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Tax Cases

Canada Revenue Agency (CRA) administers tax-related legislations such as the Income Tax Act, the Excise Tax Act and the Employment Insurance Act. Laws are legislated in the Parliament and are interpreted by case law. We archive tax related cases that we considered informative to our clients and browsers. Please feel free to submit court decisions on tax laws that you think our browsers may be interested to read.

While CRA recognizes that taxpayers' right to minimize tax liability within the parameters of law, aggressively pushing the limits creates a risk of crossing the line between acceptable tax planning and what is considered abusive tax planning. Technically, abusive tax planning may have some legal basis but have gone beyond the legislative intent. In general, abusive tax planning avoid paying the required taxes, and thus infringing law. These plans may include tax shelters, tax havens or outright tax avoidance. Taxpayers found using illegitimate schemes are penalized and sometimes prosecuted criminally.

On the other hand, CRA aggressively pursues taxpayers and at times infringe their rights under the Charter or the related acts. Sir Richard John Cartwright, Canadian Dominion Minister of Finance said the following in his 1878 Budget Speech:

"All taxation is a loss per se. It is the sacred duty of the government to take only from the people what is necessary to the proper discharge of the public service; and that taxation in any other mode, is simply in one shape or another, legalized robbery."

To ensure equity, it is important to maintain a balance of power between tax authorities and the rights of taxpayers.

Please click the case titles (arranged in descending chronological order) below to view the case synopsis and the related links.


Canada v. Gangnon [dispute of interest in arrears on a miscalculated spousal RRSP payment, court awarded costs to taxpayers challenging CRA's position]
Neumann v. Canada (Attorney General), 2009 BCSC 324 [violation of privacy — unreasonable, unnecessary search and seizure breaching charter rights]
Lipson v. Canada, 2009 SCC 1 [Tax avoidance — Whether GAAR applicable to deny tax benefits — Abuse and misuse of Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.), s. 245(4)]
Stein v. Stein, 2008 SCC 35 [equal division of liabilities between estranged spouses in divorce]
Canada v. Prévost Car Inc., 2009 FCA 57 [beneficial owner — dividends — shareholders, tax authorities lost appeal in beneficial ownership case]
Dagenais v. The Queen, 1999 CanLII 557 (T.C.C.) [tax income — foreign capital gains tax from lottery paid is not deductible in Canada]

           

[This page was added 9 April 2009, last revised October 15, 2010.]