Canada Case Law

Foix v. The Queen

Court

Tax Court of Canada

On the facts the Prior Reorganization together with the interrelated asset and share purchase resulted in W4N’s funds or cash equivalents being distributed or otherwise appropriated to or for the benefit of its shareholders in the course of a reorganization; EMC and EMC Canada were instrumentalities in that process; accordingly subsection 84(2) applies and the contested amounts are deemed dividends, so the appeals are dismissed.

Source excerpt

• Subsection 84(2) income tax act
• Section 84.1 income tax act
• Deemed dividends
• Share sale
• Reorganization
• Capital gains exemption

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In the Matter of a Plan of Arrangement of UrtheCast Corp.

Court

Supreme Court of British Columbia

The court approved replacement DIP financing and a stalking-horse SISP for UrtheCast, while restructuring priorities so Hale’s charge retained only specified priority amounts.

• Debtor‑in‑possession financing
• Priority of charges
• Charge subordination
• Stalking‑horse bid
• Sale and investment solicitation procedure
• Monitor's recommendations

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Cameco Corporation v. The Queen

Court

Tax Court of Canada

The Court found no sham — parties intended and created the legal relationships stated in documentary contracts; series and transactions were commercially rational given industry context; subsection 247(2)(b)/(d) inapplicable. On transfer pricing subsection 247(2)(a)/(c) the Court accepted a rigorous CUP-based comparability analysis (Horst) showing intercompany prices fell within arm's-length ranges and therefore reversed the Minister's transfer pricing adjustments. On resource allowance the Court held losses from uranium purchased from the foreign affiliate were not 'related to' the Appellant…

Source excerpt

• Sham doctrine
• Subsection 247(2) transfer pricing
• Arm's length principle
• Comparable uncontrolled price (cup)
• Resource allowance (part xii itr)

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United Flower Growers Co-Operative Association (Re)

Court

Supreme Court of British Columbia

The court approved a revised plan of arrangement restructuring UFG into separate auction and non-auction businesses, finding the BCA procedures, notice, and fairness requirements satisfied.

• Plan of arrangement
• Continuation
• Amalgamation
• Fairness of arrangement
• Voting and disclosure
• Dissent rights

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TLC The Land Conservancy of British Columbia (Re)

Court

Supreme Court of British Columbia

The Supreme Court of British Columbia sanctioned TLC’s CCAA plan, finding statutory compliance, no contrary conduct, and that the plan was fair and reasonable.

• Ccaa s.6(1)
• Plan of arrangement sanction
• Creditor voting and classification
• Conservation covenants and inalienability
• Approval and vesting orders
• Ccaa

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Ahmad v. The Queen

Court

Tax Court of Canada

Although the appellant experienced no net economic gain, Tyco distributed shares of its wholly owned subsidiaries pro rata to shareholders; under subsection 52(2) of the Income Tax Act such distributions are dividends in kind with a determinable value, section 86.1 was not utilized to render the distribution eligible, and therefore the assessed amount is includible in income and the appeal is dismissed.

Source excerpt

• Dividend in kind
• Spin-off
• Subsection 52(2) of the income tax act
• Section 86.1
• Definition of dividend
• Taxable event

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Marshall v. The Queen

Court

Tax Court of Canada

The spin-off shares were a pro rata distribution of property by Tyco (parent) to its shareholders and therefore constituted dividends in kind taxable to the appellant; section 86.1 did not exclude the distribution because the statutory conditions were not met (corporations not US-resident nor resident in a treaty country, not prescribed, and required information not provided), so the value of the spin-off shares is included in the appellant's 2007 income.

Source excerpt

• Dividend in kind
• Foreign spin-off
• Section 86.1 income tax act
• Taxable dividends
• Reverse stock split

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Potash Corporation of Saskatchewan Inc. v. The Queen

Court

Tax Court of Canada

The Court found the consulting fees were incurred to create or acquire an organizational structure (and/or shares in the Luxembourg entity) that enabled tax‑efficient repatriation of downstream income and therefore constituted outlays on account of capital made for the purpose of gaining or producing income from PCS's business; as capital in nature they qualify as eligible capital expenditures under s.14(5) and permit a deduction under s.20(1)(b); accordingly the appeals were allowed and the assessments were referred back to the Minister for reconsideration and reassessment.

Source excerpt

• Deductibility
• Capital vs revenue
• Eligible capital expenditures
• Withholding tax planning
• Purpose test
• Series of transactions

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Angiotech Pharmaceuticals Ltd. (Re)

Court

Supreme Court of British Columbia

The court granted an initial CCAA order for Angiotech Pharmaceuticals Ltd., found British Columbia to be the company’s COMI, and asked that the Monitor be proposed as foreign representative in Chapter 15 proceedings.

• Centre of main interest (comi)
• Monitor appointment
• Chapter 15 recognition
• Jurisdiction
• Initial ccaa order
• Ccaa

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Imperial Tobacco Canada Limited v. The Queen

Court

Tax Court of Canada

The payments were made in practical and commercial context to eliminate outstanding options in connection with a going-private acquisition and thereby reshape Imasco's capital structure; that dominant feature renders the payments payments on account of capital and not deductible as employee compensation under s.18(1)(b), following Kaiser Petroleum (FCA).

Source excerpt

• Deductibility of expenditures
• Capital vs revenue characterization
• Employee stock option plans
• Going-private transactions
• Stock option surrender payments

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