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Federal Tax - Appeals. Hud v. Canada
In Hud v. Canada (Fed CA, 2024) the Federal Court of Appeal granted a motion to summarily dismiss (effectively quash) an appeal from the Tax Court, where the Federal Rules do not have any express quashing authority.
The court here explores it's owe Tax Court appellate jurisdiction:[17] Moreover, as the respondent submits, subsection 27(1.3) of the Federal Courts Act, R.S.C. 1985, c. F-7, restricts the grounds that may be raised in an appeal from a judgment made under the Tax Court’s informal procedure. Any erroneous finding of fact must have been made in a perverse or capricious manner or without regard to the material before it.
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[21] .... The Tax Court’s jurisdiction is defined by statute, in particular section 12 of the Tax Court of Canada Act, and is limited: Bonnybrook Park Industrial Development Co. Ltd. v. Canada (National Revenue), 2018 FCA 136 at para. 19.
[22] The Tax Court has exclusive original jurisdiction to hear and determine appeals on matters arising under a number of statutes, including the Income Tax Act, R.S.C. 1985 (5th Supp.), c. 1, to the extent the particular statute provides: Tax Court of Canada Act, s. 12(1).
[23] When deciding an appeal from an assessment, the Tax Court is limited to vacating or varying the assessment or referring it back to the Minister for reconsideration and reassessment: Income Tax Act, s. 171(1). Neither the Tax Court of Canada Act nor the Income Tax Act gives the Tax Court jurisdiction to grant the relief the appellant says it erred in not granting.
[24] On appeal of the Tax Court’s decision, this Court’s powers are limited to dismissing the appeal, referring the matter back to the Tax Court, or giving the decision that the Tax Court should have given: Federal Courts Act, s. 52(c). Because the Tax Court could not give the relief the appellant sought when he was before it, it cannot give it were we to refer the matter back. Nor can we give it on appeal. . 3295940 Canada Inc. v. Canada
In 3295940 Canada Inc. v. Canada (Fed CA, 2024) the Federal Court of Appeal considers the appellate SOR for income tax 'general anti-avoidance rule' (GAAR) matters:IV. Issue and Standard of Review
[42] The only issue is whether the series is abusive.
[43] The standard of review for GAAR cases on appeal depends on what stage of the abuse analysis a party challenges. The abuse analysis occurs in two stages. The first is to determine the object, spirit, and purpose of the provisions at issue. This first stage is a question of law, subject to correctness review by appellate courts: Deans Knight Income Corp. v. Canada, 2023 SCC 16 at para. 78 [Deans Knight]; Canada v. Alta Energy Luxembourg S.A.R.L., 2021 SCC 49 at para. 50; Canada Trustco Mortgage Co. v. Canada, 2005 SCC 54 at para. 44 [Canada Trustco]; Housen v Nikolaisen, 2002 SCC 33 at paras. 8, 26–37 [Housen]. The second stage is to determine whether the transactions in issue are abusive. This inquiry is “necessarily fact intensive” and is thus reviewable only for palpable and overriding error, absent an extricable error of law: Deans Knight at para. 121; Canada Trustco at para. 44; Canada v. Oxford Properties Group Inc., 2018 FCA 30 at para. 39 [Oxford Properties]; Housen at para. 10.
[44] A trial judge’s failure to consider the overall result of a series of transactions is an extricable error of law. For instance, in Oxford Properties, this Court accorded no deference to the portion of the trial judge’s abuse analysis that failed to consider the overall result of the series of transactions: Oxford Properties at paras. 107–113. Likewise, a trial judge’s failure to consider the true, overall nature of a tax plan constitutes an error of law: Canada v. Microbjo Properties Inc., 2023 FCA 157 [Microbjo]. In Microbjo, Noël CJ explained the point as follows:The Tax Court’s failure to take into account the true nature of the plan amounts to an error of law. Indeed, as was explained by the Supreme Court in Canada (Director of Investigation and Research) v. Southam Inc., 1997 CanLII 385 (SCC), [1997] 1 S.C.R. 748, 144 D.L.R. (4th) 1 (paras. 39 and 41), a tribunal that fails to consider evidence that the law requires it to consider commits an error of law.
(Microbjo at para. 74)
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