Disclaimer - Tax

©2015 Ernst & Young LLP. All rightsreserved.This presentation contains information insummary form, believed to be current as ofthe date of publication, and is intended forgeneral guidance only. It should not beregarded as comprehensive or a substitutefor professional advice. Before taking anyparticular course of action contact EY oranother professional advisor to discuss thesematters in the context of your particularcircumstances. We accept no responsibilityfor any loss or damage occasioned by yourreliance on information contained in thispresentation.

Disclaimer

Tax Knowledge Forum – December 2015

Tax KnowledgeForumDecember 2015

George Tsitouras – Moderator

u George is a partner with EY in Montreal and the Québec Tax Leader.

u George leads the US and global tax compliance and reporting segments of theCanadian tax practice. In that role, he assists clients to improve the effectiveness andefficiency of their US and global tax function, manage tax risk, and enable effectivetax minimization from a US and global perspective.

u George is a Certified Public Accountant (Illinois) and CA/CPA licensed in Québec.

u George advises a diverse group of companies, including those in the retail,technology, distribution, manufacturing, financial and transportation industries.

George Tsitouras

Partner

Ernst & Young LLP, Montreal

Tel.: +1 514 874 4427 Email: [email protected]


AgendaLegislative update Gael Melville

CRA administrative update Philippe Dunlavey

Recent income tax cases Louis Tassé


Legislative UpdateGael Melville


Gael Melville – Legislative update

► Gael is a senior manager with Ernst & Young Electronic Publishing Services Inc. inVancouver and member of its editorial board. She is responsible for the analysis andcommunication of emerging tax issues to clients and EY’s tax practice.

► An assistant editor of EY’s Federal Income Tax Act and contributing author to EY’sGuide to Income Tax, Gael has also presented seminars and training sessions on taxresearch and writing.

Gael Melville

Senior Manager

Ernst & Young LLP, Vancouver

Tel: +1 604 891 8314 Email: [email protected]


Legislative update


► Economic update, Throne Speech, new NWMM

► Outstanding federal bills, NWMMs, and legislativeproposals

► Federal legislative consultations

► Other federal legislative updates

► Provincial developments

► Upcoming events

Federal economic update

► Delivered by new finance minister Bill Morneau► 20 November 2015

► Economic update only – no tax measures

► Press conference: Stock option deduction comments

► Recap: Liberal platform proposed cap on amount that may be claimedthrough stock option deduction

► Any changes will be prospective in nature

► Options in effect will be subject to taxation framework prior to date ofany change


Speech from the Throne

► Opened 42nd Parliament of Canada (4 December 2015)

► Tax policy mentions:► Middle class tax cut

► TFSA limit rollback to $5,500 (from $10,000)

► Canada Pension Plan enhancement

► Strengthening of Employment Insurance system

► New Canada Child Benefit


NWMM – 7 December 2015


Proposals Status EY TaxAlert/News

SubstantivelyEnacted?

Notice of Ways and MeansMotion to amend theIncome Tax Act• Reduction in rate for 2nd

personal tax bracket to20.5% (1 January 2016)

• New top personal tax rateof 33% (1 January 2016)

• TFSA contribution limitrestored to $5,500,indexation of limitreinstated (1 January2016)

NWMM tabled (7December 2015)

TA 2015-58 No

Outstanding federal bills, NWMMs, andlegislative proposals

► Federal budget measures

► Federal NWMMs and bills

► Other federal outstanding proposals


Federal budget measures




Draft legislation• Outstanding 2015 federal

budget measures• Canadian exploration

expenses (CEE)measures (1 March 2015)

Legislative proposals(31 July 2015)

TA 2015-44and

TA 2015-17TA 2015-25TA 2015-26TA 2015-27TA 2015-29TA 2015-30TA 2015-33TA 2015-35

No

Outstanding federal NWMMs and bills




NWMM to amend the Excise TaxAct• Feminine hygiene products

NWWM(Adopted 1June 2015)

N/A No

Bill C-74 – Canada-Quebec Gulf ofSt. Lawrence PetroleumResources AccordImplementation Act

1st reading(House of

Commons)18 June 2015

N/A Yes(18 June 2015)

NWMM to amend the Income TaxAct• Canadian Wheat Board continuance

NWWM(Adopted 17June 2015)

N/A No

Other federal outstanding proposals




Agriculture and Agri-FoodCanada news release• Prescribed regions for livestock

tax deferrals in 2015

List of designatedregions released

(23 July 2015)

N/A No

Agriculture and Agri-FoodCanada news release• Prescribed regions for livestock

tax deferrals in 2014

Final list released(28 May 2015)

N/A No

Other federal outstanding proposals




Draft regulations amending theincome tax regulations• Withholding of income tax on

payments from RDSPs

Published in CanadaGazette Part I(9 May 2015)

N/A No

Legislative proposals – FinanceNews Release 2013-093FAPI stub period amendment only– for ITA s. 91(all other amendments are eitherpart of Bill C-43 (2014) or ofenacted Bill C-31 (for ITA s.241(9.5))

Legislativeproposals

(12 July 2013)

TA 2013-31 No

Federal consultations


Topics Status EY TaxAlerts/News

Small business deduction: Activeversus investment business(2015 Federal budget)

Consultation opened 21 April 2015(submissions closed 31 August 2015)

EY TA 2015-25




Tax planning by multinationalenterprises(2014 Federal budget)

Consultation paper11 February 2014

(submissions closed 11 June 2014)

TA 2014-10TA 2014-15

Treaty shopping (round 2)(2014 Federal budget)

Consultation paper11 February 2014

(submissions closed 12 April 2014)

Implementation deferred29 August 2014

(Awaiting OECD/G-20 BEPS workfinal recommendations made in Oct. 2015)

TA 2014-10TA 2014-15




Eligible capital property(2014 Federal budget)

Legislative proposals to be released forcomments (confirmed in 2015 federal

budget)

TA 2014-10

Non-profit organizations(2014 Federal budget)

Consultation paper to be released forcomments

TA 2014-10

Joint ventures(2014 Federal budget)

Legislative proposals to be released forcomments

TA 2014-10

Other federal developments

► Tax treaty developments► Canada-UK treaty, Article 23 (Mutual Agreement Procedure)

► FA rules: Antigua and Barbuda, Grenada now non-qualifying countries

► BEPS► G20 leaders endorsed final BEPS package, committed to its

implementation

► OECD tasked with developing inclusive framework by early nextyear - developing countries to be included on equal footing

► See EY’s Tax Technical Update webcast on CTF conference BEPSmaterial


Provincial developments

► Manitoba

► Small business tax-free threshold to increase to $500,000 in 2017

► Newfoundland and Labrador

► Provincial election (30 November 2015)

► Result: Liberal majority (formerly Conservative majority)

► Northwest Territories

► Territorial election (23 November 2015)

► Consensus government



► Ontario

► Bill 144, Budget Measures Act, 2015 (first reading 18 November2015)

► Mutual funds – capital gains refund calculation

► Technical changes to other business and personal credits

► Draft amendments to the General Regulation O. Reg. 37/09 (2November 2015)

► OIDMTC, OFTTC, OPSTC

► Discussion paper on preventing electronic suppression of sales inOntario (4 November 2015)



► Prince Edward Island

► Bill 43, An Act to Amend the Income Tax Act (No. 2) – Firstreading: 17 November 2015; Royal Assent on 2 December 2015

► Additional low income tax reduction of $250 for qualified relation ofLITR applicant (qualified relation must be 65 or older before theend of the year) – effective 1 January 2015

► Quebec

► Implements 2015 provincial budget in part

► Several corporate and personal tax credit changes

► Harmonization with federal measures from 2013 and 2014


Provincial legislative update – 2015 Budget bills

Jurisdiction Income tax related2015 Budget implementation bills

Status Subst.Enacted

?Alberta An Act to Renew Democracy in Alberta – Bill 1

An Act to Restore Fairness to Public Revenue

Royal assent(29/06/2015)Royal assent(29/06/2015)

Yes

Yes

An Act to Implement Various Tax Measuresand to Enact the Fiscal Planning andTransparency Act – Bill 4

Secondreading

(17/11/2015)

Yes

BritishColumbia

Budget Measures Implementation Act, 2015 –Bill 10

Royal assent(25/03/2015)

Yes

Manitoba The Budget Implementation and Tax StatutesAmendment Act, 2015 – Bill 36


Yes

NewBrunswick

An Act to Amend the New Brunswick IncomeTax Act – Bill 34An Act to Amend the Small Business InvestorTax Credit Act – Bill 35


Yes




Status Subst.Enacted

?Newfoundlandand Labrador

An Act to Amend The Income Tax Act, 2000 –Bill 6An Act to Amend The Income Tax Act, 2000,No. 2 – Bill 12


Yes

Yes

NorthwestTerritories

No personal or corporate income tax changes n/a n/a

Nova Scotia Financial Measures (2015) Act – Bill 108 Royal assent(11/05/2015)

Yes

Nunavut No personal or corporate income tax changes n/a n/aOntario Building Ontario Up Act (Budget Measures),

2015 – Bill 91Royal assent(04/06/2015)

Yes

Budget Measures Act, 2015 – Bill 144 Secondreading

(1/12/2015)

Yes




Status Subst.Enacted?

Prince EdwardIsland

An Act to Amend the Income Tax Act – Bill8


Yes

Quebec An Act to give effect to fiscal measuresannounced mainly in the Budget Speechdelivered on 26 March 2015 – Bill 69


Yes

Saskatchewan The Income Tax Amendment Act, 2015 –Bill 178


Yes

Yukon Act to Amend the Income Tax Act and theYukon Child Benefit Regulation – Bill 86


Yes


Upcoming events

► Federal

► Bill to implement 7 December NWMM

► Technical bill?

► Provincial

► Alberta royalty review recommendations


CRA Administrative UpdatePhilippe Dunlavey


Philippe Dunlavey ─ CRA administrative update

u Philippe is a senior manager in the Transaction Tax team in Montreal. He has over 10years of experience working in various areas including audit, business taxcompliance and transaction tax.

u Philippe provides tax advice to Canadian and foreign multinationals on cross-borderand domestic mergers and acquisitions, international planning and corporatereorganizations and restructurings.

u Philippe has worked in various sectors including technology, communication andentertainment, manufacturing and real estate.

Philippe Dunlavey, CPA, CA

Senior Manager

Ernst & Young LLP, Montreal



Agenda


► 2015-0575921I7 – Recapture arising in statute-barred years

► 2013-0496401I7 – Article XXIX-A(3) of the Canada-U.S. TaxConvention - Active trade or business exception

► 2015-0567981I7 – Refundable investment tax credits

► Department of Finance letter on ITA s. 104(13.4) and relatedprovisions

► CRA’s News Release on private health services plans (“PHSP”)from 25 November 2015

2015-0575921I7 ‒ Recapture arising instatute-barred years

Issue

► “Whether recapture resulting from the adjustment of the capitalcost of property previously included in element "A" of thedefinition of "undepreciated capital cost" in ITA s. 13(21) andacquired in a statute-barred taxation year can be included intothe taxpayer's income in the first non-statute-barred taxationyear.”


2015-0575921I7 – Recapture arising instatute-barred years

Background► A taxpayer added the capital cost of property acquired to a particular

class.

► The taxpayer claimed CCA on the property for a number of years,many of which are now outside the taxpayer's normal reassessmentperiod.

► Later, during the course of an audit, it is determined that the particularproperty was not in fact depreciable property and the CCA deductionsclaimed for that property were in error.



Analysis► Position reflected in paragraph 14 of IT-478R2:

► […]

► If the revision to the property's capital cost causes the UCCdecreases to exceed the UCC increases as of the end of a yearnow statute-barred, the recapture of that excess amount under ITAs. 13(1) will not be added into the taxpayer's income for that yearor a subsequent year.

► If an excess of UCC decreases over increases arises in a non-statute-barred year, the resulting recapture will be included in thetaxpayer's income for that year and all CCA claimed in that year,and in subsequent non-statute-barred years, will be reassessedaccordingly.



Conclusion► CRA is of the view that it could (re)assess the particular taxpayer to

include the appropriate amount of recapture in the taxpayer's incomeat the end of the first non-statute-barred taxation year in order toresolve the negative UCC balance.

► An income inclusion under ITA s. 13(1) is necessary in order toresolve the negative UCC balance.

► Represents a change/clarification in the position stated inInterpretation bulletin IT-478R2


2013-0496401I7 – Article XXIX-A(3)Active trade or business exception

Issue► “In applying par. XXIX-A(3) of the Canada-US Tax Convention to an

interest payment, whether the requirement that the income be derived"from the other Contracting State (Canada) in connection with (...) that(US) trade or business" might be met based on a "fundingapproach"?”

► Also, in making the determination mentioned based on the “fundingapproach”, whether the requirement can only be met in respect ofCanadian-sourced income?


2013-0496401I7 – Article XXIX-A(3) Activetrade or business exception*

Facts► Canco is a Canadian corporation and a

resident of Canada for the purposes of theCanada-US Treaty (the “Treaty”).

► Parent is a non-resident that directly andindirectly owns all of the shares of thecapital stock of a non-resident corporationUS-Holdco1

► US-Holdco1 is a corporation and aresident in the US for purposes of theTreaty. It is not a "qualifying person" forpurposes of paragraph XXIX-A(1) of theTreaty

► Canco owns all of the issued andoutstanding shares of US-Holdco3, a non-resident corporation resident in the US.

US Holdco 3

Canco

Parent

US-Holdco 1

*Structure depicted only for illustrationpurposes and may not reflect the actual structure



Facts► Canco wishes to indirectly acquire all of

the issued and outstanding shares of NR-Target

► Canco and US-Holdco3 formed NR-Holdco3 and NR-Holdco3 formed NR-Holdco4, another non-resident corporation

► US-Holdco1 subscribes for Canco'sshares; and loans a certain amount toCanco ("Loan2")

► Canco makes a capital contribution to NR-Holdco3; and non-interest bearing loan toNR-Holdco4. NR-Holdco3 made a capitalcontribution to NR-Holdco4

► NR-Holdco4 acquired all of the issued andoutstanding shares of NR-Target

US Holdco 3

Canco

Parent

US-Holdco 1


NR Holdco 3

NR Holdco 4

NR Target

Loan 2



Facts► Canco made interest payments on Loan2

to US-Holdco1.

► Those payments were made out of cashgenerated from sales to US-Opco2 ofproducts manufactured in Canada. (USOpco 2 not depicted)

US Holdco 3

Canco

Loan 2

Parent

US-Holdco 1


NR Holdco 3

NR Holdco 4

NR Target



Analysis► Paragraph XXIX-A(3) applies if the

following conditions are met. In broadterms:

► Engaged in the active conduct of atrade or business in the residence state(US) ("Active Conduct Test");

► The item of income is derived from thesource state (Canada) in connectionwith or incidental to that (US) trade orbusiness ("Connected Test"); and

► The trade or business in the residencestate (US) is substantial in relation tothe activity carried on in the sourcestate ("Substantiality Test").

US Holdco 3

Canco

Loan 2

Parent

US-Holdco 1


NR Holdco 3

NR Holdco 4

NR Target



Analysis (cont’d)► Interest might be considered "derived in

connection with" a US active business inthe following circumstances:

► interest is paid in respect of an accountpayable issued by the US person in thecourse of carrying on its US active business,

► interest payments are in respect ofborrowed money used for the purpose ofearning income from a business carried onin Canada that is upstream, downstream orparallel to the US active business (i.e., aCanadian-connected business); or

► interest payments are funded out of thecash flow from such a Canadian-connectedbusiness.

US Holdco 3

Canco

Loan 2

Parent

US-Holdco 1


NR Holdco 3

NR Holdco 4

NR Target


2013-0496401I7 – Article XXIX-A(3)Active trade or business exception

Conclusion► It is clear that the taxpayer cannot rely on the "use test" as the

borrowed money was used to acquire shares of non-residentcorporations

► As for the "funding approach", CRA is of the view that it would only besatisfied if the Canadian-connected business generates sufficientcash flow to fund the payment of interest.

► To the extent of any shortfall in net cash flow of the Canadian-connected business, CRA is of the view that no relief would beavailable under paragraph XXIX-A(3) of the Treaty.


2015-0567981I7 ‒ Refundable ITCs

Issues

► “Does a revision to the corporate status of a taxpayerrequire a reassessment?”; and

► “Is the CRA required to reassess the returns revising thetaxpayer's claims from ITC to the RITC in the statute-barred years?”



CRA’s Response - Question 1► “[I]n a case where a qualifying CCPC originally filed its tax returns as

a non-CCPC, the Act does not require the Minister to reassess thosetax returns in order to correct the taxpayer's corporate status.”

► “[U]nless the change in status changes the tax payable by thecorporation for the year and the taxation year can be reassessed, noreassessment can or should be made.” [emphasis added]



CRA’s Response - Question 2► The corporation has requested a determination of its refundable

investment tax credits (“RITC”) balance and a refund of the RITCs.

► “ITA s. 152(1) requires the Minister to assess tax, interest andpenalties on receipt of a tax return and to determine various amountsincluding the RITCs.”

► “The Court had concluded that where a taxpayer files a return anddoes not claim the RITCs, and the Minister issues an Assessment ora Nil Assessment that is silent on the amount of the corporation'sRITCs, there is no evidence that the Minister has determined theamount of the RITCs (if any).” [emphasis added] (Accepts the FederalCourt decisions in Signalgene R & D Inc. v. The Queen andTheratechnologies Inc. v. The Queen)


Department of Finance letter onITA s. 104(13.4) and related provisions

Context► Letter addresses some concerns in relation to new ITA s. 104(13.4)

which deems for certain spousal trusts and similar trusts:

► (a) a year-end on the beneficiary’s death

► (b) to deem the trust’s income for the year to have becomepayable to the lifetime beneficiary in the year.

► Issues raised:

► Tax liability will be borne by the beneficiary’s estate even thoughthe trust’s property will be enjoyed by the trusts’ beneficiaries

► Possible “stranding” of the donation tax credits


Department of Finance letter onITA s. 104(13.4) and related provisions

Response► The Department of Finance describes an option for responding to the

issues raised:

► (1): ITA s. 104(13.4)(b) would be amended so that it does not applyexcept in limited circumstances and would require an election

► (2) Include provision for a trust to allocate the donation made bythe trust after the beneficiary’s death (but within the calendar year)to its taxation year-end deemed by ITA s. 104(13.4)(a)


CRA’s News Release on private healthservices plans from 25 November 2015

Context

► CRA provided additional details regarding their new administrativepolicy on what qualifies as a private health services plan (“PHSP”).

► CRA’s prior policy: All medical expenses covered under a plan had tobe eligible for the METC for the plan to qualify as a PHSP.

Change in policy

► As it was announced at the Canadian Tax Foundation AnnualConference, a plan is a PHSP as long as all or substantially all of thepremiums paid under the plan relate to medical expenses that areeligible for METC

► CRA generally interprets the phrase “all or substantially all” to meanmore than 90%


Current casesLouis Tassé


Louis Tassé ─ Current cases

u Louis has practised tax controversy work, including tax litigation, in Montréal for morethan 20 years. This practice includes seven years with the Tax Law Services Branchof the federal Department of Justice and more than 15 years in private practice.

u Louis has successfully litigated cases before the Tax Court of Canada, the FederalCourt of Appeal, the Québec Court and the Québec Court of Appeal in both incometax and commodity tax matters.

u Louis has an LLB. from the University of Montréal. He is a member of the QuébecBar and the Montréal Bar.

Louis TasséPartner

Couzin Taylor LLP, Montréal



Agenda

► Request for documents – MNR v. Amdocs CanadianManaged Services Inc., 2015 FC 1234

► Rectification – The Canada Life Insurance Company of Canada v.AGG, 2015 ONSC 281

► SR&ED credits – ACSIS EHR (Electronic Health Record) Inc. v. TheQueen, 2015 TCC 263

► SR&ED credits – R&D Pro-innovation Inc. v. The Queen, 2015 TCC186

Amdocs Canadian Managed ServicesInc. ‒ Introduction

► Application pursuant to ITA s. 231.7 requesting an orderthat taxpayer provide documentation requested by MNRpursuant to ITA s. 231.1

► Application dismissed


Amdocs Canadian Managed ServicesInc. ‒ Facts

► Taxpayer is a Canadian corporation that providessoftware in over 80 countries

► In 2013, CRA carried out three audits including a transferpricing audit (TPA)

► For the TPA, CRA issued sixteen queries to obtaindocuments

► Taxpayer did not respond fully to three queries


Amdocs Canadian Managed ServicesInc. ‒ Issue and parties’ position

► Issue► Whether the MNR is entitled under ITA s. 231.7 to compel

the taxpayer to provide responses to the outstanding queriesand provide the books, records and documents sought

► MNR’s position► Three conditions under ITA s. 231.7(1) are satisfied:

► Taxpayer is required to provide access, information ordocuments;

► Taxpayer failed to comply with MNR’s request; and

► Information or documents sought are not protected by thesolicitor-client privilege.


Amdocs Canadian Managed ServicesInc. ‒ Parties’ position

► Taxpayer’s position

► The conditions under ITA s. 231.7 are not “clearly met”:

► Documents requested were not within taxpayer’s possession,power or control;

► Reasonable steps to obtain the information was taken; and

► Documents provided are sufficiently detailed.

► If the conditions are “clearly met”, the Court should exerciseits discretion not to issue the order


Amdocs Canadian Managed ServicesInc. ‒ Federal Court decision

► The documentation requested is not protected byprivilege

► Did the taxpayer provide the documentation?► MNR has the discretion to determine the documentation

required to complete an audit (Re BP Canada Energy)

► Audit remains a work of progress until it is completed – MNRcould request further documentation from time to time

► Taxpayer has not provided documentation sought

► Taxpayer has not fully completed the queries


Amdocs Canadian Managed ServicesInc. ‒ Federal Court decision

► Is taxpayer was required to provide the documentation?► If documents exist – MNR could invoke ITA s. 230(1)► If documents exist outside Canada – MNR could invoke

ITA s. 231.6

► Application before FC was made in accordance with ITAss. 231.7 and 231.1► Taxpayer does not have in its possession the documents

requested or they do not exist► Taxpayer made reasonable efforts to acquire the

documentation and to complete the queries


Amdocs Canadian Managed ServicesInc. ‒ Lessons learned

► ITA ss. 231.7 and 231.1 does not allow the MNR to compelthe taxpayer to provide documents when such documentsdo not exist or are not in the possession of the taxpayer

► What efforts will be sufficient to establish that documents inthe possession of a related corporation could not beobtained?

► MNR could make a request under ITA s. 231.6► Taxpayer had to comply with the request

► If not, any court having jurisdiction shall prohibit the introduction bythe taxpayer of any foreign-based information or document coveredby that request


The Canada Life Insurance Company ofCanada ‒ Introduction

► Rectification is an equitable remedy designed to correcta mistake in carrying out the settled intention of theparties

► Discretionary remedy

► Re Juliar v. Canada, 2000 DTC 6589 (ON C.A.)

► Doctrine of rectification has not been limited to rectification ofcontractual documents

► Application allowed


The Canada Life Insurance Company ofCanada ‒ Facts


► In 2007, CLICC accrued an unrealized loss of $168M andaccrued unrealized gains on approximately the same amount

► CLICC could not recognize the loss in the 2007 taxation year

► To offset the gains, CLICC engaged a series of transactions(December 2007 Transactions) to trigger a loss of approximately168$M

► The limited partnership (MAM LP) was dissolved

► CLICC suffered a loss from the resulting disposition of its interest inMAM LP

The Canada Life Insurance Company ofCanada ‒ Facts

► Reassessment► CRA reassessed CLICC by disallowing the loss

► ITA s. 98(5) applied – MAM LP’s dissolution waseffected on a “rollover” basis

► Rectification order sought by CLICC► Cancellation of the 31 December 2007 transactions

dissolving MAM LP and winding up CLICC GP

► Replacing a series of transactions that dissolve MAMLP as at 31 December 2007 in order to avoid theapplication of ITA s. 98(5)


The Canada Life Insurance Company ofCanada ‒ Parties’ position► CLICC’s position

► Rectify the December 2007 Transactions

► Intended objective of the parties – Realize loss of approx. $168M

► Requirements for rectification as set out in Juliar are present

► AGC’s position► Retroactive tax planning

► Rectification is restricted to correcting mistakes in the instrumentsused to implement a definite and ascertainable tax plan

► Juliar is wrongly decided

► Re Performance Industries Ltd. v. Sylvan Lake Golf and TennisClub Ltd., 2002 SCC 19, Shafron v. KRG Insurance Brokers(Western) Inc., 2009 SCC 6 and ARQ v. ServicesEnvironnementaux AES, 2013 SCC 65


The Canada Life Insurance Company ofCanada ‒ Decision

► Principles of Juliar still govern:► The critical requirement for rectification is proof a continuing

specific intention to undertake a transaction on a particular taxbasis

► The December 2007 Transactions were carried out in order tocreate a tax loss► The parties just omitted to include steps regarding ITA s. 98(5)


ACSIS EHR (Electronic Health Record)

► Software SR&ED credit – In favour of taxpayer

► CRA disallowed claims since certain technologies already existed thatcould provide the same functionality

► Distinction between how “scientific method” is applied in softwaredevelopment vs. in chemistry

► Documentary evidence + oral testimonies from credible witness couldbe sufficient to prove that the work performed met the definition of“SR&ED”

► No expert witness testified – TCC refused to qualify the taxpayer’sproposed expert

► ITA contains no legislative requirements to file contemporaneousdocuments for the deduction of expenditures

► Re Abeilles services de conditionnement inc. and 116736 Canada Inc.


R&D Pro-Innovation Inc.

► SR&ED credit – In favour of the CRA

► Project: Development of a chocolate spread

► Issue: Whether there was technological risk oruncertainty?► One of the five SR&ED criteria – Re RIS-Christie v. The Queen, 99

DTC 5087 (FCA)

► Documents submitted showed that the testing was“methodical and systematic”, but:► TCC ruled that when uncertainties can be removed by standard

procedures or routine engineering = the project does not qualify forSR&ED

► Taxpayer used existing manufacturing processes and existingmaterials


Update on Supreme Court of Canada Cases

Attorney-General of Canadaet al v. Chambre des notairesdu Quebec et al

Privilege - constitutionality of ss.231.2(1), 231.7, 232(1) readvocates and notaries in Quebec

Heard 3 November 2015.

Attorney-General of Canadaet al v. Fairmont Hotels Inc., etal

Rectification - unintended taxconsequences of transaction

Materials on application forleave submitted to judges.

Humane Society of Canadafor the Protection of Animalsand the Environment v. MNR

Revocation of charitableorganization status

Application for leave toappeal filed.

The Jean Coutu Group (PJC)Inc. v. Attorney General ofCanada, et al

Rectification - unintended taxconsequences of transaction

To be heard 18 May 2016.

Système intérieur GPBR inc.v. ARQ

QST – invoices ofaccommodation

Application for leave toappeal filed.

MNR v. Thompson Privilege - lawyer's accountsreceivable listing

Heard 4 December 2014.

Update on Federal Court of Appeal Cases

1455257 Ontario Inc. v TheQueen

Motion - whether dissolvedcorporation must be revived tocontinue appeal

Respondent'smemorandum of fact andlaw filed 13 November2015.

The Queen v. Agnico-EagleMines Limited

Foreign exchange gains -conversion of US-denominateddebentures

Requisition for hearing filed15 June 2015.

Bakorp Management Ltd. v.The Queen

S. 187(2) - "day of payment" forinterest calculation

Requisition for hearing filed19 August 2015.

Barejo Holdings ULC v. TheQueen

Determination of question ofmixed fact and law - whethernotes constituted debtobligations

Notice of appeal filed.

Birchcliff Energy Ltd. v. TheQueen

GAAR - non-capital losses ofpredecessor corporation andapplication of s. 256(7)(b)(iii)

Agreement on contents ofappeal book filed 26November 2015.

BP Canada Energy Companyv. MNR

s. 231.2 requirement – tax accrualworking papers

Appeal book filed 27November 2015.


The Queen v. BurlingtonResources Finance Companyet al

Transfer pricing - motion to compelCrown to answer discoveryquestions

Requisition for hearing filed12 August 2015.

The Queen v. Callidus CapitalCorporation

GST – effect of tax debtor’sbankruptcy on ETA s. 222 deemedtrust

Appeal book filed 27November 2015.

Coast Capital Savings CreditUnion v. The Queen

RRSP strip - whether financialinstitution can base pleadings onsham doctrine

Appellant's memorandumof fact and law filed 12November 2015.

Easy Way Cattle Oilers Ltd. v.The Queen

SR&ED ITC - Late-filed T2Schedule 31


The Queen v. Gariepy et al Directors’ liability – effectiveness ofunsigned resignation

Requisition for hearing filed14 October 2015.

Great-West Life AssuranceCompany v. The Queen

GST – whether prescription drugprocessing fees were financialservices



Hedges v. The Queen GST - whether dried marihuanaqualified as a zero-rated supply


High-Crest Enterprises Ltd. V.Attorney-General of Canada

GST – application of ETA s. 191.1(2)to self-supply of addition to long-term care facility


Hillis et al v. AGC et al FATCA - information collection anddisclosure to IRS

Appeal held in abeyanceuntil outstanding issues inrelated Federal Courtapplication are determined.

Humby et al v. The Queen et al GST - action for damages re CRAcollection actions

Appeal dismissed.

Imperial Oil Resources Limitedet al v. Attorney General

Judicial review - whether remissionequivalent to refund of taxoverpayment

To be heard 18 January2016.

Kruger Incorporated v. TheQueen

Foreign exchange contracts - markto market accounting

Respondent'smemorandum of fact andlaw filed 19 November2015.


Kruger Wayagamack v. TheQueen

Control - de facto, de jure, anddeemed control

Requisition for hearing filed 6October 2015.

Minister of National Revenuev. Lee

GST - Compliance order: properidentification of taxpayer

Appellant's memorandum offact and law filed 13 October2015.

Liu v. The Queen GST - whether taxpayer entitled toGST/HST new housing rebate

To be heard 13 January2016.

Marzen Artistic Aluminum Ltd.v. The Queen

Transfer pricing - marketing andsales services


McGillivray Restaurant Ltd. v.The Queen

Small business deduction - de factocontrol of corporation

Requisition for hearing filed27 May 2015.

MNR v. McNally Duty to assess "with all duedispatch"

Appeal dismissed.

Olympia Trust Company v.The Queen

S. 116 - whether trustee of self-directed RRSP is "purchaser"



R&D PRO-innovation Inc. v.The Queen

SR&ED - whether food productdevelopment involved technologicaluncertainty

Appellant's memorandumof fact and law filed 9November 2015.

The Queen v. Repsol CanadaLtd.

CCA - whether LNG terminal andjetty qualify as Class 43 assets.

Motion for order to assigncase management judgefiled 13 November 2015.

The Queen v. Repsol CanadaLtd. et al

Costs - substantial indemnity costsfor fees incurred after issuance ofsettlement offer

Appeal book filed 26 October2015.

Revcon Oilfield ConstructorsIncorporated v. MNR

Solicitor-client privilege - taxplanning


SCDA (2015) Inc. [StandardLife] v. The Queen

S. 138(11.3) asset bump - whetherlife insurer carrying on business inBermuda

Requisition for hearingfiled 12 November 2015.

The TDL Group Corp. v. TheQueen

Interest deductibility - loans fromparent to acquire additionalcommon shares in wholly-ownedUS subsidiary

Requisition for hearing filed25 September 2015.

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