Tax Court of Canada


Income tax


Must be presumed that parties intended to be bound by minutes given time and effort invested

Taxpayer corporation was successor to several other corporations that were amalgamated from 1999 to 2006. In 2007, taxpayer was involved in yet another amalgamation with several other related corporations, which resulted in two taxation year-ends in 2007. In its income tax returns for each of taxation years in 2007, taxpayer deducted non-capital loss in computing income, which taxpayer claimed were incurred by its predecessors in prior years and available for carry-forward. Minister reassessed non-capital losses available to taxpayer at much lower amounts and remaining non-capital loss amounts were denied on basis that such amounts were less than reported by taxpayer. Notice of appeal was filed and taxpayer’s counsel delivered offer to Minister and after eight months of negotiations between parties, they executed minutes, and same day Minister informed court that parties had reached settlement. Five weeks after minutes were signed, Minister informed taxpayer that mistake of fact had been found and that no non-capital losses were available for carry-forward to 2007 years. Taxpayer brought motion to enforce terms of Minutes of Settlement. Motion granted. Non-capital losses existed and were available for carry-forward to 2007 taxation year, having flowed from pool from years prior to 2007 years that had been reassessed by Minister. It was found that there was no mistake regarding non-capital losses in minutes, as it was determined that parties’ agreement centred on reallocation of established pool of non-capital losses and support for reallocation was contained in language used in offer and in minutes. Accordingly, agreed facts in minutes, that taxpayer’s proposed amount for non-capital loss was available, was grounded in objective reality. Parties had entered into minutes and invested time and effort, therefore it must be presumed that parties intended to be bound by minutes as written.

CBS Canada Holdings Co. v. The Queen (2018), 2018 CarswellNat 5238, 2018 TCC 188, K. Lyons J. (T.C.C. [General Procedure]).

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