Tax court of Canada | Tax | Income tax | Administration and enforcement
MPW Inc., 107 Inc., and MPP Inc. were part of same corporate group (companies). Companies’ predecessors had unused non-capital losses, net capital losses, scientific research and experimental development expenses and / or investment tax credits (“tax attributes”). Predecessors engaged in two separate but similar series of transactions in respect of tax attributes. MPP Inc. appealed in respect of taxation years ending in 2009, 2011 and 2013 and relating to series of transactions that occurred in 1998, appeal by MPW Inc. was in respect of taxation year ending in 2008 and appeal by 107 Inc. was in respect of taxation years ending in 2008, 2009 and 2010. MPW Inc. and 107 Inc. appeals related to series of transactions that took place in 2006. Exact mechanisms and entities involved in two sets of transactions were different but end result of transactions shared common elements. In filing their income tax returns during years in issue, companies applied some or all of tax attributes to shelter income derived from profitable real estate business. MNR reassessed each of companies to deny tax attributes claimed by them and notionally delete any unused tax attributes available for carry-forward. During audit stage of cases, companies’ counsel filed access to information request with each of Finance and CRA seeking all written communication for specified time period relating to utilization and/or trading of tax losses. Requests were not specific to companies and were made in names of companies’ counsel. Companies’ counsel made subsequent access to information request in name of MPW Inc. for all records relating directly or indirectly to MPW Inc. for taxation years ending 2008 and subsequent. Companies’ counsel received hundreds of pages of documents in response, and many were fully or partly redacted and companies requested that they be given unredacted version of documents. Companies brought motion for order to compel MNR to produce documents refused at joint examination for discovery and MPP Inc. brought separate motion for similar orders. Motions were heard at same time. MNR ordered to produce documents as directed by court. In GAAR appeal, draft documents prepared in context of taxpayers’ audit or considered by officials involved in or consulted during audit and assessment of taxpayers should be disclosed as they inform Minister’s mental process leading to assessment and may also inform Minister’s understanding of policy at issue.
MP Western Properties Inc. v. The Queen (2017), 2017 CarswellNat 2356, 2017 CarswellNat 9456, 2017 TCC 82, 2017 CCI 82, Valerie A. Miller J. (T.C.C. [General Procedure]).
