In a September 8, 2015 Technical Interpretation (2015-0584221E5, El-Kadi, Randa)), CRA reiterated their position that a private school must issue T4A Slips for scholarships it awards, even when they are fully exempt from tax under Subsection 56(3).
For further information see VTN Monthly Tax Update Seminar, Issue No. 411
An April 16, 2015 Tax Court of Canada case (Benaroch vs. H.M.Q., 2012-4385(GST)G) addressed a series of transfers of tax liabilities. The taxpayer’s spouse (Mrs. A), the Director of a Corporation, had been previously assessed $67,424 for the Corporation’s unremitted GST/HST. Mrs. A transferred cash and otherassets to her spouse (Mr. A), resulting in CRA assessing Mr. A for the GST/HST owed by his spouse(Section 325 of the Excise Tax Act (ETA)).
Taxpayer wins
Assessing a Director for unremitted GST/HST requires CRA to first execute a Writ of Seizure and Sale against the corporation, and have this Writ returned unsatisfied (ETA Paragraph 323(2)(a)). CRA was not able to prove this. As a result, the Mrs. A did not owe taxes under the ETA. Therefore, there was no liabilityto transfer to Mr. A.
For further information see VTN Monthly Tax Update Seminar, Issue No. 411
In a July 7, 2015 Technical Interpretation (2014-0552711E5, Bordeleau, Francis), CRA was asked whether a LOI to purchase a corporation could result in deemed control pursuant to Paragraph 251(5)(b), for the purposes of:
CRA first noted that this deeming provision does not deem any person to cease control of the corporation. The provision only widens the notion of control.
CRA then summarized the manner in which they would assess whether a specific LOI would result in the application of Paragraph 251(5)(b), noting that this would first require determining whether the LOI is a legal contract between the parties, which is a question of fact and contract law on which CRA could not comment.
Assuming the LOI is a legal contract, Paragraph 251(5)(b) would apply if it provides an absolute or contingent right, whether immediate or at some time in the future, to:
(a) acquire shares of the corporation;
(b) cause shares held by other shareholders to be redeemed, acquired or cancelled by the corporation;
(c) control the voting rights of shares of the corporation; or,
(d) reduce voting rights held by other shareholders.
Where the ability to exercise a right set out above is contingent on the death, bankruptcy or permanent disability of an individual, that right is not considered under this provision. Otherwise, the holder of the right is deemed to be in the same position to control the corporation as if the rights had been exercised.
For further information see VTN Monthly Tax Update Seminar, Issue No. 411
In a July 30, 2015 Technical Interpretation (2015-0596841E5, Kohnen, Phillip, 613-670-8916), CRA was asked whether voluntary contributions of capital to a Trust by its beneficiaries, in the same proportion as their fixed income and capital interests in the Trust, would cause it to lose its status as a Personal Trust.
CRA noted that the definition of a Personal Trust (Subsection 248(1)) requires that no beneficial interest was acquired for consideration payable to the Trust, or anyone else who has made a contribution to the Trust. CRA indicated that the additional contributions of capital to the Trust would cause it to lose its status as a Personal Trust.
For further information see VTN Monthly Tax Update Seminar, Issue No. 410
In a January 12, 2015 Tax Court of Canada case (HLP Solution Inc. vs. H.M.Q., 2012-671(IT)I), a research and technology advisor (RTA), employed by CRA, was not permitted to testify as an expert witness in the case of a disputed scientific research & experimental development investment tax credit case. The Court noted that the RTA lacked the impartiality to testify. The Court also noted that expert witnesses do not need to be independent but should be impartial.
For further information see VTN Monthly Tax Update Seminar, Issue No. 410