Honeywell Limited v. The Queen

Honeywell Limited v. The Queen

The motion was allowed in part: the Crown may amend its reply to the extent the proposed amendments are reasonably related to the matters pleaded and do not circumvent the effect of the waivers; however the Crown may not, by amendment, abandon the specific basis of assessment set out in the waivers and rely solely on a fundamentally different head of taxation (FAPI) that is not reasonably related to the waiver; accordingly specific paragraphs were permitted to be added and others refused, and the prior March 17, 2006 timetable order was vacated.

Citation
2006 TCC 325
Parties
Applicant (respondent): Her Majesty The Queen; Respondent (appellant): Honeywell Limited
Court
Tax Court of Canada
Jurisdiction
Canada
Judgment Date
22 June 2006
Procedural Posture
Tax Appeal Under the Income Tax Act / Motion to Amend Pleadings (pre Trial)
Outcome
Motion granted in part and denied in part; specified amendments allowed; specified amendments denied; March 17, 2006 order vacated; parties directed to contact the Court to set a new timetable; costs in the cause.
Legal Topics
General Anti Avoidance Rule (section 245), Foreign Accrual Property Income (section 95), Reassessment and Waivers (subsections 152(4), 152(4.01), 152(9)), Amendment of Pleadings, Tracing and Recharacterization
Source Language
English
Tax Law Administrative Law Civil Procedure General Anti Avoidance Rule (section 245) Foreign Accrual Property Income (section 95) Reassessment and Waivers (subsections 152(4), 152(4.01), 152(9)) Amendment of Pleadings Tracing and Recharacterization

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Parties

Her Majesty The Queen

Applicant (respondent)

Honeywell Limited

Respondent (appellant)

Procedural Posture

Tax Appeal Under the Income Tax Act / Motion to Amend Pleadings (pre Trial)

Legal Issues

  1. 1 Whether the Crown may amend its reply to plead an alternative basis for assessment (FAPI under s.95) after issuing a GAAR assessment under s.245
  2. 2 Whether waivers filed by the taxpayer limit the Minister to the basis of assessment specified in the waiver under s.152(4.01)
  3. 3 Whether the proposed amendments raise a triable issue and whether they prejudice the appellant

Ratio Decidendi

The motion was allowed in part: the Crown may amend its reply to the extent the proposed amendments are reasonably related to the matters pleaded and do not circumvent the effect of the waivers; however the Crown may not, by amendment, abandon the specific basis of assessment set out in the waivers and rely solely on a fundamentally different head of taxation (FAPI) that is not reasonably related to the waiver; accordingly specific paragraphs were permitted to be added and others refused, and the prior March 17, 2006 timetable order was vacated.

Court Disposition

Motion granted in part and denied in part; specified amendments allowed; specified amendments denied; March 17, 2006 order vacated; parties directed to contact the Court to set a new timetable; costs in the cause.

Orders

  • Respondent allowed to amend the Reply as to paragraphs 5, 8, 8A, 13(g), 13(k), 13A, 15, 17, 21E and 22A
  • Amendments sought in paragraphs 18A, 21A, 21B, 21C and 21D refused