The Canada Revenue Agency (CRA) recently announced that it would not seek leave to appeal the Federal Court of Appeal decision in BP Canada to the Supreme Court of Canada. The Federal Court of Appeal had previously imposed important restrictions on the use of Section 231.1(1) audit powers by the CRA. For some taxpayers, the risk that information gathering by the CRA might result in a criminal evasion investigation or prosecution has now increased.
The Federal Court of Appeal recently considered the authority to conduct the inspection of books and records given by Section 231.1(1) of the Income Tax Act and, on the basis of a contextual interpretation of this section, imposed significant restrictions on the limits of the minister of national revenue's authority.
In an ambitious, complicated, lengthy and controversial decision, a court recently held that advisory common interest privilege has "incorrectly [been] accepted in both the United States and Canada". The judgment, which is an upheaval of law, presents serious issues for lawyers who advise clients on commercial transactions and for clients that instruct and receive advice from lawyers on such transactions.
Almost since tax-free savings accounts (TFSAs) were first introduced in 2009, the Canada Revenue Agency (CRA) has been clamping down on what it views as inappropriate activities undertaken within TFSAs. One issue in particular has raised the ire of the CRA and given rise to numerous assessments – namely, the frequent trading of publicly-traded securities within a TFSA.
The anti-surplus stripping rule in Section 84.1 of the Income Tax Act can apply where an individual taxpayer transfers shares of a corporation to another corporation with which the taxpayer does not deal at arm's length. In a recent case, two taxpayers attempted to use their capital gains exemptions to access corporate surplus by selling their shares to an arm's-length party. Interestingly, only one of the taxpayers succeeded in court.
Canada's Budget 2016 proposes to repeal the existing eligible capital property regime in favour of a new class of depreciable capital property in respect of which capital cost allowance may be claimed. This leaves a relatively narrow window in which to take advantage of deferral opportunities under the existing regime, which will be lost once the new rules come into effect.
Two recent Supreme Court of Canada decisions illustrate that although tax law may be different for some purposes, its objectives do not justify the circumvention or restriction of the law of solicitor-client privilege as this has been consistently developed by the court over the past two decades.