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PLANNING WITH GOOD ADVICE CHEAPER THAN FIXING MISTAKES





Our Supreme Court of Canada (SCC), as shown above in one of its archive photos, released its decision cited as 2021 SCC 49 dismissing an Appeal of CRA represented by the Federal Minister. The lower Appeal Court and the trial Court had each dismissed the view of CRA that there had been abusive tax evasion.


The facts were that a USA company had a Luxembourg subsidiary that had a Canadian subsidiary. The Canadian subsidiary produced a large net profit for its parent Luxembourg company who claimed a tax exemption per a tax treaty between Canada and Luxembourg. All the courts said the treaty allowing the tax exemption was clear so there was no tax evasion.


The importance of this decision to the average tax payor is the confirmation by our SCC that tax planning can be done with confidence when the specific terms of the law are followed. As usual, CRA appears miffed that tax would not be paid on the large profits made in Canada despite the fact that a treaty, which is law, allowed the tax exemption.


The lesson to learn is to retain both a CPA and a lawyer with experience BEFORE you do anything so your choices are within the law. It is always cheaper to plan than to fix mistakes.


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