Tax & Accounting May 14, 2019

Tax news headlines for May 14, 2019

Trending this week

  • In 2018-0783741E5, the CRA comments on how the excluded business might apply to a spouse who worked full-time for the business in prior years but is not currently working. 
  • The CRA has announced that it is expanding its liaison officer program to provide assistance to incorporated small businesses. Prior to this, only unincorporated small businesses were eligible. 

Federal income tax

Court Decisions 

Case (Full Text): 2019 FC 646, Minister of National Revenue v. Xue Lin; Minister of National Revenue v. Min Wang; Minister of National Revenue v. Lin Lin 

In the course of an audit, the Canada Revenue Agency determined that the taxpayers had not disclosed their offshore holdings. The taxpayers did not fully comply with the Minister’s letter seeking additional information and documents, and the Minister subsequently applied to the Federal Court for a compliance order under section 231.7 of the Income Tax Act. The Federal Court held that in order to issue a compliance order it must be satisfied that the person against whom such order is sought is one who was required under the Income Tax Act to provide the access, information or document sought by the Minister. In the Court’s view, because it was not clear whether the Minister’s request for information was directed to the respondents individually or their connected entities, which were not specified, the requirements for obtaining a compliance order had not been satisfied by the Minister. The application was therefore dismissed.

Case (Full Text): 2019 TCC 100, Dennis Gendron v. The Minister of National Revenue

For a period of time during 2016 and 2017, the taxpayer worked in the Netherlands for his Canadian employer, under a secondment arrangement. His employment was terminated in September 2017 and he applied for Employment Insurance benefits. His application was denied on the basis that the secondment employment was not insurable employment for Employment Insurance purposes and he appealed from that determination. The Tax Court of Canada held that, with limited exceptions, only employment in Canada qualifies as insurable employment and that the appellant was not, during the relevant period, employed in Canada. Employment outside Canada is insurable employment only where four specific conditions are met. Those conditions require that the person so employed be ordinarily resident in Canada, that the employment is outside Canada by an employer who is resident in Canada, that the employment would be insurable employment if it were in Canada and that the employment was not insurable employment under the laws of the country in which it takes place. The parties were agreed that the first and third conditions were met and consequently the only issues for determination were whether the appellant’s employment was or was not insurable employment in the Netherlands and whether his employment was by an employer who was resident in Canada. The Court first reviewed the circumstances of the appellant’s employment in the Netherlands and the applicable social security laws in that country. The evidence indicated that during the relevant period the appellant was covered by the Dutch social security rules in accordance with Dutch legislation. In the Court’s view, that was consistent with a conclusion that his employment in the Netherlands was insurable employment under Dutch law. In addition, contributions were made to the relevant program because of his employment, also supporting the conclusion that his employment was insurable under Dutch law. The Tax Court determined, therefore, that the appellant’s employment outside Canada was insurable employment under the laws of the Netherlands, the place where the employment took place. Accordingly, the appellant did not meet the requisite conditions for insurable employment under the provisions of the Canadian Employment Insurance Act governing overseas employment, and his appeal was dismissed.

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