58 LEXPERT MAGAZINE
|
JUNE 2016
| TAX LITIGATION |
whom has to jump through the same pro-
cedural hoops to keep their claim alive,"
Du Pont says. "e court is doing the best it
can, but it's very hard because the system is
designed for the individual taxpayer, whose
case is unique in its own way."
Nor is the group appeal trend likely to
abate. "Group appeals are a huge growth
area," Rossiter says. "We've brought in rules
to deal with them, but they continue to be
a challenge."
Also looming are two rectification cases
before the Supreme Court of Canada: the
first is from the decision of the Ontario
Court of Appeal in Fairmont Hotels Inc. v.
Attorney General of Canada and the second
is from the decision of the Québec Court
of Appeal in Groupe Jean Coutu (PJC) Inc.
v. Attorney General of Canada.
Rectification is not a remedy available
in the TCC. Still, obtaining rectification
from provincial superior courts where the
transactions did not achieve specific tax
objectives that the taxpayers intended to
obtain in undertaking the transactions is
now common in Canada.
BEPS standard and implement the BEPS
minimum standard for the spontaneous
exchange of certain tax rulings as well as
the common reporting standard for the
automatic exchange of information among
participating countries.
e CRA has also introduced an Off-
shore Tax Informant Program (OTIP) that
could ramp up the volume of litigation.
"e OTIP offers financial awards to
individuals who provide information relat-
ing to certain types of 'major international
tax non-compliance,'" says Michael Fried-
man of McMillan LLP in Toronto. "Over
the past year, it has received 1,920 separate
contacts from potential informants under
the OTIP, which led to over 200 written
submissions and 110 cases that are cur-
rently being reviewed."
e trend of "group appeals," a phenom-
enon associated with heavily marketed
structured tax products or shelters, is also
presenting its own challenges to the TCC.
"ere are no mechanisms for class ac-
tions in the TCC, so you get hundreds of
taxpayers with the same issue but each of
e CRA isn't happy about it, hence
their appeals in Fairmont and Jean Coutu.
e outcome could very well affect the
TCC's caseload.
"A liberal interpretation would confirm
rectification applications as a means of fix-
ing problems that could otherwise lead to
extensive tax litigation in the TCC," Mc-
Cue says.
On the other hand, a narrow interpreta-
tion could add considerably to the TCC's
docket. It could also create problems for tax
lawyers and planners.
"If the SCC narrows the kind of mistake
that can be rectified, it could have a mean-
ingful adverse effect on the tax advisory
profession," says Stephen Ruby of Davies
Ward in Toronto. "e more difficult it is
to get something rectified, the greater the
risk of liability to professionals and their
insurers — and we're talking about cases
with damages in the tens of millions of dol-
lars if negligence is established."
Now there's incentive for change.
Julius Melnitzer is a freelance
legal-affairs writer in Toronto.
www.thor.ca
Canada's largest law firm
practising exclusively in tax
