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Supreme Court of Canada - Latest Developments - by Mark Meredith 

Canadian Tax Adviser


October 30, 2012


Mark Meredith
Vancouver, International Corporate Tax


The Supreme Court of Canada (SCC) will be hearing the CRA and QRA's leave to appeal for Deputy Minister of Revenue v. Services Environnementaux AES Inc. on November 8, 2012. Tentative hearing dates have also been scheduled for the taxpayer's appeals for Daishowa and Envision on February 20, 2013 and March 19, 2013, respectively.

 In addition, the SCC has dismissed the CRA's application for leave to appeal the Federal Court of Appeal (FCA) cases Ronald Robertson and Roger Saunders v. The Queen (2012 FCA 94) and Ron Ballantyne v. The Queen.


AES - Hearing scheduled in rectification case for November 8, 2012
The SCC has granted the CRA and Quebec Revenue Agency leave to appeal in AES.


Robertson and Ballantyne - SCC denies leave to appeal in First Nations cases
Previously, in Robertson, the FCA found that the fishing activity of two commercial fishermen who were status Indian individual members of the Norway House Band was closely connected to the reserve. The fishermen fished off their reserve, but delivered their catch to a co-operative located on the reserve. The FCA rendered a similar decision in Ballantyne, overturning the TCC's earlier verdict that income from the taxpayer's fishing business was taxable.


Since the SCC has denied leave to appeal, the FCA's decisions will stand.


Daishowa appeal - Hearing tentatively scheduled for February 20, 2013
In Daishowa-Marubeni International Ltd. v. The Queen, the FCA found that contingent liabilities assumed by the purchaser on the transfer of a forest division of the taxpayer/vendor in its 1999 taxation year constituted proceeds of disposition of $11 million (being the value noted in the sales agreement). With respect to a second assumed contingent liability transferred by Daishowa in a similar forest division sale made in 2000, the FCA referred the matter back to the Tax Court of Canada for reconsideration. In reaching its conclusion on the second sale, the FCA noted that the TCC's examination of a $3 million disposition was insufficient given that this second sales agreement did not specify a value for the assumed liabilities. The FCA decision was not unanimous.


After a rare oral hearing on June 4, 2012, the SCC decided to allow the taxpayer's leave to appeal from the FCA decision.


Envision appeal - Hearing tentatively scheduled for March 19, 2013
Previously, the FCA decision for Envision Credit Union v. The Queen followed the Tax Court of Canada's decision that an amalgamated entity's undepreciated capital cost (UCC) balance should flow-through from the predecessor corporations' combined UCC balances. The taxpayer had argued that the amalgamation was not governed by section 87, because not all of the predecessor corporations' assets were transferred directly to the amalgamated entity and should therefore have a higher UCC balance available. As a result, the CRA was allowed to reassess Amalco to reduce its UCC balance by $30 million.


For more information, contact your KPMG adviser.






Information is current to October 30, 2012. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG’s National Tax Centre at 416.777.8500.


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