Tax Court of Canada


While transfer amounted to negligence, action did not constitute gross negligence

Appeal by taxpayer from reassessment by Minister. Taxpayer transferred house it was building to its two shareholders. Taxpayer did not collect or remit GST on transfer. Minister assessed taxpayer on basis that it transferred both legal and beneficial interest in property to its shareholders, thereby resulting in supply of property on which GST was required to be collected pursuant to ss. 165 and 221 of Excise Tax Act (Can.). Minister imposed gross negligence penalty. Appeal allowed in part. Matter was referred back to Minister for reassessment on basis that s. 285 gross negligence penalty be deleted. Taxpayer was liable to collect and remit GST on transfer of property. Taxpayer failed to establish requisite certainty of intention establishing that property was in trust for taxpayer subsequent to transfer of title. While transfer by taxpayer amounted to negligence, action did not constitute gross negligence. Shareholders held subjective belief that taxpayer maintained some interest in property given that it continued to pay expenses related to it.

Canpar Developments Inc. v. Canada

(Aug. 2, 2011, T.C.C., Paris J., File No. 2009-3264(GST)I) 205 A.C.W.S. (3d) 588 (7 pp.).

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