In Coutre v. The Queen, 2009 TCC 456, the taxpayer tried to argue that, if an assessment under subsection 15(1) is made against a shareholder, then the Minister, to prevent double taxation, must reduce the benefit by the amount of any outstanding shareholder loan. (more…)
Consider the position of Lossco and Profitco, each a wholly-owned sub of Parentco, where one has non-capital losses in a year equal to the taxable income of the other in that same year. Between them, they have not earned profits, but the Income Tax Act requires Profitco to pay taxes anyway because the Act does not permit related corporations to file consolidated returns. What to do? (more…)
I’ve seen a number of transactions lately where the owner of a life insurance policy proposes to transfer it to a corporation controlled by the owner. The benefits of corporate-owned insurance are well-known, of course, but such a transfer could also permit the owner to withdraw significant amounts of money from the corporation tax free. (more…)
In January I reported that the Tax Court had held that the penalty provided by subsection 163(2.1) of the Income Tax Act did not apply if the corporation filing the return did not have taxable income (see Goar, Allison & Associates Inc. v. The Queen, 2009 TCC 174).
The Tax Court, in another informal procedure ruling, just contradicted itself on this point. See Exida.Com Limited Liability Company v. The Queen, 2009 TCC 373. Justice Woods felt unable to follow her colleague in Goar because of the historical context for the enactment of 163(2.1).
I have posted here and here on the effect of the dissolution of a corporation and its subsequent revival on the liability of a director for source deductions and the like. The CRA has now weighed in with a technical interpretation on revival under the Ontario Business Corporations Act (the following quote is from the CCH Tax Window at ¶9835):
[T]he CRA stated that the only way that the directors may be assessed for income tax under the [Income Tax] Act is if an application is made to revive the corporation under the OBCA and the terms of the application provide that the corporation be reinstated retroactive to the date of its dissolution and that the directors be considered to have continued to hold office since the time prior to the dissolution.
Despite the many technical pitfalls in the reorganization provisions of the Income Tax Act, cases involving those provisions do not often come before the Tax Court. Husky Oil Limited v. The Queen, 2009 TCC 118, is one such case that deals with whether subsection 87(4) applied to an amalgamation. The facts of the case defy easy summary and comprehension. In the result, the Court held that the rollover in 87(4) didn’t apply because the amalgamation conferred a benefit on one of its parties.
The Tax Court, in Neumann v. The Queen, 2009 TCC 81, has decided that a capital dividend is a transfer of property for the purposes of section 160, just like an ordinary dividend.
The following article appeared in the latest edition of the Hamilton Law Association Law Journal. (more…)
