September 22, 2009 by Dan White.

This ruling is a wake up call for CRA. They can not operate outside the law and with unfettered power.

Dan White

Tax Court Suggests CRA Be More Responsible in Evaluating Diligence Defences
Source: Blake, Cassels & Graydon LLP - The recent decision in Home Depot of Canada Inc. v. Her Majesty the Queen dealt with the common law defence of due diligence, as opposed to one of the statutory defenses available to directors under subsection 323(3) of the Excise Tax Act (the ETA) or subsection 227.1(3) of the Income Tax Act. It serves to demonstrate the function of the common law due diligence defence in connection with strict liability administrative penalties and suggests that the Canada Revenue Agency (CRA) should apply commercial common sense before dismissing a taxpayer’s defence of due diligence.

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September 22, 2009 by Dan White.

I find it very interesting that somehow the word “Trust” instigates trust in the mind of the user. To me a trust is a way to get caught with your pants down.

In this case of trust residency, it would have been a huge surprise to me if Justice Woods had ruled differently than she did. When you consider where is the mind and management of a legal entity, you have to conclude that mind and management is where it exists. Period. Full stop. If you work and live in Canada, then your mind and management is Canadian residency.

I don’t see Justice Woods verdict as”novel,” I see it as logical.

So if you need a solution to your over taxed problems, and want to find your solution offshore, you better think again, the days of offshore glory are now tax problem  situations that require expertise to solve.

Dan White

Tax Court of Canada carves novel approach to trust residency
Posted: September 21, 2009, 7:30 AM by Julius Melnitzer

Madam Justice Woods of the Tax Court of Canada has carved a novel approach to determine the residency of a trust with her Sept. 10, 2009 ruling in Garron and Garron v. The Queen. She rejected the existing test enunciated in Trustees of the Thibodeau Family Trust as the only test for trust residency. Thibodeau decided that a trust is resident where trustees reside and exercise their mandate. But Woods ruled that the central management and control test, which determines the residency of corporations, also applies to trusts.

According to an analysis by Aird & Berlis’ Jack Bernstein and Barbara Worndl, the case could affect the residency of many international and domestic trusts. “For now,” they conclude,” tax planners should ensure that a trust is centrally managed and controlled in the jurisdiction where the trustees are resident.”

Julius Melnitzer

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