Canada Case Law

Gestion M.-A. Roy Inc. v. Canada

Court

Federal Court of Appeal

The insured appellants received a taxable benefit when R3D paid insurance premiums because the appellants, as policyholders, enjoyed maintained insurance coverage and attendant rights totaling $20,000,000 without paying premiums and R3D was correspondingly impoverished; the Tax Court's factual findings were not patently unreasonable and the Federal Court of Appeal found no palpable and overriding error.

Source excerpt

• Benefit under income tax act
• Subsection 15(1)
• Subsection 246(1)
• Shareholder benefit
• Payment of insurance premiums by third party

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Gestion M.-A. Roy Inc. v. The King

Court

Tax Court of Canada

Because the appellants were the contractual owners of the insurance policies and did not have to pay the annual premiums (R3D paid them), the appellants received a measurable economic benefit equal to those premiums; that benefit is taxable under s.15(1) (and alternatively under s.246(1) for the related‑party facts concerning 445 Canada), so the reassessments are upheld and the appeals dismissed.

Source excerpt

• Taxable benefit
• Shareholder benefit
• Subsection 15(1) ita
• Subsection 246(1) ita
• Life insurance premiums
• Cash surrender value

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Greer v. The King

Court

Tax Court of Canada

On the balance of probabilities the appellant was a shareholder of HGSL in 2005 as shown in the shareholders' register and by his involvement in corporate affairs; HGSL transferred four properties to him for no consideration and thereby conferred a shareholder benefit equal to the fair market value of those properties; the court found the fair market value to be $2,436,900; the appellant's failure to report that benefit was a misrepresentation attributable to neglect or carelessness, authorizing reassessment beyond the normal period under s.152(4); subsection 15(1) applies and subsection 15(2…

Source excerpt

• Shareholder benefit
• Reassessment beyond normal period
• Fair market value valuation
• Shareholder status
• Misrepresentation attributable to neglect or carelessness
• Subsection 15(1)

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Jackman v. The Queen

Court

Tax Court of Canada

The Port McNeill Explorer was acquired, held and used primarily for bona fide business marketing; the appellants' personal use was incidental (approximately 5%) and on the balance of probabilities the $18,000 recorded and paid each year fairly accounted for any personal benefit, therefore the reassessments were not justified and the appeals are allowed.

Source excerpt

• Shareholder benefit
• Valuation of personal benefit
• Business marketing expenses
• Deductibility of business expenses

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Harding v. The Queen

Court

Tax Court of Canada

The Tax Court held that life insurance premium payments by a corporation conferred a shareholder benefit under subsection 15(1), except for the Respondent’s 2013 concession.

• Shareholder benefit
• Subsection 15(1)
• Life insurance premiums
• Beneficiary designation
• Arm's length
• Shareholder-benefit

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Service de consultation dentaire Planident inc. v. The Queen

Court

Tax Court of Canada

On the balance of probabilities the Court found the St-Donat property was purchased and used for personal benefit of the shareholder and her son, not primarily to earn income; contemporaneous documentation and credibility of the appellant's principal witness were insufficient, so claimed deductions were disallowed, reassessments beyond the normal period were justified by wilful omission, and gross negligence penalties under s.163(2) were properly imposed.

Source excerpt

• Shareholder benefit
• Non-deductible capital expenditures
• Gross negligence penalty (s.163(2))
• Reassessment limitation (s.152(4))
• Old age security overpayment

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Xue v. The Queen

Court

Tax Court of Canada

Appellants failed to meet their evidentiary onus to rebut the Minister's assumptions and to explain systemic, consistent cash reductions and deleted POS entries; accordingly most of the reassessments are upheld, but the Court reduced the component of reassessment attributable to deleted POS transactions by 23% as some deletions were likely legitimate, resulting in adjusted GST/HST and shareholder benefit figures while affirming gross negligence penalties subject to reduction consistent with the adjustments.

Source excerpt

• Shareholder benefit
• Unreported income
• Gst/hst remittance
• Gross negligence penalty
• Evidence and adverse inference
• Reassessment

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Laliberté v. Canada

Court

Federal Court of Appeal

The Federal Court of Appeal upheld the Tax Court: the appellant's space trip was overwhelmingly personal; a shareholder benefit was conferred because the corporate transactions insulated other shareholders from economic cost; the Tax Court permissibly apportioned 10% to business and 90% to shareholder benefit; the appellant did not demolish the Minister's assumptions and the burden to prove quantum did not shift to the Crown.

Source excerpt

• Shareholder benefit
• Income tax act ss.15(1) and 246(1)
• Deductibility
• Burden of proof
• Apportionment of business vs personal expense

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R. v. Isaak

Court

Supreme Court of British Columbia

British Columbia Supreme Court appeal upholding tax convictions against Willi Isaak for false statements and tax evasion arising from management fees and a BC Hydro refund.

• Tax evasion
• Making false statements in tax returns
• Mens rea
• Actus reus
• Shareholder benefit
• Circumstantial evidence

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Wise v. The Queen

Court

Tax Court of Canada

The Court held that no taxable shareholder benefit under subsection 15(1) was established for the 2011 and 2012 taxation years because the tenant corporation had a valid lease with the appellant, paid for the leasehold improvements with no agreement for reimbursement, the residual/reversionary value cannot be quantified until the improvements revert to the appellant, and the Minister failed to adduce evidence (such as expert valuation) to prove an immediate benefit; accordingly the reassessments were set aside.

Source excerpt

• Shareholder benefit
• Leasehold improvements
• Capital cost allowance
• Reversionary interest
• Subsection 15(1)

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