Tax Court of Canada
Tax Related Court Decisions
Our team was able to establish that our client acted with all due diligence. Accordingly, we were able to have the notices of reassessment vacated in their entirety and removed over $5.5 million in alleged unreported income, gross negligence penalties and penalties relating to foreign reporting.
The Taxpayer was assessed with business income of $635,843 for the sale of her investment property, and she was charged with gross negligence penalties. We filed a notice of appeal to the Tax Court of Canada, and reached a settlement with the Department of Justice. Her gain was re-characterized as a capital gain, and the gross negligence penalties were removed.
Amidst the Tax Court proceedings, we were able to negotiate an early resolution by way of a consent to judgment wherein the Minister allowed our client to rightfully deduct employment related expenses. In addition to reducing the taxable income by approximately $120,000, we also negotiated the removal of gross penalties, which was 50% of the tax otherwise payable on the above noted amount.
The Minister attempted to prevent our Clients, the Taxpayers, from appealing the CRA’s incorrect decision regarding GST/HST on the disposition of a rental property. Rosen & Associates was able to demolish the Minister’s position by proving that positive steps were taken by the Taxpayers to maintain their genuine intention to dispute the impugned decision and have their appeals heard on it’s merits. For more details on this case please see our blog.
The Taxpayer’s foreign tax credits were denied. We filed a notice of appeal to the Tax Court of Canada, and successfully settled the file by having the Department of Justice agree to allow all of the credits.
The Taxpayer was audited and denied his claim for the New Home Housing Rebate. R&A Tax Law prepared and filed a notice of appeal arguing the denial was incorrect. We then prepared a settlement offer which was accepted, and the Taxpayer’s claim for the New Home Housing Rebate was allowed.
The Taxpayer’s employment status was audited by the CRA, and she was ruled to be an independent contractor. We filed a notice of appeal, and through negotiation with the Department of Justice, and with the Intervenor, we were able to settle the file reversing the earlier ruling so that the Taxpayer was now an employee.
The Taxpayer was assessed a shareholder benefit in the amount of $425,818 because his shareholder loan account was overstated by that amount. He was also charged gross negligence penalties. We filed a notice of appeal to the Tax Court of Canada, and through negotiation with the Department of Justice, we were able to settle prior to a hearing. The shareholder benefit was removed in full, and so were the gross negligence penalties.
Our Client disposed of a property she held legally for the benefit of the occupant but the CRA concluded that the trust was not valid and accordingly assessed taxable capital gains on the sale. During the hearing, R&A Tax Law successfully appealed the Minister’s position and proved the validity and existence a bare trust relationship. As a result, the Tax Court of Canada vacated the taxable capital gains of just under $200,000 as well as the gross negligence penalties associated.
During the Tax Court appeal process, we were able to successfully negotiate an early resolution by way of consent to judgment. Our client was permitted to deduct additional expenditures from her commission-based income. Accordingly, her taxable income was reduced by more than $35,000 as the same was incurred for the purposes of generating or producing income.
Our client was reassessed for allegedly receiving a dividend in the amount of $125,000 and not reporting the same on her tax return. The Minister imposed gross negligence penalties for the same. We were able to negotiate a full concession, removing the unreported income and deleting the gross negligence penalties.
The Minister denied our client valid business expenses and imposed gross negligence penalties. We negotiated a favourable resolution and avoided the need to appear in court. Our client has allowed over $70,000 of expenses and was not liable for the penalties.
The Taxpayer was assessed hundreds of thousands of dollars for unpaid GST/HST on the sale of a property. We assisted the Taxpayer with his notice of appeal, eventually securing a settlement that removed the amount owing in full.
The Taxpayer was running a restaurant and was audited by the CRA for unreported cash sales. R&A Tax Law took the matter to the Tax Court of Canada, and secured a settlement lowering the income and removing gross negligence penalties prior to the completion of any litigation steps. This saved the Taxpayer the unnecessary expenses of protracted litigation.
The Taxpayer was denied his spousal support deductions for payments made during the 2012 through 2014 taxation years. We filed a notice of appeal and were able to get the deductions allowed before completing the majority of the litigation steps through a settlement with the Department of Justice.
The Taxpayer’s business expenses were denied in the amount of $237,114. We filed a notice of appeal to the Tax Court of Canada, and reached a settlement with the Department of Justice. The vast majority of the expenses were allowed.
The Taxpayer was denied his employment expenses for payments made during the 2013 and 2014 taxation years. We filed a notice of appeal and successfully settled the file having the expenses allowed in full.
The Taxpayer was assessed under subsection 160(1) of the Income Tax Act. The Canada Revenue Agency submitted that property was transferred from a company to the Taxpayer (for consideration of less than fair market value) as a means of allegedly evading tax liability. The matter was successfully settled with the Department of Justice prior to trial whereby the matter would be referred back to the Minister for a reconsideration on the basis that the Taxpayer is not liable under section 160.
The Taxpayer was denied deductions for donations made, and was assessed with gross negligence penalties. We filed a notice of appeal and took the matter to the Tax Court of Canada. At the hearing we were successful in getting a portion of the donation credits allowed, and having the gross negligence penalties removed.
The Taxpayer was trying to run his first business, buying and reselling goods. The CRA completely denied his business expenses despite accepting that he had earned almost $40,000 in business income. R&A Tax Law appealed and successfully negotiated a settlement agreement with the Minister. As a result, the Taxpayer’s business income was reduced by over $67,000, allowing for business losses to be utilize to offset his income taxes.
Our client was audited and ultimately reassessed by the CRA for a large sum of expenditures related to crew supplies for the Appellant’s fishing business and for allegedly underreported income. In settlement, R&A Tax Law demolished the CRA’s assumptions that certain “household” expenses were personal in nature by establishing a nexus to the Appellant’s fishing business. Additionally, the alleged unreported income, which the CRA had based largely on records from the Department of Fisheries, was adjusted per our negotiations.
R&A Tax Law achieved an early resolution with the Department of Justice and significantly reduced the adjusted income and increased otherwise denied expenses, amounting to a reduction in taxable income of approximately $350,000.
The Taxpayer was reassessed and his principal residence exemption was denied for the sale of his property. We filed a notice of appeal to the Tax Court of Canada, and successfully settled with the Department of Justice prior to the hearing. The principal residence exemption was reinstated and he did not have to pay any taxes on the sale of his property.
The taxpayer was denied the New Home Housing Rebate because she moved out of her condominium shortly after purchase. The taxpayer appealed the audit decision, but could not convince the Canada Revenue Agency appeals division that she was entitled to the Rebate. We filed an appeal to the Tax Court of Canada. Following receipt of the Reply, we submitted a settlement offer explaining why our client deserves the Rebate. The Department of Justice agreed, and convinced their client, the CRA to allow the appeal. The taxpayer is fully entitled to the New Home Housing Rebate and has received her Rebate in full.
The Taxpayer was audited by the CRA using an indirect audit method. At the end of the audit, the CRA claimed to have found unreported income due to cash deposits, loans and shareholder benefits, as well as levying gross negligence penalties. R&A Tax Law navigated the litigation process and was able to secure a very favourable settlement on the basis that the taxpayer is entitled to additional business expenses, lowering taxable income by over $100,000 thereby reducing the GST/HST owing, as well as a deduction of non-capital losses of over four hundred thousands dollars.
The Taxpayer was audited by the CRA using a net worth projection method. CRA disallowed business expenses, erroneously included unreported business income, disallowed non-capital losses and levied gross negligence penalties. R&A Tax Law assisted the taxpayer with appealing to the Tax Court of Canada where a settlement was agreed to. The taxpayer’s shareholder benefit is reduced by over two hundred thousand dollars in 2012 and over a hundred and thirty thousand dollars in 2013.
The taxpayer was denied the New Home Housing Rebate following an audit. The taxpayer objected but was not successful in with the Canada Revenue Agency appeals division. R&A Tax Law filed an appeal to the Tax Court of Canada. After reading our Notice of Appeal, the Department of Justice did not reply, thereby conceding. The taxpayer has now received the New Home Housing Rebate in full.
The Taxpayer’s travel expenses were denied. We assisted with a notice of appeal to the Tax Court of Canada. Prior to the hearing, we successfully negotiated a settlement with the Department of Justice to have the expenses allowed.
The taxpayers were assessed for unreported business income and associated shareholder benefits from a net worth audit. R&A Tax Law was able to reduce the unreported income and shareholder benefits by over $380,000 having the appeal allowed in full. Since the taxpayers chose to pay the bill prior to fighting the assessments, they will be receiving a refund of over $100,000 plus interest.
The taxpayer came to us in 2016 after the Canada Revenue Agency reassessed him based on the purchase and sale of a home. The CRA disallowed his Principal Residence claim, and reassessed him charging him for business income and gross negligence penalties because he had only lived in the home for a few months. The amount owing was $75,000. R&A Tax Law filed a Notice of Appeal in the Tax Court of Canada, and aggressively pursued the case knowing that he should be entitled to the Principal Residence Exemption. A few weeks before trial, we were successful in overturning the CRA decision. He has now been reassessed owing no taxes or penalties and is being allowed his Principal Residence Claim.
The taxpayer claimed the Principal Residence Exemption on the sale of his condominium. The Canada Revenue Agency (“CRA”) reassessed him on the basis that the sale of the property should be counted as business income, and gross negligence penalties were assessed as well. R&A Tax Law fought, and the taxpayer’s appeal was allowed in full. He was able to use the Principal Residence Exemption to pay no taxes on the sale, and no penalties were charged.
The Canada Revenue Agency issued an assessment, pursuant to subsection 160(2) of the Income Tax Act, against the taxpayer for an unpaid tax liability of a relative. In exchange for title to a property, the taxpayer forgave previous loans that were advanced. The Tax Court of Canada agreed that debt forgiveness was valid consideration and as such the appeal was allowed, significantly reducing the assessed tax liability.
The taxpayer was claiming business expenses incurred for the purposes of gaining or producing income. CRA denied the expenses associated with her endeavors in the entertainment and real estate industries since the taxpayer did not generate any revenue. The taxpayer, by way of consent, was allowed to deduct additional expenses of $25,213, amounting to 70% of the claimed expenditures, in the applicable taxation years.
The taxpayer was managing a multiplex and generating rental income. The CRA denied a vast majority of the expenses associated with the rental property Ultimately, by way of consent, the taxpayer was allowed expenses totalling $48,652.33. More importantly, the gross negligence penalties were vacated.
The taxpayer claimed the Principal Residence Exemption on the sale of his townhouse. The CRA reassessed him on the basis that the sale of the property should be counted as business income, and gross negligence penalties were assessed as well. R&A Tax Law was able to get a consent to judgement allowing the taxpayer’s appeal in full. He was able to use the Principal Residence Exemption to pay no taxes on the sale, and no penalties were charged.
The Taxpayer was assessed $3,00,000 in supposed unreported income, which led to an assessment for unreported GST/HST as well. R&A Tax Law was able to secure a settlement right before the hearing that removed the majority of the unreported income bringing it down to $425,000, which also significantly lowered the GST/HST from $370,000 to $45,000.
The taxpayer claimed a multi-million dollar capital loss on an investment that went bankrupt. The CRA refused to allow the capital loss. R&A Tax Law was able to get a consent to judgement allowing a massive, multi-million dollar capital loss that the taxpayer will now use to shelter capital gains for years to come.
An audit was conducted and the Minister reassessed the Appellant to include $5.3 million dollars of unreported income. R&A Tax Law got involved during the Tax Court stage and was able to negotiate a settlement reducing the unreported income by 85%, which means a total reduction of $4.53 million dollars.
The taxpayer had three different lawyers during her Tax Court of Canada appeal which spanned over a period of 6 years. She came to R&A Tax Law three weeks prior to her scheduled hearing. We were able to settle with the Department of Justice turning her business income into capital gains, and lowering her profit by over $150,000.
The Taxpayer was assessed for RRSP over-contribution penalties because of a third-party error in generating too many RRSP tax slips. Both of the Taxpayer’s relief requests asking for penalty relief were denied, so R&A Tax Law stepped in and initiated a Judicial Review application of those decisions. Immediately after our filing, we negotiated a settlement with the CRA and their lawyers, the DOJ to send the file back to remove the over-contribution penalty because of the slip duplication issue.
The Taxpayer/Applicant had previously applied for taxpayer relief from interest and penalties for an inadvertent over-contribution made to her tax-free savings account (TFSA). The CRA denied the Taxpayer the relief sought on the initial application, and following the second level review. R&A Tax Law was retained to prepare and file an application for judicial review. Well before completing the litigation steps, we negotiated an early resolution whereby the matter would be referred back to the Minister for a fresh reconsideration (on an expedited basis) by a CRA officer who was not previously involved in the matter.
The taxpayer had applied for relief from interest and penalties under the fairness provisions. She was denied twice by the CRA. R&A Tax Law brought a judicial review application questioning the administrative decision to deny the requested relief. The Honourable Justice Campbell found in our favour, particularily that the CRA failed to conduct a full examination of the taxpayer’s circumstances and submission. The matter was referred back to the CRA for a fresh review and costs were awarded in favour of the taxpayer.
In the early 1990s, Mr. Lee applied to the Canada Revenue Agency requesting an advanced ruling on an vehicle export business he operated, indicating that he would not be liable for GST if he followed several conditions. After running the business for several years and complying with this ruling, he was audited, and after receiving poor advice from his auditor, missed the deadline to respond. He applied for Taxpayer Relief in 2015 to waive some of the related penalties and interest. Following the denial of taxpayer relief, R&A Tax Law applied for Judicial Review in Federal Court. We negotiated with the Department of Justice, and the application was allowed. Mr. Lee was entitled to further relief from the Canada Revenue Agency.
Federal Court of Appeal
The taxpayer was assessed under the Income Tax Act and the Excise Tax Act for unreported income of over $3.5 million. The Tax Court of Canada dismissed the appeal after not allowing evidence to be presented as it did not meet the rules of evidence. As such, the taxpayer could not demonstrate that the source of the unreported funds was not taxable (it was claimed that the funds were transfers of an inheritance from Iran).
R&A Tax Law appealed the evidentiary ruling to the Federal Court of Appeal. Though the Justices agreed with our position, they ultimately ruled that the Tax Court Judge was correct in her ruling because of the evidentiary issues at the Tax Court trial. Nothing could have been done at the Federal Court of Appeal to overcome these initial issues.
Ontario Superior Court of Justice
The Minister raised a director’s liability assessment for unpaid taxes under the Retail Sales Tax Act. The taxpayer had effectively resigned more than two years prior to the aforementioned assessment being issued. By way of consent, the Minister vacated the assessment and revoked all legal action.