Cases
Coast Capital Savings Credit Union v. Canada, 2016 FCA 181
The applicant (“Coast Capital”), which was the trustee of RRSPs and RRIFs, was assessed under s. 116(5) for failure to withhold on its...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 116 - Subsection 116(5) | rejection of apparent attempt to argue that an inflated purchase price should be bifurcated between a FMV cost and a benefit conferral | 294 |
| Tax Topics - Income Tax Act - Section 54 - Adjusted Cost Base | no bifurcation of inflated purchase price between FMV cost and benefit conferral | 142 |
Antle v. Canada, 2010 DTC 5172 [at 7304], 2010 FCA 280
A purported Barbados trust that was used in connection with a tax plan to avoid Canadian capital gains tax on the disposition of shares of a...
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|---|---|---|
| Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(1) | settler did not intend to lose control of "contributed" property | 294 |
2529-1915 Québec Inc. v. Canada, 2009 DTC 5023 [at 5585], 2008 FCA 398
Overview of facts. The two individual taxpayers devised a scheme to: generate artificial capital gains of $110 million in some home-grown...
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|---|---|---|
| Tax Topics - General Concepts - Tax Avoidance | capital dividend elections for distributions of what should have been known to be income-account gains were shams | 266 |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Business | shares premiums received for marketing tax scheme were business income | 213 |
| Tax Topics - Income Tax Act - Section 83 - Subsection 83(2) | capital dividend elections for distributions of what should have been known to be income-account gains were shams | 718 |
| Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Shares | shares acquired for immediate resale as part of capital dividend account generation scheme were on income account | 177 |
| Tax Topics - Income Tax Act - Section 9 - Exempt Receipts/Business | shares premiums received for marketing tax scheme were business income | 223 |
Canada v. Nunn, 2007 DTC 5111, 2006 FCA 403
In finding that the trial Judge has erred in finding that the investment of the taxpayer's RRSP in worthless shares as a result of fraudulent...
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|---|---|---|
| Tax Topics - General Concepts - Tax Avoidance | misrepresentation element of sham | 87 |
| Tax Topics - Income Tax Act - Section 171 - Subsection 171(1) | sham finding not argued | 51 |
Ledoux c. La Reine, 2000 DTC 6465, 2001 FCA 130 (FCA)
The Court affirmed (at p. 6466) the findings of the trial judge that a series of complex transactions comprising 43 stages that were completed...
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|---|---|---|
| Tax Topics - General Concepts - Tax Avoidance | documents did not reflect actual transactions | 70 |
McEwen Bros. Ltd. v. The Queen, 99 DTC 5326 (FCA)
In finding that a purported partnership agreement was not a sham, Robertson J.A. stated (at p. 5330):
"In short, to qualify as a sham, the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - General Concepts - Tax Avoidance | deception of Minister | 44 |
| Tax Topics - Income Tax Act - Section 96 | purported partners did not jointly manage or provide capital | 85 |
Continental Bank Leasing Corp. v. The Queen, 96 DTC 6355 (FCA), rev'd 98 DTC 6501 (SCC)
Before finding that the taxpayer had failed to accomplish a tax-motivated plan because it had failed, in law, to establish a partnership with two...
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|---|---|---|
| Tax Topics - General Concepts - Tax Avoidance | no sham if docs reflect legal reality | 86 |
| Tax Topics - Income Tax Act - Section 97 - Subsection 97(2) | no rollover because partnership not established | 216 |
The Queen v. Parsons, 84 DTC 6447, [1984] C.T.C 354 (FCA)
It was found by the trial judge that management companies, which two professional engineers ("Parsons" and "Vivian") had incorporated and...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - General Concepts - Tax Avoidance | no sham as purported legal rights were created | 113 |
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(a) - Related Companies | 113 | |
| Tax Topics - Income Tax Act - Section 9 - Related Companies | 113 |
The Queen v. Esskay Farms Ltd., 76 DTC 6010, [1976] CTC 24 (FCTD)
The taxpayer, wished to sell land to the City of Calgary in consideration for two annual instalments in order to defer a portion of the gain to...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - General Concepts - Agency | 118 | |
| Tax Topics - General Concepts - Evidence | 75 | |
| Tax Topics - General Concepts - Tax Avoidance | no sham if documents describe intended legal rights | 338 |
| Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(2) | 137 | |
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(n) | 195 | |
| Tax Topics - Income Tax Act - Section 245 - Old | 55 | |
| Tax Topics - Income Tax Act - Section 246 - Subsection 246(1) | 191 | |
| Tax Topics - Statutory Interpretation - Provincial Law | 52 |
Simard-Beaudry Inc. v. M.N.R., 74 DTC 6552, [1974] CTC 715 (FCTD)
Before concluding (at p. 6557) that "the purchase by the Appellant by means of an option does not constitute a sham in the legal sense," and after...
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|---|---|---|
| Tax Topics - General Concepts - Agency | 47 | |
| Tax Topics - General Concepts - Tax Avoidance | motives should not be exaggerated | 90 |
| Tax Topics - Income Tax Act - Section 13 - Subsection 13(21) - Undepreciated Capital Cost - A | 26 | |
| Tax Topics - Income Tax Act - Section 245 - Old | 130 |
Stubart Investments Ltd. v. The Queen, 84 DTC 6305, [1984] CTC 294, [1984] 1 S.C.R. 536
Before finding that a transfer by the taxpayer of its flavouring business to an affiliated company with a history of losses (coupled with the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - General Concepts - Tax Avoidance | 148 | |
| Tax Topics - Income Tax Act - Section 245 - Old | 33 | |
| Tax Topics - Statutory Interpretation - Resolving Ambiguity | 24 |
See Also
R. v. Golini, 2016 TCC 174
A family corporation (“Ontario”) used proceeds of a daylight loan to redeem shares of Holdco, which used those proceeds to purchase a life...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 15 - Subsection 15(1) | a loan to a shareholder with recourse limited to an asset pledged by the corporation was a shareholder benefit | 589 |
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) | interest deduction on limited recourse loan | 305 |
| Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) | use of corporate asset to create PUC was abuse of s. 84(1) | 250 |
| Tax Topics - Income Tax Act - Section 84 - Subsection 84(1) | policy of 84(1) | 219 |
Crooks v. The Queen, 2016 TCC 52 (Informal Procedure)
An agreement for the purchase of a new condo by the appellant was amended to add her friend as a co-purchaser. Hershfield J found that the amended...
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|---|---|---|
| Tax Topics - Excise Tax Act - Section 254 - Subsection 254(2) - Paragraph 254(2)(a) | accommodation co-owner was not supplied her interest directly by the builder | 451 |
| Tax Topics - Excise Tax Act - Section 123 - Subsection 123(1) - Recipient | “ultimate liability” doctrine indicated an accommodation co-purchaser of condo was not a recipient | 301 |
| Tax Topics - Excise Tax Act - Section 262 - Subsection 262(3) | accommodation co-purchaser (for financing purposes) of condo was not a recipient of supply by builder | 231 |
| Tax Topics - General Concepts - Substance | the addition of an accommodation co-purchaser (for financing purposes) of condo did not reflect the parties' true intentions | 173 |
| Tax Topics - Statutory Interpretation - Benefits-Conferring Legislation | interpretation to favour conferral of intended benefits | 207 |
Mariano v. The Queen, 2015 DTC 1209 [at 1331], 2015 TCC 244
The taxpayers were participants in leveraged donation transactions, which were intended to result in a step-up of the adjusted cost base of...
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|---|---|---|
| Tax Topics - General Concepts - Fair Market Value - Other | courseware licences valued at modest initial cost, given relevant wholesale market and depressive effect of huge volumes purchased | 303 |
| Tax Topics - General Concepts - Ownership | no acquisition of unascertained property | 76 |
| Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(1) | void for lack of certainty of objects | 224 |
| Tax Topics - Income Tax Act - 101-110 - Section 107 - Subsection 107(2) | delegation of power of appointment to promoter not authorized | 238 |
| Tax Topics - Income Tax Act - Section 118.1 - Subsection 118.1(1) - Total Charitable Gifts | no gift where no intent for impoverishment and where gifted property not yet identified | 566 |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(35) | attempted use of initial gift to step-up ACB under s. 69(1)(c) | 262 |
Birchcliff Energy Ltd. v. The Queen, 2015 TCC 232
A predecessor ("Birchcliff") of the taxpayer negotiated a plan to merge with a corporation ("Veracel"), which had discontinued its medical...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 111 - Subsection 111(5) - Paragraph 111(5)(a) | grant of proxy did not detract from investors acting individually in own interest | 237 |
| Tax Topics - Income Tax Act - Section 245 - Subsection 245(3) | share subscription was avoidance transaction notwithstanding its "overarching purpose" was financing | 148 |
| Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) | abusive reverse takeover by Lossco through diverted private placement | 261 |
Coast Capital Savings Credit Union v. The Queen, 2015 TCC 195, aff'd 2016 FCA 181
On the basis of allegations accepted in the pleadings, the applicant, which was the trustee of RRSPs and RRIFs, purchased shares (that were...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 116 - Subsection 116(5) | cost of shares was cash amount required to be paid rather than FMV | 165 |
Dimane Enterprises Ltd. v. The Queen, 2015 DTC 1013 [at 64], 2014 TCC 334
The taxpayer's sole director ("Richard"), who ran the taxpayer's business out of his home office, employed his four children, aged 23, 21, 14 and...
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|---|---|---|
| Tax Topics - General Concepts - Payment & Receipt | payments not received where children "recipients" had no control over funds | 64 |
| Tax Topics - Income Tax Act - Section 144 - Subsection 144(1) - Employee Profit Sharing Plan | purported recipients of trust distributions had no control over funds | 242 |
Bessette v. ARC (Quebec Revenue Agency), 2014 QCCQ 4329
The dental practice of the taxpayer paid fees of approximately 70% of its revenues to a services company (which was wholly-owned by the dentist...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(a) - Income-Producing Purpose | professional "services" corporation with no employees | 210 |
McLarty v. The Queen, 2014 DTC 1162 [at 3556], 2014 TCC 30
The taxpayer, as a member of a joint venture, bought an undivided interest in seismic data for $20,000 cash and an $85,000 limited-recourse...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - General Concepts - Agency | participations contrary to agreement were disregarded | 111 |
| Tax Topics - General Concepts - Illegality | participations contrary to agreement were disregarded | 113 |
| Tax Topics - General Concepts - Tax Avoidance | sham cannot apply to just part of transaction | 145 |
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) | revenues 10% of interest | 186 |
| Tax Topics - Income Tax Act - Section 67 | leveraged purchase of seismic data at arm's length was presumptively reasonable | 296 |
Foresbec Inc. v. The Queen, 2002 DTC 1786 (TCC), aff'd 2003 DTC 5455, 2002 FCA 186
A consulting contract did not reflect the legal reality of the parties' rights and obligations (it was never contemplated that consulting services...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - General Concepts - Tax Avoidance | documents did not reflect legal reality | 58 |
| Tax Topics - Income Tax Act - Section 15 - Subsection 15(1) | 97 | |
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(a) - Income-Producing Purpose | 81 |
Administrative Policy
26 February 2015 CBA Roundtable, Q. 6
a) When CRA alleges "sham," what internal procedures are required before assessing on that basis?
b) What criteria does CRA apply in determining...
Articles
Glen Loutzenhiser, "Sham in the Canadian Courts", Sham Transactions (Edwin Simpson and Miranda Stewart, editors), Oxford University Press, 2014.
Sham formulation in Snook
(pp. 244-5)
The classic Snook-inspired Canadian formulation of sham has three main components. First, there must be a...