Tax court of Canada | Tax | Income tax | Corporations
Taxpayer corporation was incorporated by three lawyers, father and two daughters. Almost decade later, Minister assessed taxpayer for over $2 million and assessment was premised on assumption that father had transferred property worth more than $3 million to taxpayer for little or not consideration. Taxpayer appealed. Appeal allowed. It was found that father was either employed by taxpayer for no salary or worked for taxpayer as volunteer. Father provided services to taxpayer’s clients on behalf of taxpayer and fact that he chose to do so for no consideration did not change nature of his relationship with taxpayer. Nothing employee provided to firm could be described as property, because employee provides services, not property. If father and taxpayer had agreed that father would be paid and had father later waived that right, father could have been said to have transferred property, for example, salary receivable, to taxpayer. As it was found that father did not transfer property to taxpayer by working for no consideration, appeal was allowed and assessment was vacated.
Aitchison Professional Corporation v. The Queen (2018), 2018 CarswellNat 3675, 2018 TCC 131, David E. Graham J. (T.C.C. [General Procedure]).
