SimpsonWigle Law LLP Tax News

Subsection 103(1) of the Income Tax Act (Canada) is an anti-avoidance rule that permits the Minister to reallocate (among other things) income among the partners of a partnership where the “principal reason” for the allocation agreed upon by the partners “may reasonably be considered to be the reduction or postponement of the tax that might otherwise have been or become payable under [the] Act”.

In XCO Investments Ltd. v. The Queen, 2005 TCC 655, the Court ruled against an attempt by taxpayers to use a partnership to access the tax losses of another party. The Minister had applied subsection 103(1) to reallocate the income, which had the effect of nullifying the taxpayers’ planning. The Court upheld the Minister’s application of the subsection and dismissed the taxpayer’s appeal.

When is an independent contractor not an independent contractor for the purposes of the Employment Insurance Act (the “EI Act”)? Apparently when the Employment Insurance Commission of Canada makes a regulation that says she isn’t. (more…)

If a court take too long to hear a taxpayer’s case, is the taxpayer entitled to interest relief under the fairness provisions of the Income Tax Act? In Cole v. Canada (Attorney General), 2005 FC 1445, the CRA said no. The Federal Court took another view of the matter. (more…)

It is often said that, in a tax appeal, the Canada Revenue Agency is the client and the Department of Justice is its lawyer. As the client, the CRA gives instructions to Justice about how to conduct a tax case. Whether a case can be settled, it is thought, depends on the litigation officer from the CRA who is giving instructions to Justice. Indeed, Justice lawyers themselves often talk this way.

Garber v. The Queen, 2005 TCC 635, suggests that the situation is more complex than that. (more…)

Some readers of this newsletter were under the impression that my last article (”OMA Opens Law Firm!”) was intended to applaud the Ontario Medical Association (OMA) for offering to incorporate professional corporations for its members. In fact, our firm has serious concerns about the information presented by the OMA and the extent to which it appears to encourage a do-it-yourself approach to some tricky legal, tax and accounting questions. Paul Milne and I hope to publish an article on this site soon that outlines our concerns.