidente est assujettie à l’impôt sur ses revenus
mondiaux, sauf si elle a fait le choix d’être une fiducie
déterminée; dans ce cas, la FNR est assujettie à l’impôt au
Canada uniquement sur sa partie résidente. Une fiducie
déterminée au fédéral est également une fiducie déterminée
aux fins de l’impôt du Québec.
Les règles québécoises sur les FNR sont identiques aux
règles fédérales et comprennent les mêmes concepts, à
l’exception de la nouvelle définition d’un « contribuable
assujetti », lequel terme définit le rattachement de la FNR
avec le Québec. Un contribuable assujetti est 1) une
personne (autre qu’une société) qui réside au Québec, ou
2) une société qui a un établissement stable (ES) au Québec.
De façon générale, une FNR qui est réputée résider au
Canada en application des règles fédérales parce qu’elle a un
contribuant résident canadien sera également réputée résider
au Québec si le contribuant résident est un contribuable
assujetti (paragraphe 595(f ) de la LIQ). Lorsqu’une FNR est
réputée avoir une résidence canadienne en vertu des règles
fédérales puisqu’elle a un bénéficiaire résident et un
contribuant rattaché, alors cette dernière sera réputée
résider au Québec si tant le bénéficiaire que le contribuant
rattaché sont des contribuables assujettis.
Dans la situation où la FNR est réputée résider au
Québec et est une fiducie déterminée, le revenu imposable
au Québec sera limité à la partie du revenu de la fiducie
que l’on peut raisonnablement considérer comme étant
attribuable à des biens qui ont fait l’objet d’un apport à la
fiducie par 1) un contribuant résident de la fiducie qui est
un contribuable assujetti à l’égard de la fiducie, ou 2) un
contribuant rattaché de la fiducie qui est un contribuable
assujetti à l’égard de la fiducie (si un bénéficiaire résident
de la fiducie est un contribuable assujetti à l’égard de la
fiducie). Étonnamment, aucun mécanisme plus complet
limitant le revenu assujetti à l’impôt aux apports faits par un
contribuable assujetti n’existe. Par exemple, si une société qui
a son siège social à l’extérieur du Québec et un ES au Québec
fait un apport à une FNR, la FNR sera assujettie à l’impôt au
Québec sur le même revenu qui est assujetti à l’impôt en
application des règles fédérales, même si l’apport n’est pas
Nathalie Perron
Barsalou Lawson Rheault, Montreal
[email protected]
Les problèmes associés aux règles
québécoises sur les fiducies
non résidentes
Le projet de loi 69 adopté le 4 décembre 2015 comprend des
nouvelles règles qui harmonisent la législation québécoise
sur les fiducies non résidentes (FNR) (les « règles québécoises
sur les FNR ») et les règles fédérales sur les FNR. Une FNR qui
est actuellement assujettie aux règles fédérales doit établir si
les règles québécoises sur les FNR s’appliqueront à elle en
examinant attentivement la nature des apports qui lui sont
faits et en déterminant si au moins un de ses bénéficiaires
réside au Québec. Il est à noter que les transactions
effectuées à l’extérieur du Québec peuvent entrainer
Volume 6, Number 2
7
May 2016
Investment Income Integration Summary, 2016
attribuable à l’ES au Québec. Est-ce que le Québec outrepasse
ses pouvoirs de taxation directe prévus au paragraphe 92(2)
de la Loi constitutionnelle de 1867, lequel limite les
pouvoirs de taxation de la province à la « taxation directe
dans les limites de la province »?
Les taux d’impôt élevés constituent le second élément
problématique. En effet, la surtaxe fédérale de 48 pour cent
sur le revenu non gagné dans une province (paragraphe
120(1) de la LIR) s’applique au revenu d’une FNR en sus de
l’impôt du Québec. Pour 2016, un taux de 48,84 pour cent
(33 % × 1,48) s’applique au fédéral, et un taux de 25,75 pour
cent au Québec, ce qui donne un taux total de 74,69 pour
cent. L’ARC a laissé entendre qu’un allégement à la surtaxe
de 48 pour cent sera considéré au cas par cas en application
du Décret de 1988 sur la remise d’impôt sur le revenu
gagné au Québec. L’ARC ne s’est pas prononcée toutefois sur
le processus de demande ni précisé si les contribuables
devaient d’abord payer l’impôt et ensuite chercher à obtenir
un remboursement.
Investment
income earned
corporately
Difference
percent
British Columbia . . . . . . .
Alberta . . . . . . . . . . . . . . .
Saskatchewan . . . . . . . . .
Manitoba . . . . . . . . . . . . .
Ontario . . . . . . . . . . . . . .
Quebec . . . . . . . . . . . . . .
New Brunswick . . . . . . . .
Nova Scotia . . . . . . . . . . .
Prince Edward Island . . .
Newfoundland and
Labrador . . . . . . . . . . .
Yukon . . . . . . . . . . . . . . . .
Northwest Territories . . .
Nunavut . . . . . . . . . . . . .
Nathalie Perron
Barsalou Lawson Rheault, Montréal
[email protected]
51.89
52.19
52.05
56.55
55.97
55.33
61.40
59.70
57.34
47.70
48.00
48.00
50.40
53.53
53.97
58.75
54.00
51.37
4.19
4.19
4.05
6.15
2.44
1.36
2.65
5.70
5.97
52.73
53.93
48.25
49.09
48.30
48.00
47.05
44.50
4.43
5.93
1.20
4.59
However, if the funds must be extracted as an ineligible dividend, the personal income tax that this extraction will attract
makes the strategy inadvisable: why pay now rather than later,
unless one believes that personal tax rates will increase in the
future (as top rates did in Alberta between 2015 and 2016)?
On the other hand, if a taxpayer can extract the funds at a
capital gain or eligible dividend rate, the immediate tax hit
becomes low enough that extraction could be worthwhile. The
benefit in each case is affected by the expected investment
return and the length of the investment period.
If investments are to continue to be held through a corporation, should sufficient dividends be paid to allow the taxpayer
to recover RDTOH balances (and reinvest them personally), or
is it better to accumulate the maximum funds in the corporation and pay no dividends? Results differ by province (using
the new RDTOH rates, which are effective on January 1, 2016).
In Ontario, for example, if we assume a 5 percent rate of return on investment and sufficient yearly dividends to recover
RDTOH, the payout strategy decreases after-tax proceeds by
0.2 percent after 10 years, 1.0 percent after 20 years, and
2.4 percent after 30 years in comparison with not paying the
dividends. Alberta gives the opposite result: on the basis of
the same assumptions, after-tax proceeds increase by 0.2 percent after 10 years, 0.8 percent after 20 years, and 2.24 percent
after 30 years. (A spreadsheet and explanation are available
from the author on request.) Changes in the assumed rate of
return alter the magnitude but not the direction of the effect.
Therefore, it is beneficial to fully recover RDTOH in Alberta,
but it is detrimental to do so in Ontario.
Investment Income Earned Personally
or Through a Corporation
In every jurisdiction in Canada, it is more advantageous for a
taxpayer to earn investment income personally than to earn it
through a CCPC and distribute it as dividends; however, this
does not necessarily mean that taxpayers should immediately
extract funds that are currently in a corporation. But if the
funds are left in the corporation, should sufficient dividends
be paid to recover RDTOH?
The 2016 changes to the federal income tax rate and the
ineligible dividend gross-up and tax credit have increased the
underintegration of investment income earned through a
CCPC in comparison with investment income earned personally. Additionally, changes to provincial ineligible dividend tax
credits have increased underintegration in some provinces.
After these changes, for a top-bracket individual the difference
between earning investment income in a CCPC and earning
investment income personally is between 1.20 and 6.15 percent, depending on the province or territory. The table
summarizes the integration of investment income.
Although the differences between the rates had been expected to continue to increase until 2019 due to additional
federal changes to the small business tax rate and to the ineligible dividend gross-up and tax credit, the 2016 federal budget
proposes to freeze these rates. As a result, the rates listed in
the table should apply, barring future changes.
Given the tax rate differences noted above, one might consider whether a taxpayer should withdraw funds from a
corporation and hold them personally for investment purposes.
Volume 6, Number 2
Investment
income earned
personally
Sean M. Zubryckyj
Felesky Flynn LLP, Edmonton
[email protected]
8
May 2016
for proceeds equal to its FMV at the time; any accrued gains
are therefore subject to tax under part I on departure. The
taxpayer is then deemed to have reacquired the property at
this FMV.
Dividends paid to a non-resident are subject to withholding
tax under part XIII. Thus, any accrued gain on shares that is
taxed at departure may be taxed again when the inherent gain
is distributed in the form of dividends. This situation gives
rise to the double taxation problem.
The dividend could cause a decline in the value of the
shares, and thus a loss might be realized on sale. If the loss
were to be recognized for tax purposes and allowed to be carried back to the year of departure, part I tax would be eliminated
and the double taxation problem would be solved. (Pursuant
to subsection 128.1(8), the carryback period for non-resident
individuals disposing of taxable Canadian property [TCP] is
not limited to the usual three years.) However, subsection
40(3.7) reduces a non-resident’s loss from the disposition of
property if taxable dividends are received. Thus, double taxation relief is still needed.
Such relief is provided by section 119, which applies to the
withholding tax on dividends subject to the stop-loss rules in
subsection 40(3.7) and provides a credit against tax payable in
the year of departure. In order to claim this credit, the taxpayer
must file an amended departure return to reflect the reduced
tax payable. To understand how this process works, assume
that Ms. A owns shares of Canco with a nominal ACB and an
FMV of $100. Upon emigration, she recognizes the gain of
$100 and pays tax of $25 under part I. The ACB of the shares
is increased to $100. Post-departure, Ms. A receives $50 of
dividends and pays withholding tax of $10. If she subsequently
disposes of the shares for $50, she will recognize a loss of $50,
which will be reduced to nil pursuant to subsection 40(3.7).
In this situation, Ms. A has an economic gain of $50 that is
taxed under both part I and part XIII. By applying section 119,
she will receive a deduction, in computing tax payable, equal
to the lesser of the part I departure tax of $25 and the part XIII
withholding tax of $10. In other words, section 119 allows a
deduction equal to the relevant part XIII tax paid, up to the
amount of part I tax paid at departure.
Section 119 is a federal credit and has no counterpart at the
provincial level. Because no withholding tax is levied by the
province, there is no need for a credit to provide relief.
There are two flaws in the section 119 double taxation
relief:
Stock Options in Merger and
Acquisition Transactions
Consider the sale of shares of a corporation, Targetco, which has
outstanding stock options, to an arm’s-length party, Purchaseco.
Targetco can make a cashout payment to its employees in
compensation for their surrender of their options; if Targetco
makes an election under subsection 110(1.1), those employees
will be entitled to a paragraph 110(1)(d) deduction. But if the
options are left outstanding until after the purchase and Purchaseco then makes a similar payment, can Purchaseco also
make the election? The CRA’s answer is no (2015-0585171E5,
December 7, 2015). This is a trap to avoid: the cashout payment could be made by Targetco either before or after the
acquisition.
The legal reasoning is straightforward. According to subsection 110(1.1), only a qualifying person can make the election.
The definition of “qualifying person” in subsection 7(7) says
only that such a person must be a corporation or a mutual fund
trust. However, paragraph 110(1)(d), which the election is in
respect of, applies to a situation in which a qualifying person
has agreed to sell or issue a security. This use of the term
“qualifying person” also occurs in subsection 7(1), which generates the income inclusion. Targetco is thus the qualifying
person, since it agreed to sell or issue the stock options. Purchaseco did not do so, and therefore it is not entitled to make
the election. The CRA’s opinion appears to be correct in law.
Although Purchaseco cannot make the election, will any
cashout payment that it makes to Targetco’s employees (who
may now be Purchaseco’s employees) be deductible to it?
The payment does not constitute part of the purchase price
of the shares, and it does not seem to provide any enduring
benefit to Purchaseco. Thus, the payment is likely to be on
account of income and deductible for tax purposes. However,
since the employee will not be eligible for a paragraph 110(1)(d)
deduction, he or she may be unwilling to accept a cashout
payment.
Jin Wen
Grant Thornton LLP, Toronto
[email protected]
Section 119: Flawed Relief
from Departure Tax
1) For section 119 to apply, the property deemed disposed
of under subsection 128.1(4) must be TCP. Historically,
the definition of TCP included most private corporation
shares, partnership units, and trust units. However, the
definition was amended in 2010 to include only those
properties that derive 50 percent or more of their value
from real property situated in Canada (and certain
other Canadian property). Although this amendment
Section 119 is designed to provide relief from double taxation
when an individual emigrates from Canada. Absent such a
provision, an individual might be subject to tax under both
part I and part XIII of the Act. Because relief does not exist in
all situations, care should be taken when one is analyzing a
departure situation.
When an individual emigrates from Canada, subsection
128.1(4) deems him or her to have disposed of certain property
Volume 6, Number 2
9
May 2016
was intended to lighten section 116 compliance obligations, the narrower definition restricts the taxpayer’s
ability to claim a section 119 deduction if the property
disposed of is not TCP. Accordingly, double taxation
may still occur.
2) The section 119 deduction becomes available only
when the property is ultimately disposed of, so the
double taxation relief is delayed. One solution is to elect
under subsection 220(4.5) to post security to the CRA
and defer payment of departure tax until disposition.
permanent establishment. In that case, the apportionment
formula in regulation 400 attributes all income to the Canadian
provinces in which the company has a permanent establishment, and thus provincial tax will be payable. Why would there
be foreign tax in this situation? Perhaps the foreign jurisdiction has no tax treaty with Canada, and foreign tax is not
limited to operations for which there is a foreign permanent
establishment. Alternatively, tax could be imposed by a subnational foreign government (which of course is not bound
by a treaty, and has a choice of whether or not to apply the
treaty terms). For instance, a Canadian taxpayer may carry on
a business in certain US states that do not apply the Canada-US
treaty; the taxpayer will not have any US federal tax, but it may
have a sufficient nexus to a US state to be subject to state tax.
Companies in the trucking business are particularly likely to
be in this situation, since the use of a state’s road system could
be considered sufficient nexus for taxation. Thus, the taxpayer
may be subject to provincial tax on the US-source business
income but have no ability to claim a foreign tax credit for the
US state tax against that provincial tax.
Another circumstance arises when there is a permanent
establishment in the foreign jurisdiction, but there is a mismatch between the income apportionment formula in Canada
and that of the other country. For example, if a corporation has
a head office in Ontario and other offices abroad, the allocation
of income to the various jurisdictions could be different in
Canada, which predominantly uses sales and salaries, from
the allocation in the foreign jurisdictions, whose sourcing
principles might include factors such as capital.
Henry Shew
Cadesky Tax, Toronto
[email protected]
The Missing Provincial Tax Credit for
Foreign Business-Income Tax
The ITA provides foreign tax credits for business-income tax
and non-business-income tax. However, legislation in Canada’s
provinces provides the latter but not the former for corporations. (For individuals, only Quebec provides a business-income
tax credit: see QTA section 772.8.) To avoid unpleasant surprises,
practitioners who implement business structures need to be
aware of the situations in which the absence of this second
corporate credit makes a difference.
A taxpayer calculates foreign tax credits according to the
detailed rules in ITA section 126. Very generally, the taxpayer
determines the source country of the income and whether the
income is from a business. The taxpayer then categorizes tax
paid to a foreign jurisdiction as either “business-income tax”
or “non-business-income tax.” Canadian tax principles rather
than those of the relevant foreign jurisdiction are used for this
analysis. The principles are incorporated by reference into
provincial legislation, but a credit is allowed only for nonbusiness-income tax.
The absence of this provincial credit usually does not cause
any problems when foreign operations are conducted through
a subsidiary, because there is no foreign business-income tax
in the Canadian corporation. However, if foreign operations
are conducted through a branch, there is foreign tax in the
Canadian corporation; one hopes that the fiscal burden will be
eliminated by a full foreign tax credit against Canadian tax. If
foreign tax rates are sufficiently low relative to Canadian federal
rates, full credit will be obtained through the federal businessincome-tax credit; otherwise, credit for foreign ­business-income
tax from provincial income tax is needed but is not available.
Clearly, one would not expect a provincial credit if there
were no provincial tax on this income. Therefore, in what circumstances is there provincial tax on foreign business income
but no associated provincial credit?
One such circumstance arises when the operations that are
taxed in the foreign jurisdiction are not carried on through a
Volume 6, Number 2
Kyle B. Lamothe
Thorsteinssons LLP, Toronto
[email protected]
Supreme Court Docket Update
Awaiting Judgment
• Minister of National Revenue v. Duncan Thompson. The
case was heard on December 4, 2014, and a webcast is
available. This case is an appeal from Thompson v. Canada
(National Revenue) (2013 FCA 197) and pertains to the
issue of whether a lawyer subject to enforcement proceedings can claim solicitor-client privilege over his
accounts receivable. A short summary of the case is available here.
• Attorney General of Canada, et al. v. Chambre des notaires du
Québec, et al. The case was heard on November 3, 2015. A
motion for leave to intervene, filed by the Canadian Bar
Association, the Federation of Canadian Law Societies, the
Advocates’ Society, and the Criminal Lawyers Association,
was granted on June 17, 2015. This case is an appeal from
Canada (Procureur général) c. Chambre des notaires du Québec
(2014 QCCA 552). Leave was sought by the Department
10
May 2016
of Justice and was granted with costs on December 18,
2014. This case pertains to whether subsection 231.2(1)
and section 231.7, together with the exception set out in
the definition of “solicitor-client privilege” in subsection
232(1), are unconstitutional vis-à-vis notaries and lawyers
in Quebec on the basis that the provisions are contrary
to the Canadian Charter of Rights and Freedoms. A short
summary of the case is available here.
arising from the transaction that it effected—not from
the transaction that it would have preferred to have effected given the benefit of hindsight regarding unintended
tax consequences.
Leave Dismissed
• Robert Lajoie v. Agence du Revenu du Québec (from 2015
QCCA 1489) Leave dismissed with costs on April 7, 2016.
This case pertains to whether the applicant had a residence elsewhere than Quebec on December 31 of each
of his 2006 and 2007 taxation years. A short summary of
the case is available here.
• Humane Society of Canada for the Protection of Animals
and the Environment v. Minister of National Revenue (from
2015 FCA 178). Leave was dismissed with costs on March
10, 2016. This case pertains mainly to whether personal
benefits conferred on a director of a charitable organization may result in the loss of registration. A short
summary of the case is available here.
• Michele Santarsieri Inc., et al. v. Deputy Minister of Finance
(Manitoba) (from 2015 MBCA 71). Leave dismissed with
costs on March 10, 2016. This case pertains to whether
the appeal from a decision of the Tax Appeals Commission was to proceed on the basis of the record before the
commission or by way of a de novo hearing. A short
summary of the case is available here.
Leave Granted
• Jean Coutu Group (PJC) Inc. v. Attorney General of Canada
(from 2015 QCCA 838). Leave was granted on November
19, 2015. The date for the hearing is May 18, 2016. This
case pertains to a motion for rectification and to what
extent a taxpayer can retroactively revisit documentation
giving effect to a series of transactions when unforeseen
tax consequences have resulted following the SCC’s decision in Quebec (Agence du revenu) v. Services Environnementaux
AES inc. (2013 SCC 65). A short summary of the case is
available here.
• Attorney General of Canada v. Fairmont Hotels Inc., et al.
(from 2015 ONCA 441). Leave was granted on December
10, 2015. The date for the hearing is May 18, 2016. This
case pertains to a motion for rectification granted in favour of the taxpayer based on the test in Attorney General
of Canada v. Juliar (2000 CanLII 16883 (ONCA)) and the
taxpayer’s continued tax intention. The Crown argues
that the Juliar test was misapplied and that to allow rectification solely on the basis of the taxpayer’s tax intention
would be to sanction impermissible retroactive tax planning. A short summary of the case is available here.
Marie-France Dompierre
Deloitte Tax Law LLP, Montreal
[email protected]
Dossiers portés en appel devant la
Cour suprême — Mise à jour
Leave Sought by the Department of Justice
None.
En attente de jugement
Leave Sought by the Taxpayer
• Ministre du Revenu national c. Duncan Thompson (de
2013 CAF 197). L’appel a été entendu le 4 décembre
2014. Une diffusion Web de l’audition est disponible
ici. Cet arrêt se rapporte à la question de savoir si un
avocat qui est visé par des procédures d’exécution peut
invoquer le secret professionnel de l’avocat à l’égard de
ses comptes à recevoir. Un court sommaire de l’arrêt
est disponible ici.
• Procureur général du Canada, et al. c. Chambre des
notaires du Québec, et al. (de 2014 QCCA 552). Cet appel
a été entendu le 3 novembre 2015. Une requête en
autorisation d’intervention produite par l’Association
du Barreau canadien, la Criminal Lawyers’ Association,
la Fédération des ordres professionnels des juristes du
Canada et l’Advocates’ Society a été accueillie. Demande
d’autorisation déposée par le ministère de la Justice
accueillie avec dépens le 18 décembre 2014. Cet arrêt se
• James T. Grenon v. Her Majesty The Queen (from 2016 FCA
4). Leave was sought by the taxpayer on March 11, 2016.
This case pertains to the deductibility of legal fees and
costs incurred in contested proceedings to determine the
amount of child support payments.
• Virginia Forsythe v. Her Majesty The Queen (from 2015 FCA
258). Leave was sought by the taxpayer on January 14,
2016. This case pertains to whether the taxpayer’s employment income is property “situated on a reserve” so
that it is exempt from taxation by operation of section
87(1)(b) of the Indian Act (RSC 1985, c. I-5).
• Mac’s Convenience Store Inc. v. Attorney General of Canada,
et al. (from 2015 QCCA 837). Leave was sought by the
taxpayer on December 18, 2015. This case pertains to a
motion for rectification sought by the taxpayer that was
denied on the basis that a taxpayer is obliged to pay tax
Volume 6, Number 2
11
May 2016
rapporte à la question de savoir si le paragraphe
231.2(1) et l’article 231.7 ainsi que la définition de
« privilège des communications entre avocats et
clients » au paragraphe 232(1) de la LIR sont
inconstitutionnels, en ce qui concerne les avocats et
notaires au Québec, puisqu’ils seraient contraires à la
Charte canadienne des droits et libertés. Un court
sommaire de l’arrêt est disponible ici.
c. I-5) et étaient par conséquent exonérés d’impôt au
titre de la Loi de l’impôt sur le revenu.
• Dépanneurs Mac’s c. Procureur général du Canada, et al.
(de 2015 QCCA 837). Demande d’autorisation déposée
par le contribuable en date le 18 décembre 2015. Ce
dossier porte sur une requête pour jugement
déclaratoire (rectification) déposée par le contribuable
et refusée par les instances inférieures au motif qu’un
contribuable doit payer les impôts qui découlent de
l’opération effectuée — et non pas celle, qu’avec du
recul, il aurait préféré avoir effectuée compte tenu des
conséquences fiscales inattendues de ladite opération.
Demande d’autorisation accueillie
• Groupe Jean Coutu (PJC) inc. c. Procureur général du
Canada, et al. (de 2015 QCCA 838). Demande
d’autorisation accueillie le 19 novembre 2015. La date
d’audition a été fixée au 18 mai 2016. Ce dossier porte
sur une demande de rectification et les balises
appropriées à appliquer suite aux décisions de la Cour
suprême du Canada en la matière dans Québec (Agence
du revenu) c. Services Environnementaux AES inc. (2013
CSC 65). Un court sommaire du dossier est disponible ici.
• Procureur général du Canada c. Hôtels Fairmont Inc., et al.
(de 2015 ONCA 441). Demande d’autorisation accueillie
le 10 decembre 2015. La date d’audition a été fixée au
18 mai 2016. Ce dossier porte sur une demande de
rectification accueillie en faveur du contribuable
compte tenu du test contenu dans la décision Attorney
General of Canada v. Juliar (2000 CanLII 16883 (ONCA))
et de l’intention fiscale continue du contribuable. La
Couronne argumente que le test de Juliar fut mal
appliqué et que se baser uniquement sur l’intention
fiscale du contribuable constitue de la planification fiscale
rétroactive. Un court sommaire du dossier est
disponible ici.
Demande d’autorisation rejetée
• Robert Lajoie c. Agence du Revenu du Québec (de 2015
QCCA 1489). Demande d’autorisation déposée par le
contribuable rejetée avec dépens le 7 avril 2016. Ce
dossier porte sur la question de savoir si le contribuable
avait une résidence ailleurs qu’au Québec pendant ses
années d’imposition 2006 et 2007. Un court sommaire
est disponible ici.
• Humane Society of Canada for the Protection of Animals
and the Environment c. Ministre du Revenu national (de
2015 CAF 178). Demande d’autorisation déposée par la
contribuable rejetée avec dépens le 10 mars 2016. Ce
dossier porte principalement sur la question de savoir
si des avantages personnels conférés à un directeur de
l’organisme peuvent résulter en la révocation de
l’enregistrement de la contribuable à titre d’organisme
de bienfaisance. Un court sommaire est disponible ici.
• Michele Santarsieri Inc., et al. c. Sous-ministre des
Finances (Manitoba) (de 2015 MBCA 71). Demande
d’autorisation déposée par le contribuable rejetée avec
dépens le 10 mars 2016. Ce dossier porte sur la
question de savoir si l’appel d’une décision de la
Commission d’appel des impôts et des taxes devait être
instruit (d’après le dossier) devant la Commission ou
par voie d’audience de novo. Un court sommaire est
disponible ici.
Demande d’autorisation déposée
par le ministère de la Justice
Aucune.
Demande d’autorisation déposée
par le contribuable
Marie-France Dompierre
Droit fiscal Deloitte S.E.N.C.R.L./s.r.l., Montréal
[email protected]
• James T. Grenon c. Sa Majesté la Reine (de 2016 CAF 4)
Demande d’autorisation déposée par le contribuable le
11 mars 2016. Ce dossier porte sur la déductibilité des
frais légaux et judiciaires encourus dans des procédures
afin de déterminer le montant à payer de pension
alimentaire pour enfants.
• Virginia Forsythe c. Sa Majesté la Reine (de 2015 CAF 258)
Demande d’autorisation déposée par la contribuable le
14 janvier 2016. Ce dossier porte sur la question de
savoir si le revenu d’emploi de la contribuable constituait
des biens meubles « situés sur une réserve » au sens
de l’article 87(1)b) de la Loi sur les Indiens (LRC 1985,
Volume 6, Number 2
12
May 2016
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of Canadian Tax Focus, Alan Macnaughton ([email protected]), or to
one of the contributing editors listed below. Content must not have been published
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For each issue, contributing editors from Young Practitioners chapters across
Canada suggest topics and assist authors in developing ideas for publication. For
the February 2016 issue, we thank Timothy Fitzsimmons, editorial adviser, and the
contributing editors shown in the list below. In Montreal, an editorial board works
together in preparing articles. We thank the board chair, Olivier Fournier (olfournier
@deloittetaxlaw.ca), and Raphael Barchichat ([email protected]); Stéphanie
Jean ([email protected]); Jean-Philippe Latreille ([email protected]); Nathalie
Perron ([email protected]); Rachel Robert ([email protected]); Victor
Perrault ([email protected]); and Joel Scheuerman ([email protected]).
Halifax:
• Dawn Haley ([email protected])
• Lori Messenger ([email protected])
Quebec City:
• Alex Boisvert ([email protected])
Ottawa:
• Mark Dumalski ([email protected])
• Leona Liu ([email protected])
Toronto:
• Nicole K. D’Aoust ([email protected])
• Melanie Kneis ([email protected])
Edmonton:
• Tim Kirby ([email protected])
Calgary:
• Marshall Haughey ( [email protected])
• Corinne Grigoriu ([email protected])
Vancouver:
• Sam Liang ([email protected])
• Aliya Rawji ([email protected])
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or to copy, in any form or by any means, any part of this publication for distribution must be
obtained in writing from Michael Gaughan, Permissions Editor, Canadian Tax Foundation,
Suite 1200, 595 Bay Street, Toronto, ON M5G 2N5. E-mail [email protected].
In publishing Canadian Tax Focus, the Canadian Tax Foundation and Alan Macnaughton are
not engaged in rendering any professional service or advice. The comments presented herein
represent the opinions of the individual writers and are not necessarily endorsed by the Canadian Tax Foundation or its members. Readers are urged to consult their professional advisers
before taking any action on the basis of information in this publication.
ISSN 1925-6817 (Online). Published quarterly.
Volume 6, Number 2
13
May 2016