Tax & Accounting May 16, 2019

Tax news headlines for May 16, 2019

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Federal income tax

Canada Revenue Agency Documents

Income Tax Folio S1-F1-C1, Medical Expense Tax Credit (Update May 16, 2019)

Income Tax Folio S1-F3-C3, Support Payments (Update May 16, 2019)

Income Tax Folio S4-F2-C1, Deductibility of Fines and Penalties (Update May 16, 2019)

Government of Canada


Court Decisions 

Case (Full Text): 2019 TCC 110, Shaibal Theodore Roy v. Her Majesty the Queen

Shaibal Theodore Roy v. Her Majesty the Queen. Tax Court of Canada, May 9, 2019, 2019 TCC 110. Court File No.: 2017-2709(IT)I. Smith J. Costs – Whether successful appellant entitled to increased award of costs or damages – The taxpayer had appealed, under the Informal Procedure, from a determination in which the Canada Revenue Agency had improperly reduced the amount of his unused registered retirement savings plan (RRSP) contributions.  He was successful on that appeal and the Court awarded costs in his favour in the amount of $1,000. The appellant then requested that such costs award be increased and that damages or penalty be assessed against the Crown. The Tax Court of Canada held, however, that while there had been error on the part of the CRA, the appellant was also, by large measure, the author of his own misfortune and that his success in the appeal should not be interpreted as shifting responsibility for his own mistakes on to the CRA. The Court noted as well that an award of costs against the Minister in the amount of $1,000 in the context of an Informal Procedure appeal was “exceptional”.  In addition, the appellant had been self-represented and costs were normally awarded only where an appellant is represented by legal counsel. The Court rejected the appellant’s claim for costs as compensation for his time expended on the appeal, noting that any taxpayer who pursues an appeal without legal representation must similarly spend time to do so, without compensation for that time. There was, in the Court’s view, no basis for an increased costs award. Finally, the Court considered the appellant’s request for damages or penalty to imposed on the Crown, and held that it did not have jurisdiction to award damages or impose penalty. The appellant’s request for an increased costs award and for an award of damages or penalty against the Crown was dismissed.


Court Decisions

Case (Full Text): 2019 FCA 147, CIBC World Markets Inc. v. Her Majesty the Queen

CIBC World Markets Inc. v. Her Majesty the Queen. Federal Court of Appeal, May 15, 2019, 2019 FCA 147. Court File No. A-170-18. Noel CJ, Laskin and Rivoalen JJ.A. Input tax credits (“ITCs”) - Whether corporate taxpayer entitled to ITCs claimed on services rendered by it to chartered bank’s foreign banking operations - The corporate taxpayer was an investment dealer and a wholly owned subsidiary of a Canadian chartered bank, CIBC. The taxpayer provided administrative services from its office in Toronto in support of CIBC’s Canadian and foreign banking operations. It claimed ITCs for GST paid on costs incurred by it in supplying services to CIBC’s foreign branches. The Minister disallowed these ITC’s on the ground that the supplies with respect to which they were claimed were deemed under subsection 150(1) of the Excise Tax Act (the “Act”) to be exempt financial services (thus not qualifying for the ITCs claimed). In affirming the Minister’s assessments, the Tax Court of Canada concluded, in essence, that the joint election made between the taxpayer and CIBC under subsection 150(1) had the effect of deeming all supplies between them to be exempt supplies, including those exported to CIBC’s permanent establishments as constituted by its foreign branches. In allowing the taxpayer’s further appeal, the Federal Court of Appeal concluded, in essence, that: (a) as a matter of statutory construction, CIBC was deemed to be a separate non-resident person with respect to the activities conducted though its foreign permanent establishments; (b) services provided to those establishments, therefore, fell outside the scope of the deeming provisions of subsection 150(1), and were thus zero-rated exported supplies through the combined operation of subsection  132(3) and sections 7 and 23 of Part V of Schedule VI of the Act; and (c) the taxpayer was thus entitled to the ITCs claimed. The Minister was ordered to reassess accordingly.


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