Index. Current to Release TAL 15-3 ( Rel. 3)

Transcription

1 3 Index Current to Release 15-3 Advance income tax rulings. costs, 9-5. retiring allowances, to structured settlements, 2-71, to 2-106, 45-1 to 45-9 Alberta Business Corporations Act. individual shareholders.. corporate repurchase of shares, 4-2 Alimony and maintenance: see also Separation and divorce. conditions for includibility, 7-2. income inclusions and deductions, 7-2 to legal costs incurred in enforcing, deductibility of, to third party payments, 7-3 Alternative minimum tax, 2-94 Arrears. alimony and maintenance payments in, 7-2 to 7-22 Assets. distribution of, to partners, 5-6 to 5-7. transfer of, to new partnership, 5-6 Bankruptcy and insolvency. basic rules, 6-1. corporations, 6-2 to planning opportunities, to individuals, 6-9 to Beneficiary of trust. disposition of a capital interest in trust by, 8-5 to 8-6. dividend tax credits, 8-6. meaning, 8-2. more than one, allocation of earned income, 8-6. preferred, election, 8-4 to defined, 8-3. private corporation as, 8-7. public corporation as, 8-6 to 8-7. trust and estate litigation.. planning opportunities, 8-6 to 8-9 Business/property income. damages representing, 2-5, 2-6, Ponzi scheme, to distinct business operations, 2-37 to material impact on incomeproducing apparatus, to 2-37, Revenue Canada s position, substance over form, 2-40 to tort actions, 2-42 to 2-44 Business principle test. damages paid on capital or income account, 2-17 to 2-19 Butterfly transactions, 5-5 Canada Revenue Agency. approach to inconsistent treatment of damages paid and received, to damages as tax-free capital receipts, 2-59 to directors liability, policy re criminal defence fees, 9-14 to policy re deduction from income in respect of a damage payment, 2-29 to policy re deduction.. from income in respect of settlements and similar payments, 2-29 to representing income from a business or property, to policy re legal fees incurred in enforcing alimony/maintenance agreements, 9-11 to policy re personal injury damages, 2-65 to structured settlements, acceptance of, 2-70 to 2-71 TAL 15-3 ( Rel. 3)

2 4 Tax Aspects of Litigation Canada Employment and Immigration Commission. legal expenses regarding decisions of, 9-6 Canadian-controlled private corporation. loss of status, 4-6 Capital. damages paid on account of, 2-5. distinguished from income, 2-4. income vs: see Income vs capital Capital cost allowance. generally, 2-5. recapture of, 2-56 Capital gain/loss. disposition of property, from.. damages received characterized as, 2-5, 2-6, 2-55 to disposition of property to partners, 5-3. tax deferral through rollover, 2-94 Capital gains exemption. lifetime, , 8-9. qualified farm property, 8-9 Capital interest in a trust, 8-4. disposition of, by beneficiary, 8-5 Capital losses. preservation of, through capitalization, 4-5 to 4-6 Capital receipts, tax-free. damages as, 2-5, 2-6, 2-48 Child. tax-free transfers to.. farm property, 8-7 to shares of small business corporation, 8-8 Child support: see also Separation and divorce. agreements or orders made before May 1997, to CRA policy on payments of.. Folio S-F3-F3, to calculating annual income, to Canada Child Tax Benefit, eligibility, to deductibility of, 7-9 to Federal Child Support Guidelines, to marital disputes, to support amount defined, support amounts to be included in income, to Commercial litigation: see also Damages paid/payable and Damages received/receivable. expenses, deductibility of, to 9-8. generally, 2-4 to 2-7. tax consequences, how determined, 2-3 to 2-4 Commercial reality. damages paid or payable on account of, 2-27 to 2-28 Commercial trading. ordinary principles of, damages paid or payable, to , 2-24 Common sense test. damages paid on capital or income account of, 2-19 to 2-21 Contractual breach. vs tortious action.. differences in characterization of damages received, 2-43 Corporate repurchase of shares. corporate shareholders, 4-4. dividend received by, rules, 4-4. individual shareholders, 4-1 to 4-4. Part IV tax, 4-4. purchasing corporation, 4-5 to stop loss rules, 4-5 to 4-6. reversed transactions, 4-7 to Corporations: see also Corporate repurchase of shares. bankruptcy, planning opportunities, 6-4. beneficiary, corporate, tax-free dividends, 8-7. change of control, 4-5. non-competition agreement payments, to private, as beneficiary of trust, 8-7. public, as beneficiary of trust, 8-6 to 8-7. shareholder disputes.. legal expenses, deductibility of, 9-7. transfer of property to, by partnership, 5-4.6, 5-6 ( Rel. 3) TAL 15-3

3 Index 5 Costs. GST on awards of, to Courts. distinction between income and capital, 2-4 to 2-5 Creditors. acquiring or reacquiring real property as a result of mortgage foreclosures and repossessions, tax position, 3-3 to 3-4. definition, 6-8 Crime. income/losses, Folio S3-F9-C1, to Criminal defence fees. deductibility of fees, to Cumulative eligible capital account. reduction in, 2-58 Damages: see also Damages paid/ payable; Damages received/receivable. characterization of awards, for tax purposes, 2-5. defined, 2-3. eligible capital receipts, to income vs capital: see Income vs capital. independent contractor relationship, to interest, including, personal injury: see Personal injury damages. reciprocity of payments and receipts, taxation of.. general perspectives on, 2-3 to payment vs receipt, 2-3. tax-free capital receipts, as, 2-59 to Damages paid/payable. account of capital on, 2-5 to and damages received, reciprocity of, Canada Revenue Agency s policy re deduction from income in respect of, 2-30 to control test, damages received versus.. practical considerations reinconsistent treatment, to deductibility unaffected by overall annual loss, eligible capital expenditures, representing, to employee/employer relationship, 2-91 to fines or penalties.. deductibility of, income vs capital account, ambiguous situations (the modern approach to), 2-21 to application to the business principle test, 2-17 to application to the common sense test, 2-19 to enduring benefit test, to modern approach, 2-21 to 22.2, 2-29 to multiple test approach, 2-14 to ordinary principles of commercial trading, to payments made on account of commercial reality, 2-28 to payments representing goodwill, 2-24 to principles and tests evolved to determine, termination of distributorship, 2-27 to must be reasonable to be deductible, organization/integration text, purposes of gaining or producing income, 2-5, 2-7 to receipts vs distinction between the categorization of, 2-6. representing eligible capital expenditures, 2-5, to sole proprietorship, 2-91, to , Damages received/receivable. breached contract, characterization of, 2-44 to 2-47, to Canada Revenue Agency s position, to capital gains exemption, lifetime, TAL 15-3 ( Rel. 3)

4 6 Tax Aspects of Litigation. capital gains from disposition of property, damages representing, 2-55 to collective agreement, breach of, to damages paid, vs.. practical considerations re inconsistent treatment, to disposition of property, 2-5. distinction between the categorization of, 2-6. eligible capital receipts, damages representing, to forfeited deposits, 2-47 to insurance contract, compensation for breach of, to surrogatum principle, to , , , to interest, damages include, practical considerations, to pure capital receipt, 2-5. representing capital gains from the disposition of property, 2-55 to representing eligible capital amounts. 2-5, 2-6, representing income from a business or property: see under Business/ property income. tax-free capital receipts, 2-59 to termination of contract, compensation for, 2-48 to 2-52 Debt. bankruptcy situations, 6-4. fairness provisions, to forgiveness of, to Debtor. position re mortgage foreclosures, 3-4, 3-5 to Deferred profit-sharing plan. rollovers, 2-93 Dependents relief cases. fatal injury, 2-84 to 2-85 Deposits, forfeited. damages received/receivable, 2-47 to 2-48 Depreciable property. damages received for injuries to, 2-55 to 2-56 Directors liability see also Goods and Services Tax (GST). case digests, to directors held liable, to , to directors held not liable, to , to defence of due diligence, to , 11-1 to 11-2, 11-4 to employee source deductions, GST, unpaid, 10-34, generally, to indemnities, 11-2 to introduction and comments, 11-1 to joint and several liability, to protective measures, 11-5 to quasi-criminal consequences, reassessment beyond normal time limits, to relief under fairness provisions, to , to resignation letter, , to rules of thumb, to , to events that will absolve director liability, 10-35, 11-7 to events that will not absolve director liability, 10-35, 11-5 to withholding tax, 11-1, 11-2 Discretionary trust. use of, 8-5 Distinct business operations. damages representing income from business or property, 2-37 Distributorship. termination of, 2-25 to 2-27 Dividend. deemed paid, 4-2. received by corporate shareholders, rules, 4-4. tax-free dividends, 8-6 to 8-7 Divorce: see Separation and divorce Election. re preferred beneficiary, 8-4 to 8-5 Eligible capital amounts ( Rel. 3) TAL 15-3

5 Index 7. damages received representing, 2-5, 2-6, 2-56 to 2-59 Eligible capital expenditure. damages paid representing, 2-5, to Employer. Folio S2-F3-C1, to salary disputes, legal expenses incurred in, 9-2 to 9-4 Enduring benefit test. damages paid on capital or income account, development of, 2-11 to generally, 2-10 to interpretation of enduring, 2-12 to 2-13 Estates: see also Trusts. disputes concerning, 8-1. preferred beneficiary election, 8-4 to 8-5. taxation issues, 8-1 to 8-6 Expenditures. deductibility, business vs. personal expenses, to income vs capital account, 2-14 to common sense approach, 2-19 to criteria, modern approach, 2-21 to Expenses. representation, 9-3 to 9-4 Family support payments. Form T1158, 27-3 Farm property. tax-free transfer to child, 8-7 to 8-9 Fatal injury cases. dependents relief cases, 2-84 to taxation factors and quantum of award, 2-79 to 2-80 Foreclosures: see Mortgage foreclosures and repossessions Goods and Services Tax (GST)/Harmonized Sales Tax (HST). basics of GST/HST, 10-4 to exempt supplies, to how GST works, 10-4 to rebates, small suppliers, zero-related supplies, bibliography, breach of contract, GST on, to conditions, to scope of subsec. 182(1), transitional rule, costs by court, award of, to directors liability, to relief under fairness provisions, to directors not liable, to joint and several liability, to introduction, 10-2 to legal aid, to litigation expenses, mortgage foreclosures, seizures and repossessions, to court seizures, lease of seized personal property, to power of sale, quitclaim or other voluntary transfer, receivership, redemption of property, sale of seized personal property, to sale or lease of seized property, to seizure or repossession, no GST on, special rules, to use of personal property seized after 1993, to use of real property, to rules of thumb, to settlement of claim, transfer of property to insurer on, timing of liability: appeals, tort vs contract, suing in, unpaid GST, suing for, to interest and penalties, to preconditions for claim under s. 224, TAL 15-3 ( Rel. 3)

6 8 Tax Aspects of Litigation.. where conditions not met, to when contract silent, who bears GST, to Goodwill. damages representing payments for, 2-24 to 2-27 Gratuitous payments. deductibility of, 2-28 Illegal acts. damages paid as result of, not deductible, 2-31 Income. distinguished from capital, 2-4. gaining or producing, damages paid for purposes of, 2-5 Income attribution. rules not applicable in separation/ divorce situations, 7-18 Income interest. of a trust, 8-3 to 8-4 Income-producing apparatus. material impact of damages, 2-35 Income tax objections and appeals. deductions in respect of fees and expenses, to Income vs capital. damages paid or payable: see under Damages paid/payable. expenditures characterized as.. common sense approach, 2-19 to criteria, 2-19 to modern approach, 2-21 to reciprocity of damages paid and received, 2-32 Individuals. bankruptcy, 6-9 to shareholders, 4-1 to 4-4 Infant. personal injury award paid to, 2-78 to 2-79 Inter vivos trust, 8-2. settlor of, defined, 8-3 Involuntary disposition of property, to 3-12 Legal fees. commercial litigation expenses, to contingency fees, to criminal defence fees, to deductibility of, 9-1. regulatory litigation, to salary disputes, 9-2 to shareholder disputes, to Litigation. need for awareness of tax implications, 1-2. statutory provisions re taxation issues, 1-2. tax aspects, increased concern regarding, 1-1 Litigation expenses. characterizing, 9-1. deductibility, 9-1 to 9-2. commercial litigation, to contingency fees, 9-20 to criminal defence fees, to marital disputes, 9-12 to regulatory litigation, to 9-5. salary disputes, 9-2 to prerogative of priority, 3-6 to Loss. deductibility of damage payments unaffected by, 2-23 Lottery winnings. Folio S3-F9-C1, to Marital disputes. child support, to legal expenses re, deductibility of, to planning opportunities, 7-22 to taxation aspects of, 1-2 Minors. personal injury damages, 2-78 to 2-79 Mortgage foreclosures and repossessions. Certificate of Lis Pendens, to debtor s position, 3-4. forgiveness of debt, to GST, applicability of, to involuntary dispositions and replacement property rules, to 3-12 ( Rel. 3) TAL 15-3

7 Index 9. sanctions, to statutory provisions, 3-1 to 3-2. tax position of creditor who has acquired or reacquired real property as result of, 3-3 to illustration, 3-4 to 3-5 Non-competition agreement. payments, to taxation of (subsec. 6(3.1)), to rules governing (s. 56.4), to 4-21 Non-fatal injury cases. taxation factors and quantum of award, 2-60 Owner-occupied home. separation and maintenance payments, 7-6 Partner(s). continuing partnership as sole proprietorship, 5-7 to 5-8. disposition of property to, 5-3, 5-6 to 5-7. distribution of assets to, 5-7. spouses, to 5-4.3, transfer of asset to new partnership, 5-6 to 5-7. transfer of property to corporation, 5-5 to 5-6. transfers of partnership property, taxfree, 5-3 to 5-5 Partnership(s). between spouses, to 5-4.3, debtor, as, defined, disputes between members, 5-1. Folio S4-F16-C1, to generally, 5-1 to new partnership, transfer of assets to, 5-6 to 5-7. types of remedies, 5-1. taxation of, 5-1. tax-free transfer of property to a corporation, 5-5 to 5-6. tax-free transfer of property to partner, 5-4 to transfer of assets to new, 5-6 to 5-7 Partnership test, Personal injury damages. fatal injury, quantum of, fatal injury/dependents relief cases, 2-84 to generally, infants, 2-78 to injured person, claims by, 2-80 to earnings lost, taxation of, 2-85 to invested award, taxation of, 2-86 to interest portion, taxability of, non-fatal injury, quantum of, taxation after receipt of an award, structured settlements, to 2-78: see also Structured settlements. taxation factors and quantum of, 2-79 to taxation of, 2-65 to 2-69 Personal injury litigation. determining taxation consequences, 2-65 to 2-69 Personal trust, 8-2 Ponzi scheme. partnerships, source of income, , to , to Principal residence. defined, 7-22 to Folio S1-F3-C2, to Property. disposition of.. damages received characterized from, 2-5, damages representing capital.. gains from disposition of, involuntary, to legal costs deducted from proceeds, restrictive covenants, rules governing (s. 56.4), 4-15 to to partners, 5-3. partnership, 5-3 to tax-free transfer to partner, to tax-free transfer of, to corporation, 5-5 to replacement, rules, to 3-12 Real estate litigation. issues in, 3-1 TAL 15-3 ( Rel. 3)

8 10 Tax Aspects of Litigation Registered pension plan. transfer of retiring allowance to, to 2-97, to Registered retirement savings plan. transfer of assets of, in marital disputes, 7-18 to 7-19, to transfer of retiring allowance to, to 2-97, to Replacement property rules, to 3-12 Repossession: see Mortgage foreclosures and repossessions Representation expenses, 9-4 to 9-5 Restrictive covenant: see Non-competition agreement Retiring allowances. defined, retirement compensation arrangement (RCA), to custodian/trustee of RCA trust, to employer, taxation of, to former employee, taxation of, minutes of settlement, to retiring allowance regime, current.. CRA policy on payments received, 2-94 to characterization of payments as retiring allowances, to amount of termination payment, contractual payments, to general considerations, to timing and circumstances of payment, to general rules, to legal expenses, to lump sum payments, retroactive, 2-97 to tax deferral through rollover, 2-95 to withhold tax, requirement for employer to, to transfer to registered retirement savings plan, 2-95 to withholding of tax, to Revenue Canada/CCRA: see Canada Revenue Agency Rollovers. family farm property, to child, 8-7 to 8-8. partnership property.. to corporation, 5-5 to to new partnership, 5-6 to to partners, 5-3, 5-6 to to sole proprietorship continuing partnership business, 5-7 to 5-8. shares of small business corporation, 8-7 to 8-8. tax deferrals through, 2-93 to trust property, 8-7 to 8-8 Salary disputes. legal expenses incurred in, 9-2 to Separate business. spousal partnership, to 5-4.3, what constitutes, 2-38 to 2-39 Separation and divorce: see also Marital disputes. attribution rules for capital gains not applying, child support, to 7-15: see also Child support. generally, 7-1. legal expenses relating to marital disputes, to non-spousal support, 7-15 to perspectives, 7-1. planning opportunities, 7-22 to spousal support, 7-2 to Folio S1-F3-C3, to transfer of assets of registered retirement savings plan in settlement of, 7-18 to transfer of property in settlement of, 7-18 to 7-21 Settlements and similar receipts. representing income from business or property, to Revenue Canada s policy re deduction from income in respect of, 2-29 Settlor. of inter vivos trust, defined, 8-2. of testamentary trust, defined, 8-3 Share(s) ( Rel. 3) TAL 15-3

9 Index 11. redemption, acquisition or cancellation of deemed dividend paid, 4-2. small business corporation, rollover of to child, 8-8 Shareholders. corporate, 4-4 to dividends received by, rules, 4-4. disputes between, 4-1 to legal expenses, 9-8 to individual, 4-1 to corporate repurchase of shares, 4-5 to 4-6. loans, to Small business corporation. rollover of shares to child, 8-8 Sole proprietorship. partnership continued as, by single partner, 5-7 Spousal support. CRA policy on payments of.. Folio S1-F3-C3, to Form T1157 election, Guide P102, income inclusions and deductions, 7-2 to 7-22 Spousal trust, 8-2 Stop loss rules, 4-5 to 4-6 Structured settlements, to advance income tax ruling, 2-71, to 2-106, 45-1 to conditions that must be complied with, to final release, to generally, to illustrated, increased use of, non-tax considerations, 2-76 to obtaining binding tax ruling, Revenue Canada s policy, to tax policy and future, tax treatment to casualty insurer, 2-73 to tax treatment to claimant, 2-72 to 2-73 Substance over form. damages representing income from a business or property, 2-40 to 2-42 Surrogatum principle. commercial litigation expenses, to damages received or receivable, 2-35 to insurance contract, compensation for breach of, to Tax equity. treatment of damages paid and received, 2-32 Tax-free capital receipts. damages as, 2-48 Tax returns. bankruptcy, year of, 6-3 Termination payments. deferred compensation, distinguished from, distributorship, 2-25 to lump-sum payments, rules, timing, to Testamentary trust. defined, 8-2. generally, 8-3 to 8-4. settlor of, defined, 8-2 Tort actions. damages in, 2-42 to GST not applying, Trademarks. damages paid to effect registration of, income expenses, 2-25 Trust(s). capital interest in, 8-4. income interest in, 8-3 to 8-4. preferred beneficiary election, 8-4 to 8-5. taxable income of, 8-4 to 8-5. taxation issues relevant to disputes over, 8-1. taxation of, basic rules, 8-1. types of, 8-2 Trust and estate litigation. planning opportunities, 8-6 to 8-9 Unemployment insurance. legal expenses regarding disputes concerning, 9-6 Withholding of tax. retirement compensation arrangements.. special tax, TAL 15-3 ( Rel. 3)

10 12 Tax Aspects of Litigation. termination payments, to 2-95 Wrongful dismissal. damages for, 2-88 to deductibility to employer, 2-88 to taxation of employee: former regime, to legal expenses connected with, not deductible, 9-2 to retirement compensation arrangements, to retiring allowance regime, current, 2-94 to : see also Retiring allowances.. characterization of payments as retiring allowances, to general rules, 2-94 to legal expenses, to tax deferral through rollover, to spouses practising in same firm.. separationagreements,7-10.1,7-14 ( Rel. 3) TAL 15-3