Tag Archives: tax litigation

English vs French – Linguistic favoritism by Tax Court Judge : decision quashed by the FCA

 Fasken Martineau Tax bulletin

In Industrielle Alliance vs. Mazraani and MNR[1], the Federal Court of Appeal recently quashed a Tax Court of Canada decision on the basis that the trial judge violated the linguistic rights of both witnesses and counsel for Industrielle Alliance. The reasons for judgment can be found here in English and French.

The Tax Court of Canada decision

Before the Tax Court of Canada (TCC), Kassem Mazraani[2] appealed the Minister’s determination that he was not engaged in insurable employment while working for Industrielle Alliance between April and November 2012. Industrielle was an intervenor to the appeal and had taken the position that the Minister’s determination was correct since an independent contractor agreement had been concluded with Mazraani. The appeal was heard under the informal procedure before Justice Archambault and the hearing lasted 6 days. Mazraani filed his appeal in English, the Minister’s reply was in English also and Industrielle’ s intervention was in French.

In a massive 160 page decision, the TCC concluded that Mazraani was engaged in insurable employment.

Continue Reading »

facebooktwittergoogle_pluslinkedinmail

The ONLY Way to Keep Tax Planning Confidential

Solicitor-client privilege is a constitutionally-entrenched right that protects communications between a lawyer and his or her client. The foundation of such privilege is to encourage full and frank disclosure between lawyers and their clients for the purpose of providing legal advice.  A lawyer cannot be compelled to disclose information shared by his or her client and only the client can waive privilege.  In the tax planning context, protecting the confidentiality of taxpayer information is important to ensure that a taxpayer’s tax position is not unfairly prejudiced by legal requirements to provide subjective analysis or information to taxing authorities where such analysis or information was communicated or created for purposes of providing tax advice.  Further, to better ensure taxpayer compliance under a self-reporting tax system, the confidentiality of communications with one’s tax lawyer is protected to encourage full and complete disclosure of the facts necessary to provide tax advice.

Continue Reading »

facebooktwittergoogle_pluslinkedinmail

Imperial Oil Resources Limited: FCA rules that there is no refund interest on amounts subject to remission

industrial-720706
The Federal Court of Appeal’s decision in Imperial Oil Resources Limited  v. Canada (Attorney General)[i] concerns refund interest on amounts relating to remission orders.  The specific issue before the Court was whether, in computing the amount required to be paid by Imperial Oil Resources on account of its tax liability pursuant to the Income Tax Act (Canada) (the “ITA”), the Minister of National Revenue was required to credit the amount of a tax debt remitted to it pursuant to the Financial Administration Act[ii] (the FAA) and pay refund interest on the resulting overpayment.

As a bit of background, the ITA requires a taxpayer to include in its income resource royalties receivable by a province and prohibits the deduction of resource royalties payable to a province.  The Federal government passed the Syncrude Remission Order[iii] (the SRO), which granted to each participant of the Alberta Syncrude Project remission of any tax payable with respect to related royalties.

Continue Reading »

facebooktwittergoogle_pluslinkedinmail

Transfer Pricing Developments

Transfer pricing issues continue to be an important focus for multinational enterprises (“MNEs”) and tax authorities.  This post summarizes some of the significant developments in Canada that have arisen so far in 2016 and what to look forward to in the coming months.  In particular, we highlight a decision of the Federal Court of Appeal, Canada’s implementation of the OECD Base Erosion and Profit Shifting (BEPS) Action Plan and some significant transfer pricing cases that are working their way through the Tax Court of Canada. Continue Reading »

facebooktwittergoogle_pluslinkedinmail

No need to delay rectification applications: Ontario Superior Court

The recent decision of the Ontario Superior Court of Justice in Slate Management Corporation v. Attorney General of Canada[1] indicates that applicants do not have to wait for the Supreme Court of Canada’s (“SCC”) pending judgments in two high profile rectification cases before seeking rectification orders. Continue Reading »

facebooktwittergoogle_pluslinkedinmail

Panama Papers data leak will prompt more tax audits targeting wealthy Canadians

A huge data leak from a Panama-based law firm has exposed billions in secret, offshore transactions involving multiple political leaders around the world and approximately 350 Canadians with offshore tax haven investments.

Previous leaks of offshore activities have led the Canada Revenue Agency (CRA) to engage in multiple tax audits targeting wealthy Canadians, such as clients of the LGT Bank, the Swiss HSBC Bank, and recently clients of one international accounting firm, just to name a few. This time should be no different. CRA was already instructed to get the leaked data in Panama Papers.

Many OECD-participating countries have engaged in a fight against tax evasion, treaty shopping and base erosion and profit-shifting (BEPS). Combined with the upcoming exchanges of financial information between countries starting in 2017 and 2018, Canada’s “new” offshore tax compliance section since 2013 and the offshore tax informant program (OTIP) rewarding whistleblowers, wealthy Canadians and businesses engaged in aggressive tax planning are more likely than ever to be audited.

In addition, the 2016 Federal budget proposed a plan to “improve tax compliance, prevent underground economic activity, tax evasion and aggressive tax planning,” requiring an investment of $444.4 million over five years to be used by the CRA for:

  • hiring additional auditors and specialists
  • developing robust business intelligence infrastructure
  • increasing audit activities
  • improving the quality of investigative work that targets criminal tax evaders

The expected additional revenue from such measures is $2.6 billion.

To most Canadians, these measures may sound perfectly legitimate. But many taxpayers in the province of Québec will hear a familiar tune that evokes unpleasant memories.

Continue Reading »

facebooktwittergoogle_pluslinkedinmail