Simpson Wigle LLP Tax News

To avoid being found to carry on a “personal services business” or a “specified investment business” under the Income Tax Act, a corporation must employ “more than five full-time employees”. The CRA, based on several tax court decisions, has stated that this phrase really means “at least six full-time employees”. The Tax Court, in 489599 B.C. Ltd v. The Queen, 2008 TCC 332, has thrown doubt on this position by refusing to follow the cases in question. Instead, the Tax Court held that five full-time employees plus two part-timers could meet the test.

An executor who receives fees for acting as such must include the fees in income, usually as income from an office (employment income). Can this result be avoided if the fees are called a “legacy” in the will that provides for their payment? Not according to Messier v. The Queen, 2008 TCC 349. Read the rest of this entry »

Richard Weber at Taylor Leibow was kind enough to forward to me a CRA technical interpretation (2007-0229311I7) dated June 14, 2007, concerning the payment of dividends. A corporation purported to pay a capital dividend. The necessary election was filed, but the corporation forgot to reflect the dividend in its financial statements, and apparently the dividend was not otherwise paid. The CRA discovered these facts when conducting an audit. Read the rest of this entry »

The following article on resignation as a director of a corporation and directors’ liability under the Income Tax Act (Canada) appeared in the latest edition of the Hamilton Law Association Law Journal. Read the rest of this entry »

What happens to a professional corporation (a “PC”) when the doctor is no longer in the house? Read the rest of this entry »

Over the last few years, lawyers’ magazines and newspapers have been full of talk about “Web 2.0” and its significance for the legal profession. To some degree, I remain a skeptic, despite that I have been blogging (a quintessential 2.0 activity) since 2005. Read the rest of this entry »

Donald Bowman, the former Chief Justice of the Tax Court of Canada, has joined Fraser Milner Casgrain LLP as Counsel.

Tax practitioners will be familiar with the Juliar case, which allowed the parties to a transaction to amend it with retroactive effect in order to avoid adverse income tax consequences. According to the Ontario Court of Appeal decision in the case, it didn’t matter that the only purpose for the amendment was to avoid or postpone income taxes. What mattered was that the parties had a continuing, common intention to effect the transactions in a tax-deferred manner, which intention was thwarted by the form of the transaction.

The Ontario Superior Court came to a different conclusion in Binder v. Saffron Rouge Inc., 2008 CanLII 1662

The Supreme Court of Canada today issued its decision in Redeemer Foundation v. Canada (National Revenue), 2008 SCC 46. Four members of a seven-person panel rejected the charity’s appeal from the decision of the Federal Court of Appeal. Read the rest of this entry »

Most tax practitioners will have heard that a 25-year veteran of the Tax Court was appointed as its new Chief Justice earlier this month. Gerald Rip takes over from Donald Bowman, who turned 75 this month. The Prime Minister also appointed Eugene Rossiter as the new Associate Chief Justice. Justice Rossiter is a relative newcomer to the Court: he was only appointed in 2006. Perhaps he is being groomed for the Chief’s chair. Read the rest of this entry »