By Colleen McMullin of Gowling Lafleur Henderson LLP
Introduction
The Federal Court of Appeal has recently provided much needed clarification on the parameters of the controversial General Anti-Avoidance Rule (the “GAAR”), which has left many corporate tax advisors breathing a temporary sigh of relief. The rule, contained in section 245 of the Income Tax Act, may be asserted against taxpayers who are in technical compliance of the law, but, in the opinion of the Canadian Revenue Agency (the “CRA”), have participated in a transaction that resulted in a “misuse” or “abuse” of the provisions of the Act.1
Since its enactment in 1988, a great deal of uncertainty has entered into the realm of tax planning. More than two decades later, this uncertainty still abounds today. Taxpayers and tax planners alike are unable to predict with any degree of certainty whether or not they have structured their affairs in a way which will avoid CRA scrutiny, despite complying with the letter of the law. Contributing to this atmosphere of doubt is the Agency’s tendency to use the GAAR as a tool to make retroactive determinations of the appropriateness of a transaction – a process which critics claim has more to do with the quantum of the assessment, and less to do with any well-founded principles of tax law.
In order for the GAAR to apply, the taxpayer must have enjoyed a tax benefit (i.e. a reduction, avoidance or deferral of income tax), have entered into an avoidance transaction (i.e. a transaction undertaken primarily for a tax benefit), and engaged in abusive tax avoidance (i.e. the tax benefit enjoyed as a result of the avoidance transaction frustrated or defeated a specific
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by James D. McAuley of KPMG LLP
It is not surprising that Canadian banks continue to be popular targets for class action lawsuits. Not only are Canadian banks among the world’s largest and most profitable corporations, but they also provide most of the population with a set of essential and complex services.
In the absence of readily available statistics to measure industry exposure to class actions in Canada, KPMG embarked on a research project of its own. Our investigation found that Canadian banks currently face at least 81 class actions.1 The amounts claimed, where reported, amount to almost $4.9 billion. When this known amount is extrapolated to include actions with no reported financial claim,2 the total estimated claims swell to between $8.8 billion and $12.4 billion.3
It is important to remember that the ultimate liability of banks to class actions will most likely be significantly less than the aggregate amounts claimed. However, the costs of settlement are substantial, and significant operating costs are also incurred to defend class actions. Perhaps one of the greatest concerns in the process is damage to the bank’s reputation. It is common for the announcement, progress, and settlement of class actions to be
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by Tina Giesbrecht, Barry B. Sookman, and Erika Ringseis of McCarthy Tétrault LLP
A well-drafted computer-use policy can provide evidence to uphold a termination for cause and can protect an employer from harassment claims, as recent case law illustrates.
The scene is well-known in the workplace: an employee receives an e-mail joke or photo from a colleague down the hall, has a giggle, and forwards the message to other colleagues, friends at other organizations, and relatives who might appreciate the joke. In minutes, a complete cyber network is created, and it has passed along a message.
Sometimes the message is innocuous, e.g., it involves cute images or funny expressions. Other times, it involves racist, sexist or pornographic jokes or images.
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By Jennifer Smith, Ernst & Young LLP, Ottawa
In a clear and concise judgment, the Tax Court of Canada applied section 84.1 of the Income Tax Act (ITA) to a disposition of shares by the taxpayer, resulting in a taxable dividend of $400,000 instead of a capital gain eligible for the capital gains exemption. Although Justice Judith Woods agreed with the taxpayer’s counsel that section 84.1 is a “trap for the unwary” and appeared to have some sympathy for the taxpayer’s position, she nevertheless felt bound to apply the clear wording of the provision.
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It is now easier and less costly to file suits in Ontario. If you or your clients want to recover a debt, sue for wrongful dismissal or for any other cause, Ontario’s courts have changed their claim limits and eased some procedural requirements. I am pleased to reprint here an excellent summary of recent changes to Ontario’s Court procedures, focussed on employee claims against former employers, but applicable to a wide range of cases you or your clients may encounter.
