Grenon v. The Queen | Jun 1, 2021

Docket: 2014-3401(IT)G

BETWEEN:

JAMES T. GRENON,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

Appeal heard on common evidence with the appeal of The RRSP Trust

of James T. Grenon (552-53721) by its Trustee CIBC Trust Corporation

– 2014-4440(IT)G

Appeal heard on February 11, 12, 13, 14, 15, 18, 19, 20, 21, 22, 2019 and

September 9, 10, 11, 12 13, 2019, at Winnipeg, Manitoba.

Before: The Honourable Justice Guy R. Smith

Appearances:

Counsel for the Appellant:

Cy M. Fien

Brandon Barnes Trickett

Ari M. Hanson

Aron W. Grusko

Counsel for the Respondent: Ifeanyi Nwachukwu

Tanis Halpape

Christopher Kitchen

Jeremy Tiger

AMENDED JUDGMENT

Page: 2

[This Amended Judgment is issued in

substitution of the Judgment dated April 9, 2021 to

correct and add counsel’s names.]

In accordance with the attached Reasons for Judgment, the appeal from Notices of

Reassessment made by the Minister of National Revenue on February 28, 2013 in

respect of the 2008 and 2009 taxation years, pursuant to subsection 56(2) of the

Income Tax Act AND the appeal from the Notices of Assessment made on March 1,

2013 in respect of the 2004 to 2011 taxation years, pursuant to subsection 204.1(2.1)

of the Income Tax Act, are hereby allowed.

The parties will have 60 days from the date of hereof to provide written submissions

regarding costs. Such submissions shall not exceed 15 pages for each party.

Signed at Ottawa, Canada, this 27th day of April 2021.

“Guy R. Smith”

Smith J.

Docket: 2014-4440(IT)G

BETWEEN:

THE RRSP OF JAMES T. GRENON (552-53721)

BY ITS TRUSTEE CIBC TRUST CORPORATION,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

Appeal heard on common evidence with the appeal of

James T. Grenon – 2014-3401(IT)G

Appeal heard on February 11, 12, 13, 14, 15, 18, 19, 20, 21, 22, 2019 and

September 9, 10, 11, 12 13, 2019, at Winnipeg, Manitoba.

Before: The Honourable Justice Guy R. Smith

Appearances:

Counsel for the Appellant:

John J. Tobin

Linda Plumpton

James Gotowiec

Cy M. Fien

Brandon Barnes Trickett

Ari M. Hanson

Aron W. Grusko

Counsel for the Respondent: Ifeanyi Nwachukwu

Tanis Halpape

Christopher Kitchen

Jeremy Tiger

Page: 2

AMENDED JUDGMENT

[This Amended Judgment is issued in

substitution of the Judgment dated April 9, 2021 to

correct and add counsel’s names.]

In accordance with the attached Reasons for Judgement, the appeal from Notices of

Assessment made by the Minister of National Revenue on March 6, 2013 in respect

of the 2004 to 2009 taxation years, pursuant to subsection 146(10.1) of the Income

Tax Act is allowed and the appeal is referred the back to the Minister for

reconsideration and reassessment on that basis that the income of the RRSP Trust

received from the Income Funds (described herein as the Distribution Transactions)

during the 2005 taxation year, shall be reduced by $136,654,427;

The appeal from Notices of Reassessment dated March 6, 2013 in respect of the

2004 to 2009 taxation years, pursuant to subsection 207.1(1) of the Income Tax Act,

is hereby dismissed.

The parties will have 60 days from the date of hereof to provide written submissions

regarding costs. Such submissions shall not exceed 15 pages for each party.

Signed at Ottawa, Canada, this 27th day of April 2021.

“Guy R. Smith”

Smith J

Page: 3

Table of Contents

OVERVIEW..................................................................................................................................................1

BACKGROUND FACTS................................................................................................................................3

a) The Appellant....................................................................................................................................3

b) The Income Funds.............................................................................................................................5

c) The acquisition of units by the RRSP Trust .......................................................................................7

d) The income distributions made by the Income Funds....................................................................10

e) Tom 2003-1 Income Fund...............................................................................................................12

f) Tom 2003-2 Income Fund...............................................................................................................13

g) Tom 2003-3 Income Fund...............................................................................................................13

h) Tom 2003-4 Income Fund...............................................................................................................14

i) Tom 2006-5 Income Fund...............................................................................................................15

j) Tom 2006-8 Income Fund...............................................................................................................15

k) The Fact witnesses..........................................................................................................................15

THE ASSESSMENTS.................................................................................................................................19

a) Grenon Appeal - Part 1 Reassessments .........................................................................................19

b) Grenon Appeal - Part X.1 Assessments...........................................................................................19

c) RRSP Trust Appeal - Part 1 Assessments.........................................................................................20

d) RRSP Trust Appeal - Part XI.1 Reassessments.................................................................................20

THE ISSUES.............................................................................................................................................20

a) Grenon Appeal - Part 1 Reassessments and Part X.I Assessments.................................................20

b) RRSP Trust Appeal - Part 1 Assessments and Part XI.1 Reassessments..........................................21

PRELIMINARY ISSUES ..............................................................................................................................22

a) Admissibility of the Affidavit of Helen Little ...................................................................................22

b) Admissibility of certain Read-ins.....................................................................................................25

RELEVANT STATUTORY PROVISIONS .....................................................................................................26

a) The RRSP legislative framework......................................................................................................26

b) Mutual Fund Trusts.........................................................................................................................37

c) Indirect Payments ...........................................................................................................................43

d) General Anti-Avoidance Rule (“GAAR”)..........................................................................................44

ANALYSIS...............................................................................................................................................48

Page: 4

Whether the Income Funds were “Qualified Investments”? .............................................................48

a) Overview – “a lawful distribution…to the public” ..........................................................................48

b) Summary of the Alleged Deficiencies .............................................................................................56

c) The burden of proof in tax appeals.................................................................................................57

d) General principles of statutory interpretation ...............................................................................60

e) The meaning of “distribution” in subparagraph 4801(a)(i)A ..........................................................61

f) The meaning of “lawful” in subparagraph 4801(a)(i)A...................................................................66

g) Failure to disclose the position held...............................................................................................72

h) The subscription and acquisition of units by minors ......................................................................73

i) The subscription of units by adults for other adults.......................................................................83

j) The requirement that units be purchased “as principal” ...............................................................86

k) The requirements of Regulation 4900(1)(d.2) ................................................................................90

l) Conclusion.......................................................................................................................................92

The Sham Doctrine..............................................................................................................................93

Window Dressing..............................................................................................................................100

The Application of Subsection 56(2).................................................................................................105

The Excess Contributions ..................................................................................................................113

Statute-Barred Years.........................................................................................................................117

a) The Grenon Appeal .......................................................................................................................117

b) The RRSP Appeal...........................................................................................................................121

The application of GAAR...................................................................................................................133

a) Was there a tax benefit?...........................................................................................................135

b) Was there an avoidance transaction? ..........................................................................................137

c) If so, was the avoidance transaction ‘abusive’?............................................................................140

d) Determination of tax consequences.............................................................................................149

e) Analysis and Conclusion............................................................................................................151

CONCLUSION......................................................................................................................................154

Appendix A – The Read-ins .......................................................................................................................157

Citation:2021 TCC 30

Date:20210601

Docket: 2014-3401(IT)G

BETWEEN:

JAMES T. GRENON,

and

Appellant,

HER MAJESTY THE QUEEN,

Respondent.

Docket: 2014-4440(IT)G

THE RRSP OF JAMES T. GRENON (552-53721)

BY ITS TRUSTEE CIBC TRUST CORPORATION,

Appellant,

and

HER MAJESTY THE QUEEN

Respondent.

FURTHER AMENDED REASONS FOR JUDGMENT

Smith J.

OVERVIEW

James T. Grenon (the “Appellant”) was the annuitant of a Registered

Retirement Savings Plan (the “RRSP Trust”) in which he had accumulated

substantial assets. CIBC Trust Corporation (“CIBC Trust”) acted as trustee.

The Appellant established and promoted several income funds (the “Income

Funds”) each of which raised a relatively modest amount of capital relying on the

exempt distribution rules of the provinces of Alberta and British Columbia. The

investors in each fund were essentially the same but the Appellant also participated,

acquiring units personally and through investment vehicles he owned or controlled.

Page: 2

Following the closing of the exempt distributions, the Appellant (acting alone

or in concert with two other individuals and their respective RRSPs) then arranged

for the RRSP Trust to acquire in excess of 99% of the units of the Income Funds.

The Income Funds then invested in flow-through investment vehicles that

served as conduits for the acquisition of business ventures or investments controlled

directly or indirectly by the Appellant, the profits of which flowed back to the

Income Funds and were distributed to unitholders, including the RRSP Trust.

It is not disputed that the Appellant intended from the beginning to structure

the Income Funds as qualified investments for RRSP purposes and one of the key

issues in this appeal is whether they met the definition of a “mutual fund trust”.

The Minister of National Revenue (the “Minister”) has taken the position that

the steps undertaken to establish the Income Funds were not legally effective such

that they were not a “qualified investment” for RRSP purposes or alternatively, that

they were a sham or mere window dressing intended to allow the Appellant to

manipulate the RRSP regime by using the funds in the RRSP Trust to acquire and

actively manage businesses or investments, the profits of which flowed back to the

RRSP Trust where they continued to accrue on a tax-exempt basis. The Minister has

also relied on the general anti-avoidance rule (“GAAR”).

The appeals herein were heard on common evidence with the appeals in

Magren Holdings Ltd. v. Her Majesty the Queen, 2017-486(IT)G; 2176 Investments

Ltd. v. Her Majesty the Queen, 2017-605(IT)G; and Magren Holdings Ltd. v. Her

Majesty the Queen, 2017-606(IT)G (the “Corporate Appeals”). Reasons for

Judgment in respect of the Corporate Appeals will be issued separately.

The “Appellant” will refer to Mr. Grenon in his personal capacity and as the

annuitant of the RRSP Trust and the “Appellants” will refer to both Mr. Grenon and

the CIBC Trust. Unless otherwise indicated, the 2004 to 2011 taxation years will be

referred to as the relevant period (the “Relevant Period”).

Unless otherwise indicated, all references to legislative provisions in these

Reasons for Judgment are references to the legislative provisions of the Income Tax

Act¹, (the “Act”) including Regulations promulgated under the Act, that relate to the

assessments or reassessments and the taxation years in question.

¹R.S.C., 1985, c.1 (5th Suppl.)

Page: 3

BACKGROUND FACTS

The Appellant testified on his own behalf but also called four fact witnesses,

all of whom had acquired units in the Income Funds. Two other witnesses testified

on behalf of the CIBC. Their respective testimony will be reviewed below.

Alan B. Martyszenko testified as an expert witness but his testimony relates

primarily to the Corporate Appeals and will not be reviewed herein.

The Minister did not call any witnesses but relied on the affidavit of Helen

Little, an auditor with the Canada Revenue Agency (“CRA”).

a) The Appellant

The Appellant completed a law degree at University of Manitoba in 1980 and

practiced law in Alberta for a short period of time before pursuing an interest in

corporate finance and investments. He resided in Alberta during the Relevant Period

but became a non-resident when he emigrated to New Zealand in 2012.

Early in his career, the Appellant became involved with a company known as

Tom Capital Associates Inc. (“Tom Capital”) that focused on general corporate

finance including loans and distressed lending. During the Relevant Period, it was

controlled by Grencorp Management Inc. (“GMI”), wholly-owned by the Appellant.

The Appellant also owned or controlled numerous other companies or entities

that were used in the Income Funds structure including 100% of the shares of

1042946 Alberta Inc. (“1042 Inc.”) and 1019109 Alberta Inc. (“1019 Inc.”) that

acted as general partners as well as participating interests in Colborne Capital

Corporation (“CCC”) and Landcraft Development Corporation (“Landcraft”).

The Appellant was also involved in the early stages of the Alberta oil and gas

industry and as a result of these activities, gained significant personal wealth.

By 2003, the Appellant had accumulated substantial assets in the RRSP Trust

including approximately $39 million in cash and cash equivalents and a 58% interest

in Foremost Industries Income Fund (“FMO”), a publicly traded mutual fund trust

created in 2001, of which he was a trustee.

By March 2004, the units of FMO were valued at $46 million and the total

value of the RRSP Trust at that point in time was approximately $90 million.

Page: 4

It was apparent that the Appellant was a sophisticated individual whose

knowledge of income tax law surpassed that of ordinary taxpayers. He readily

admitted that he frequently consulted the Act and generally followed developments

in income tax law. He described this as one of his hobbies.

With respect to the RRSP Trust, the Appellant explained that he was not

interested in passive investments or in a diversified portfolio of publicly traded

companies. He wanted to be as actively involved as possible in the management of

the investments acquired. He understood the financial consequences of withdrawing

funds from an RRSP which he described as financial “suicide”.

With respect to the structure of his investments or businesses, the Appellant

explained that he preferred a flow-through structure using business trusts or limited

partnerships that he viewed as more efficient from an income tax point of view.

With respect to the Income Funds, the Appellant’s objective was to broaden

his RRSP investment horizon and to provide flexibility in the management of his

investments in a way that was not normally possible within an RRSP.

He was also not especially interested in raising large amounts of capital from

a wide array of investors. As will be seen below, he only sought to raise as much

capital from as many investors as was needed to meet or exceed the minimum

requirements of a “mutual fund trust” as defined by the Act.

Since he had already accumulated substantial assets in the RRSP Trust, what

he needed was an appropriate vehicle to invest those funds. He was of the view that

the Income Fund structure was “best aligned with his investment objectives.”

With respect to at least two Income Funds, the Appellant collaborated with

two other business associates, namely Bruce MacLennan (“MacLennan”) and Angus

Sutherland (“Sutherland”). Both individuals acquired units of two Income Funds,

accepting a transfer from the Grenon RRSP in exchange for cash from their

respective RRSP’s (the “MacLennan RRSP” and “Sutherland RRSP”) and assumed

various roles in the Income Fund structure. They acted as trustee of some funds or

as directors of various companies that acted as general partners. As will be seen in

greater detail below, the MacLennan RRSP and Sutherland RRSP each held a 49%

interest in two Income Funds.

Although the Appellant was the promoter of all the Income Funds, the

Minister has described all three individuals as insiders (the “Insiders”) in connection

Page: 5

with the Income Fund structure. According to the Minister’s assumptions²“the

structures were crafted so that Insiders could obtain a number of tax related benefits

from these non-arm’s length structures” including the following (the Minister refers

to the Income Funds as the “Promoted Funds”):

- The reduction and postponement of taxes payable by Grenon and various

businesses owned by Grenon, through the payment of interest and management

fees to related entities;

- The deferral of tax on the distribution of income to the various RRSP Trusts held

by the Insiders, including the Grenon RRSP Trust, income that would otherwise

be distributed as dividends, or otherwise, subject to tax;

- The avoidance of Part 1 and Part X1.1 tax on non-qualifying investments held by

the Insiders’ RRSP Trusts, including the Grenon RRSP Trust;

-The avoidance of Part X.1 tax on excess amounts contributed to the Grenon RRSP

Trust in respect of the amounts that the Grenon RRSP Trust received from the

Promoted Funds.

b) The Income Funds

The Income Funds that are relevant to these appeals were established in 2003

and 2006. The 2003 series of Income Funds (described as Tom 2003-1, Tom 2003-

2, Tom 2003-3, Tom 2003-4) were established in Alberta by separate deeds of trust

dated March 14, 2003. The 2006 series of Income Funds (known as Tom 2006-5 and

Tom 2006-8) were similarly established on June 30, 2006.

Each Income Fund undertook a first distribution of units to 171 Investors (the

“First Distribution”) relying on a prospectus exemption pursuant to the securities

legislation of the provinces of Alberta and British Columbia (“BC”) known as the

“Offering Memorandum Exemption” (“OME”).

The units in the 2003 series of Income Funds were distributed pursuant to the

OME requirements described in Part 4 of Multilateral Instrument 45-103 Capital

Raising Exemptions.³The units in the 2006 Income Funds were issued pursuant to

the OME requirements described in Part 2 of National Instrument 45-106 Prospectus

²Paragraph 19(dd) of the Fresh as Further Amended Reply.

³Adopted by the Alberta Securities Commission effective March 30, 2002 and by the BC Securities Commission

effective April 3, 2002.

Page: 6

and Registration Exemptions⁴. The OME requirements of Multilateral Instrument

45-103 and National Instrument 45-106 (the “Instruments”) are substantially the

same and where there are differences, they are not material in these appeals.

An Offering Memorandum (“OM”) was prepared for each Income Fund

indicating that a minimum of 100 units (a “block of units”) valued at $7.50 per unit

for a total of $750 would be issued to each investor, subject to a minimum of 160

investors (the “Investors”). All units had the same rights. The investment process

involved delivery of the OM to prospective investors who were then required to sign

the risk acknowledgment (the “Risk Acknowledgment”) and subscription agreement

(the “Subscription Agreement”) forms.

Each Income Fund allegedly issued units to 171 Investors thus raising

approximately $128,250, subject to nominal legal and accounting fees. As explained

by the Appellant, the minimum subscription amount and minimum number of

Investors, was established by him with the intention that it meet or exceed the

minimum requirements of a “mutual fund trust”, as defined by the Act.

The Appellant participated as an Investor in the First Distribution acquiring a

block of units for himself but additional units were acquired by entities owned or

controlled by him including Grencorp, Tom Capital, Tom Capital Consulting Corp

and Tom Consulting Limited Partnership. All were included as part of the Investors.

As will be seen in greater detail below, the units were promoted and

distributed to the Appellant’s immediate and extended family members, friends,

employees, business associates and others with whom he was not as closely

connected. In any event, it is not disputed that Investors who acquired units in the

2003 and 2006 series of Income Funds were essentially the same persons.

Additionally, I find that all Investors were residents of Alberta or BC.

The OM indicated that it was a “blind pool offering” or “junior capital pool”

and that the business would be identified by trustees at a later date. It indicated that

investors would be “restricted from selling their units for an indefinite period to

time” but that the Appellant would provide liquidity to those who might wish to

redeem their units at cost (though this never occurred). It also indicated that the

Appellant would “invest at least $1,000,000 in the Fund” and that he or other trustees

⁴Adopted by the Alberta Securities Commission and the BC Securities Commission effective September 14, 2005.

Page: 7

would acquire at least 66.66% of the units, thus allowing them “to substantially

control the Fund”.

Each OM contained a certificate indicating: “This Offering Memorandum

does not contain a misrepresentation”. It was signed by the Appellant as trustee and

promoter and included the following statement:

No securities regulatory authority has assessed the merits of the Units or reviewed

this offering memorandum. Any representation to the contrary is an offence. This

is a risky investment (…)

Finally, the OM contained an explanation of the “Tax Status of the Fund”

indicating that, subject to certain conditions, it would be a “unit trust” and a “mutual

fund trust” and thus a “qualified investment for Exempt Plans”. It added that if the

fund ceased to qualify as a “mutual fund trust”, investors who acquired units in an

exempt plan would have to pay a 1% tax on the fair market value of the units and

report any income or gains personally.

Upon completion of the First Distribution, the Appellant selected and

arranged for the appointment of the trustees of the Income Funds, including Bruce

MacLennan and Deborah Nickerson, as well as various legal counsel.

As will be seen in greater detail below, the income fund structure generally

included a series of trusts described as fund venture trusts (“FVT’s”) wholly-owned

by the Income Funds. The FVT’s in turn held 99.99% of the units of a master limited

partnership (“MLP”) that established a series of limited partnerships, as required, to

acquire various investments or businesses. A corporation generally wholly-owned

or controlled by the Appellant or other Insiders acted as general partner and held a

0.01% interest. The 2006 series of Income Funds did not use an FVT and

investments were held directly.

c) The acquisition of units by the RRSP Trust

Following completion of the First Distribution (including the filing of a report

with the Alberta and BC securities commission), the Appellant undertook a second

distribution of units in favour of his RRSP Trust which resulted in a substantial

dilution of the initial Investors’ aggregate holdings.

The table below provides a detailed breakdown of the subscriptions made by

the RRSP Trust in the 2003 and 2006 series of Income Funds, setting out the date of

Page: 8

the subscription, the number of units acquired, the value of the units and the

subscription amount, collectively referred to as the second distribution (the “Second

Distribution”):⁵

Subscriptions made by the RRSP Trust in the Income Funds

2003-1 Income Fund

Sub. Date

June. 2003

Jan. 2005

Dec. 2007

Total

# of Units

1,575,000

3,400,000

1,390,500

Value of Units Amount ($)

7.50

9.06

8.99

11,812,500

30,804,000

12,500,595

55,117,095

2003-2 Income Fund

Sub Date

Sept. 2003

Sept. 2006

July 2007

# of Units

540,000

225,800

60,000

Value of Units Amount ($)

7.50

4,050,000

3,499,900

896,400

15.50

14.94

15.08

18.00

May 2008

July 2010

147,700

41,666

2,227,316

749,988

Total

11,423,604

2003-3 Income Fund

Sub Date

# of Units

Value of Units Amount ($)

Sept. 2003

540,000

7.50

4,050,000

Total

4,050,000

2003-4 Income Fund

Sub Date

Nov. 2005

May 2006

# of Units

3,821,850

4,000,000

Value of Units Amount ($)

40.00

5.53

152,874,000

22,120,000

174,994,000

Total

2006-5 Income Fund

Sub Date

March 2008

July 2008

# of Units

320,000

213,333

Value of Units Amount ($)

7.50

2,400,000

1,599,998

3,999,998

Total

2006-8 Income Fund

Sub Date

# of Units

Value of Units Amount ($)

7.50 39,999,998

August 2008

5,333,333

⁵Tab 3 of the Appellant’s Compendium of Documents

Page: 9

August 2009

3,176,620

7.87

24,999,999

Total

64,999,997

The total amounts are further summarized in the table below. The RRSP Trust

acquired units of the 2003 Income Funds and the 2006 Income Funds, valued at

approximately $245 million and $69 million, respectively:

Total number and value of units acquired by the RRSP Trust⁶

2003 Income Funds

2006 Income Funds

Subscription

Year

Amount ($)

Number of

Units

Number of

Units

2,655,000

0

19,912,500

0

2003

2004

2005

2006

2007

2008

0

7,221,850

4,225,800

1,450,500

147,700

183,678,012

25,619,900

13,396,995

2,227,316

0

5,866,666

43,999,996

0

3,176,620

24,999,999

2009

Total

15,742,516

$245,584,711

9,043,286.00

$68,999,995

7

As a prerequisite to the acquisition of units in the Income Funds (the

“Acquisition Transactions”), CIBC Trust required delivery of certain documents

including copies of the OM, the subscription documents and a legal opinion from a

reputable law firm to confirm that the Income Funds were qualified investments.

The process and documentation required was more fully explained by Kerri Calhoun

and Sabrina Tam, employees of the CIBC, whose testimony is summarized below.

A total of twelve legal opinions were issued, one for each Acquisition

Transaction (collectively, the “Legal Opinions”). The Legal Opinions were set out

⁶See below

⁷This table was taken, with slight modifications, from the Written Submissions of the Crown (Volume 1 of 3). I

have corrected the table to include the subscription amount of $3,999,998 for the 2006-5 Income Fund in 2008. This

has the effect of increasing the total amount for the 2006 Promoted Funds to $68,999,995 instead of $64,999,997.

Page: 10

on the law firm’s letterhead and addressed to CIBC Trust. They contained four

paragraphs including the following:

For the purposes of this opinion, we have relied upon the facts represented to us

by James T. Grenon in the form of the Trustee’s Certificate attached hereto and

other matters as we have considered necessary or appropriate for the purpose of

this opinion.

Four of the Legal Opinions were distinct in that they included a caveat that

the facts represented in the Trustee’s Certificate (the “Certificates”) had not been

“independently verified” and that if the facts differed “from those presented (…) this

opinion may not be valid.” All of the Legal Opinions concluded that the Income

Funds were “qualified investments under the Act for the RRSP maintained for the

benefit of James T. Grenon.”

The Certificates signed by the Appellant contained an acknowledgment that

the Legal Opinions would be based in part on the factual information set out in the

certificate wherein the Appellant represented that he knew those facts to be true and

correct and specifically that:

In respect of the Fund, an offering memorandum has been filed with the Alberta

Securities Commission and the British Columbia Securities Commission and there

has been a lawful distribution in Alberta and British Columbia to the public of Units

of the Fund in accordance with the offering memorandum.

When the RRSP Trust acquired units of the Income Funds that were already

engaged in business or investment activities, valuation reports prepared by

accounting firm Grant Thornton (the “Grant Thornton valuations”) were included

with the Legal Opinions. These valuation reports were intended to support the

issuance of units at prices exceeding the initial subscription price of $7.50 per unit.

As will be seen in greater detail below, the Income Funds were required to file

a report with the securities commission within 10 days from the completion of the

distribution of units. Reports were filed in connection with the First Distribution but

no evidence was adduced to demonstrate that reports were filed in connection with

the Second Distributions.

d) The income distributions made by the Income Funds

The profits from the various investments or businesses were flowed-up

through the various entities, including the FVT’s, to the Income Funds and were then

Page: 11

distributed to unitholders, including the RRSP Trust. Trustee resolutions to support

the distribution of profits were prepared and reported in the T3 Returns.

According to the Minister, a total of $186,489,148 was distributed to the

RRSP Trust (the “Distribution Transactions”). The table below represents a

summary of all distributions made from the Income Funds to the RRSP Trust during

the Relevant Period (the “Distribution Transactions”):

Total distributions made by the Income Funds to the RRSP Trust

2003-1

2003-2

2003-3

2003-4

2006-8

Total

2004

4,192,015

1,924,362

6,116,377

2005 6,372,526

2006 4,176,831

2007 2,513,091

2008 1,381,913

2009

3,493,797

861,930

4,773,945

3,232,052

2,838,325

136,654,427

2,636,201

2,554,003

151,294,695

10,907,014

10,099,615

3,432,833*

2,194,196

2,050,920

1,516,445

3,122,169 4,638,614

Total 14,444,361 14,309,303 12,768,594 141,844,631 3,122,169 186,489,148

8

As will be seen in greater detail below, there is some dispute as to the actual

distributions made in 2005 by the 2003-4 Income Fund. The Appellant argues that

the distributions made in that year resulted from the issuance of new units to the

RRSP Trust in exchange for the transfer of the FMO units to the 2003-4 Income

Fund and that this did not have the effect of increasing the value of the RRSP Trust.

The Appellant also argues that the Minister failed to account for a loss of

$129,876,648 realized by the RRSP Trust on the disposition of those units in 2008.

In any event, the Appellant has acknowledged that the RRSP Trust earned

approximately $58 million from the Income Funds during the Relevant Period.

⁸The Minister has acknowledged that this amount should be reduced by $1,806,008 to $3,432,833: Written

Submissions of the Crown, volume 1, page 40.

Page: 12

The Appellant as trustee, approved the filing of the respective T3 Trust

Income Tax and Information Returns on an annual basis indicating that each fund

was a “mutual fund trust”. Similarly, CIBC as trustee filed a T3GR Return in which

it was required to list all “taxable” RRSP’s (meaning RRSPs that held non-qualified

investments) with the applicable tax withheld and remitted to the Minister. The

RRSP Trust was grouped with others in a specimen plan but was not listed as a

taxable RRSP holding non-qualified investments. The annual filing of the T3GR

Returns was explained by the CIBC employees and will be addressed below.

e) Tom 2003-1 Income Fund

In June 2003 (shortly after the closing of the First Distribution), the RRSP

Trust initially subscribed for 1,575,000 units of the Tom 2003-1 Income Fund at

$7.50 per unit for total proceeds of $11,812,500. Additional subscriptions were made

at later dates, as detailed above.

As with all Income Funds, a corporation acted as trustee of the FVT to ensure

a form of creditor protection, as explained by the Appellant. In this instance, 1019

Inc., a corporation wholly owned by the Appellant, acted as general partner.

This fund held 100% of the units of the Tom 2003-1 FVT that owned 99.99%

of the units of the Tom 2003-1 Master Limited Partnership. (“MLP-1”). 1042 Inc.,

another corporation wholly owned by the Appellant, acted as general partner.

Beginning in 2005, MLP-1 acquired a 99.99% in both the Raywal Limited

Partnership and the Tom 2003-1 Limited Partnership-1 that held 100% of the units

or shares in 1213321 Alberta Ltd., Raywal Kitchens Inc. and 2037629 Ontario Inc.

In 2006, the Tom 2003-1 Income Fund acquired a 99.99% interest in Can-Am

Kitchens Limited Partnership and a 75% participating interest in Landcraft Limited

Partnership with Landraft as the general partner. Prior to these transactions, 75% of

the shares in Landcraft were owned by the Appellant. The Appellant also owned or

controlled several of the companies that acted as general partners.

The Tom 2003-1 Income Fund also entered into several loan transactions. On

August 1, 2003, it entered into a loan agreement for $10 million with CCC, owned

in part by Grencorp, the Appellant’s management company. Security for the loan in

the form of a general security agreement securing the assets and undertakings of

CCC, was signed by the Appellant on behalf of the borrower.

Page: 13

As noted in the table above, the 2003-1 Income Fund distributed a total of

$14,444,361 to the RRSP Trust during the Relevant Period.

f) Tom 2003-2 Income Fund

In September 2003, the RRSP Trust initially subscribed for 540,000 units of

the Tom 2003-2 Income Fund at $7.50 per unit for total proceeds of $4,050,000. The

MacLennan RRSP owned 49% of the units in this fund. MacLennan owned 100%

of the shares in Century Services Inc. (“Century Services”) that was involved in the

business of distressed lending.

The Tom 2003-2 Income Fund held 100% of the units in a FVT whose primary

investment was a 99.99% interest in the Century Services Limited Partnership

(“CSLP”) established on November 15, 2003. Century Services held the remaining

interest and acted as general partner.

In December 2003, CSLP purchased the assets and liabilities of Century

Services Partnership for $12.6 million. The only assets of that partnership were the

shares of Century Services. In 2005, Century Services paid management fees of

$5,692,000 to CSLP. The net income of CSLP was paid to the 2003-2 FVT and then

to the Tom 2003-2 Income Fund.

As noted above, this fund distributed a total of $14,309,303 to the RRSP Trust

during the Relevant Period, excluding the amounts distributed to the MacLennan

RRSP.

g) Tom 2003-3 Income Fund

In September 2003, the RRSP Trust subscribed for 540,000 units of the 2003-

3 Income Fund at $7.50 per unit for total proceeds of $4,050,000. The RRSP Trust

and Sutherland RRSP each owned 49% of the units and the remaining units were

held by the Investors. This fund owned 100% of the units in the Tom 2003-3 FVT

which owned 99.99% of the units in MLP-3 formed in January 2004. The general

partner was 661314 B.C. Ltd. (“661 Ltd.”), a company controlled by Sutherland.

Sutherland had a controlling interest in Silvercreek Development Corporation

and was involved in the development, subdivision and sale of commercial and

residential properties in Alberta and British Columbia.

Page: 14

MLP-3 owned 99.99% of the units in Silvercreek Abbortsford Limited

Partnership (“SALP”), formed in February 2004. Several other limited partnerships

were later created but in all instances 661 Ltd. was the general partner.

Properties were identified for development and a corporation owned by

Sutherland would acquire the property. SALP or other limited partnerships in which

MLP-3 owned 99.99% of the units, acted as limited partners while 661 acted as

general partner. These properties were developed and sold to third parties. The net

income was paid by the limited partnerships to MLP-3 and then to the 2003-3 FVT,

followed by distributions to the 2003-3 Income Fund.

As appears from the table above, the Tom 2003-3 Income Fund distributed a

total of $12,768,594 to the RRSP Trust during the Relevant Period, excluding

amounts paid to the Sutherland RRSP.

h) Tom 2003-4 Income Fund

The Tom 2003-4 Income Fund was not directly involved in any business and

its income was generated from loans made to related parties including other Income

Funds. It was referred to by the Appellant as the “fund of funds”.

As noted above, the Tom 2003-4 Income Fund acquired the units of FMO, a

publicly traded mutual fund trust, held by the RRSP Trust. As long as the units of

FMO were actually held by the RRSP Trust, the Minister has acknowledged that

they were a qualified investment for RRSP purposes.

This transaction took place on November 14, 2005, and involved, inter alia,

a transfer by the RRSP Trust of its 58% interest in FMO to the 2003-4 Income fund,

in exchange for units. As part of that transaction, the RRSP Trust submitted a

subscription for 3,821,850 units valued at $40 per unit for a total $152,874,012.

In May 2006, the RRSP Trust submitted a further subscription for 4 million

units valued at $5.53 per unit for net proceeds of $22,120,000. No explanation was

provided to the Court as to why the value of the units had decreased in value between

November 2005 and May 2006.

As noted in paragraph k) of the Reply to the Fresh as Further Amended Reply,

the transaction involving the transfer of the FMO units is more particularly described

in the Corporate Appeals.

Page: 15

i) Tom 2006-5 Income Fund

The Tom 2006-5 Income Fund was settled in 2006.

In March 2008, the RRSP Trust subscribed for 320,000 units at $7.50 per units

for net proceeds of $2,400,000 and in July 2008, it subscribed for an additional

213,333 units at $7.50 per unit for net proceeds of $1,599,998.

As a result of these subscriptions, the RRSP Trust controlled more than 99%

of the outstanding units but no distributions were made during the Relevant Period.

The proposed acquisition was never completed and all units were eventually

redeemed at cost.

j) Tom 2006-8 Income Fund

The 2006-8 Income Fund was also settled in 2006.

In March 2008, the RRSP Trust subscribed for 5,333,333 units at $7.50 per

unit for net proceeds of $39,999,998 and in August 2009, it subscribed for a further

3,176,620 units at $7.87 per unit for net proceeds of $24,999,999.

On August 12, 2008, the Tom 2006-8 Income Fund entered into a loan

transaction with the Appellant extending a loan of $18,000,000 at 9%per annum.

The loan proceeds were used for investment purposes and the Appellant

acknowledged in oral testimony that he claimed the interest charges as a deduction

on his personal tax return. Several other loans were made to related corporations.

As noted in the table above, the 2006-8 Income Fund made distributions of

$3,122,169 to the RRSP Trust during the Relevant Period.

k) The Fact witnesses

Geoffrey Merritt

The Appellant called Geoffrey Merritt, a chemical engineer with extensive

experience in the oil and gas industry. He invested in both the 2003 and 2006 series

of Income Funds with his spouse and 2 children, aged 15 and 18 in 2003.

Page: 16

Mr. Merritt was made aware of the funds through the Appellant’s brother and

since he knew that the Appellant would be investing his own money, he did not feel

the need to conduct any further due diligence. He confirmed signing the subscription

documents on behalf of his spouse and children and receiving income distributions

and T3’s over the years. He stated that his children held investments in other

securities from a young age but no corroborating evidence was adduced.

Mary Yee

Mary Yee was employed as a legal assistant with Tom Capital for 14 years

and provided administrative assistance for the Income Funds, including up-dates to

unitholders, distributions, tax slips and notices of annual meetings.

She testified that all the investors in the Income Funds were residents of

Alberta or BC and that while minors had subscribed for units, none had ever refuted

the subscription or refused or returned a distribution cheque, even upon reaching the

age of majority. She and her spouse had subscribed for units in the 2006 series of

Income Funds based on the success of the 2003 series.

Deborah Nickerson

Deborah Nickerson joined the accounting team of Tom Capital in 2005 and

eventually assumed a leadership role. She also provided accounting services for both

Tom Capital and the Income Funds and served as trustee for several funds. She

provided those services through a numbered company.

Ms. Nickernon also provided advice as to the appropriate interest rate and

security to be provided for loans from the Income Funds to related parties such as

the Appellant. She felt that the terms were commercially reasonable but

acknowledged that she had no formal training or credentials in this area. She also

indicated that the Income Funds were regularly reviewed by external accountants,

that clarifications were provided where needed and that if any issues arose, they were

always resolved.

In connection with the Income Funds, she too confirmed that all Investors

were residents of either Alberta or BC and that units had been issued to minors. In

fact, she testified that she had signed the Subscription Agreement and Risk

Acknowledgment forms for her two children, aged 10 And 13 at the time of the

subscriptions in 2003. She also indicated that the subscription funds for her children

Page: 17

were intended as loans to be reimbursed once the units were redeemed. She

acknowledged that she had no documentation to support this.

Bruce MacLennan

Bruce MacLennan was the president of Century Services whose core business

was appraising real estate or other assets for institutional and private lenders. It was

also involved in distressed lending which is how he came into contact with the

Appellant and Tom Capital.

Mr. MacLennan served as trustee of the 2003 series of Income Funds. He

testified that he signed the subscription and risk acknowledgement forms for his two

children (both aged 5 in 2003) who acquired units in the 2003 series of Income

Funds. Both children signed their own documents for the 2006 series of Income

Funds but he witnessed their signature. During cross-examination, he acknowledged

that he had actually paid the subscription price for his spouse and two children and,

on re-examination, indicated that the amounts paid on their behalf were intended as

gifts. All distribution cheques were deposited in their respective bank accounts.

Kerri Calhoun

Kerri Calhoun joined CIBC Trust Corporation in 1988 and at the time of her

testimony was Executive Director. She explained that only trust companies could

act as trustees of an RRSP and as a result, CIBC, being a Canadian chartered bank,

had appointed CIBC Trust as trustee for all its RRSP’s. That said, CIBC Wood

Gundy, and later CIBC Capital Markets Inc., were appointed as agents to manage

the day-to-day administration and ensure that assets were qualified investments.

Ms. Calhoun also explained that in a self-directed plan, the annuitant made all

investment decisions and the role of CIBC Wood Gundy, as agent for CIBC Trust,

was to ensure that investments were qualified investments under the Act.

Other investments, described as non-public offerings or private placements,

required additional documentation including the OM, Subscription Agreement as

well as a legal opinion from a reputable law firm confirming that the investment was

a qualified investment. The team tasked with the review of the documents would

have been familiar with the requirements of the Act and Regulations.

Page: 18

From CIBC’s perspective, they relied on the legal opinions provided as to the

status of the investment though it understood that the law firm itself would be relying

on the statements made in a trustee certificate. If the investment was an initial

offering, the value of the securities was determined with reference to the OM but for

a secondary or subsequent offering, a valuation report prepared by a reputable

accounting firm might be required. On cross-examination, she indicated that there

was no obligation to obtain a comprehensive valuation report. They were only

required to make reasonable efforts to obtain a fair market value of the proposed

investment. She also indicated that for self-directed plans, in accordance with the

contractual documentation required to open such a plan, it was ultimately up to the

annuitant to ensure that the acquired assets were qualified investments.

With respect to the CIBC Trust’s filing obligations with the CRA, Ms.

Calhoun indicated that CIBC would submit an application and declaration of trust.

If the documentation was approved, CRA would assign a specimen plan number that

could reference hundred of thousand of RRSP plans. On an annual basis, CIBC

would then submit a T3GR – Group Income Tax and Information Return for RRSP,

RRIF, RESP, or RDSP Trusts, being the prescribed form that included the fair market

value of all RRSP’s listed under that specimen plan.

The T3GR included a listing of all RRSPs within the specimen plan that held

non-qualified investments, described as taxable RRSP’s, in which case taxes were

deducted from the RRSP and paid to the CRA. In this instance, the RRSP Trust was

not listed on any of the T3GR forms filed during the Relevant Period because,

according to Ms. Calhoun, it did not hold any non-qualified investments.

With respect to the documentation submitted by the Appellant or his agents,

she was not aware and could not comment as to whether minors had acquired units

in the Income Funds or who had actually paid the subscription amounts. Such

enquiries were not made given the reliance on legal opinions.

On cross-examination, she acknowledged her understanding that the T3GR

was both an income tax return and information return but that if an RRSP trust had

taxable income, a T3 Trust and Information Return was required to be filed.

She indicated that a T3 Return was not filed for RRSPs that held only qualified

investments as CRA did not require it to do so. She acknowledged that a T3 return

had not been filed with the CRA in connection with the RRSP Trust.

Sabrina Tam

Page: 19

Sabrina Tam was a director of business risk effectiveness at CIBC World

Markets Inc. She commenced her employment with CIBC in 1999 as a compliance

officer moving on in 2005 to the business risk and sales supervision group (“BBRS

Group”) tasked with reviewing and approving private-placement transactions.

The BBRS Group reviewed all private placement documentation. If concerns

arose, they consulted with the CIBC compliance or legal departments. She

confirmed that the required documents included a subscription agreement to confirm

both the value and number of securities being purchased as well as a risk

acknowledgement and legal opinion from a reputable law firm confirming that the

investment was a qualified investment for RRSP purposes. On cross-examination,

she stated that they would typically rely on the legal opinion provided and would not

parse the representations or certificates contained in the OM.

THE ASSESSMENTS

The Minister has issued a number of assessments or reassessments (the

“Reassessments”) as described below but has acknowledged that the Part 1

assessments in both appeals seek to tax the same amounts for the 2008 and 2009

taxation years and that she can only be successful in one or the other:

a) Grenon Appeal - Part 1 Reassessments

The Appellant appeals from Notices of Reassessment made by the Minister

on February 28, 2013, on the basis that the payments of $3,432,833 and $4,638,614

made by the Income Funds to the RRSP Trust during the 2008 and 2009 taxation

years, respectively, (the “Grenon Part 1 Reassessments”), should be assessed as

indirect payments taxable in the hands of the Appellant on the basis of subsection

56(2)⁹or in the alternative on the basis of sham, window dressing or GAAR. The

2009 taxation year gave rise to a nil assessment, such that it is not under appeal, but

the Appellant claimed a non-capital loss for that year, the amount of which is not in

dispute, which he carried back to the 2006 taxation year. The Minister reduced the

non-capital loss by $4,638,614, thus resulting in a consequential increase of the

Appellant’s taxable income for the 2006 taxation year.

b) Grenon Appeal - Part X.1 Assessments

⁹An assessment pursuant to subsection 15(1) was later abandoned.

Page: 20

The Appellant also appeals from Notices of Assessment (T1-OVP) made by

the Minister on March 1, 2013 (late filing penalties were later deleted by Notice of

Reassessment dated August 13, 2014) in respect of the 2004 to 2011 taxation years

(the “Grenon Part X.1 Assessments”) on the basis that payments made by the Income

Funds to the RRSP Trust (described herein as the Distribution Transactions) should

be re-characterized as excess contributions to the RRSP Trust and subject to a tax of

1 % calculated monthly pursuant to subsection 204.1(2.1), or in the alternative, on

the basis of sham, window dressing or GAAR.

c) RRSP Trust Appeal - Part 1 Assessments

The RRSP Trust appeals from Notices of Assessment made by the Minister

on March 6, 2013, served on CIBC as trustee, in respect of the 2004 to 2009 taxation

years (the “RRSP Trust Part 1 Assessments”) assessing taxes and late filing penalties

on the payments made by the Income Funds to the RRSP Trust (described herein as

the Distribution Transactions), pursuant to subsection 146(10.1) or in the alternative,

on the basis of sham, window dressing or GAAR.

d) RRSP Trust Appeal - Part XI.1 Reassessments

The RRSP Trust also appeals from Notices of Reassessment made by the

Minister on March 6, 2013, served on CIBC as trustee, in respect of the 2004 to 2009

taxation years (the “RRSP Trust Part XI.1 Reassessments”), assessing a tax of 1%

on the fair market value of the units of the Income Funds acquired by the RRSP

Trust, pursuant to subsection 207.1(1) or, in the alternative, on the basis of sham,

window dressing or GAAR. Late filing penalties were also assessed.

THE ISSUES

The issues in this appeal may be described as follows:

a) Grenon Appeal - Part 1 Reassessments and Part X.I Assessments

i. Whether the Income Funds were a “qualified investment” for RRSP

purposes, as that term is defined in subsection 146(1) of the Act and

Regulation 4900(1) and, more particularly, whether the Income Funds were

properly constituted as a “mutual fund trust” as defined in subsection 132(6)

and met the prescribed conditions set out in Regulation 4801, or alternatively

qualified as a unit trust as described in Regulation 4900(1)(d.2);

Page: 21

ii. Whether the Income Funds were shams or mere window dressing;

iii. Whether the Minister was entitled to include the Income Fund payments

made in respect of the 2008 and 2009 taxation years to the Appellant’s

personal income on the basis that they were “indirect payments” relying on

subsection 56(2) or, in the alternative, whether the Minister was entitled to do

so relying on sham, window dressing or GAAR, as a basis for the application

of subsection 56(2);

iv. Whether the Minister was entitled to re-characterize the payments made by

the Income Funds to the RRSP Trust, described herein as the Distribution

Transactions, as “excess contributions” to the RRSP Trust, relying on sham

or window dressing or alternatively on GAAR, and if so, whether the

Appellant was entitled to a credit of $152,874,000 (or at least $136,654,427,

being the lesser amount used by the Minister), being the value of the units

issued to the RRSP Trust in exchange for the FMO units and/or to a further

credit of $129,876,648 as a result of a loss suffered by the RRSP Trust from

the disposition in 2008 of the units held in the 2003-4 Income Fund;

v. Whether the Part 1 and Part X.1 Reassessments are statute-barred and in

particular, whether the Appellant was required to file a separate T1-OVP

Return to report and pay tax on the excess contributions;

b) RRSP Trust Appeal - Part 1 Assessments and Part XI.1 Reassessments

i. Whether the Minister was entitled to assess the RRSP Trust on the basis that

the Income Fund payments, described herein as the Distribution Transactions,

were income derived from non-qualified investments, taxable pursuant to

subsection 146(10.1) of the Act or alternatively, on the basis of sham, window

dressing or GAAR and if so, whether the Appellant was entitled to a credit of

$129,876,648 resulting from a loss suffered by the RRSP Trust from the

disposition in 2008 of the units held in the 2003-4 Income Fund;

ii. Whether the Minister was entitled to assess the RRSP Trust for a tax equal

to 1% calculated monthly on the fair market value of the units in the Income

Funds at the time they were acquired, pursuant to subsection 207.1(1) of Part

XI.1 of the Act or alternatively, on the basis of sham, window dressing or

GAAR;

iii. Whether the Part 1 and Part XI.1 assessments are statute-barred on the

basis that CIBC filed the T3GR form within 90 days from the end of each

Page: 22

applicable year, as required by subsection 207.2(1) and was assessed

accordingly;

PRELIMINARY ISSUES

The Court reserved on two issues at the conclusion of the hearing and what

follows is the final disposition forming part of these Reasons for Judgment.

a) Admissibility of the Affidavit of Helen Little

As noted above, the Respondent did not call any witnesses but on the final

day of the hearing, tendered the affidavit of Helen Little (the “Affidavit”), an auditor

with the CRA, relying on the following provision of the Act:

244(9) Proof of Documents – An affidavit of an officer of the Canada Revenue

Agency, sworn before a commissioner or other person authorized to take affidavits,

setting out that the officer has charge of the appropriate records and that a document

annexed to the affidavit is a document or true copy of a document, or a print-out of

an electronic document, made by or on behalf of the Minister or a person exercising

a power of the Minister or by or on behalf of a taxpayer, is evidence of the nature

and contents of the document.

Appended to the Affidavit, was a computer screen shot of the name and

birthdate of all minors who had acquired units in the Income Funds. The Appellant

was aware of its contents since it had been in the possession of counsel for several

months prior to the actual hearing of the appeals.

Helen Little’s name had been included in the Respondent’s list of potential

witnesses with a short summary of her proposed testimony but she was not called to

testify. When the Affidavit was tendered as evidence as the Respondent closed its

case, the Appellant requested a sealing order given the confidential nature of the

information pertaining to minors. The Court issued the Order, restricting access to

Court officials, the parties to these proceedings and their authorized agents.

The Appellant also reserved the right to make further written submissions as

to the admissibility or weight of the Affidavit. There were no further objections.

Aside from the sealing Order, no further ruling was made at that time and the

intention of the Court, though not clearly expressed as appears from the transcript of

the hearing, was to mark the Affidavit for identification purposes and to reserve on

its admissibility, subject to written submissions to be delivered at a later date.

Page: 23

The Appellant indicates in written submission that Helen Little was to be

cross-examined at the hearing. It is argued that although she was present in court for

most of the hearing, she was not present when the Respondent closed its case and

this has deprived him of the fundamental right of cross-examination.

There is little doubt that the facts that the Affidavit seeks to establish are

relevant to the Minister’s position i.e. whether minors acquired units of the Income

Funds. It had been established that “the presumption is that relevant evidence is

admissible and that all those called to testify with respect to relevant evidence are

compellable”: Globe and mail v. Canada (AG), (2010) 2 SCR 592, (para 56).

Thus, although Hellen Little was “compellable”, the Appellant did not

indicate to the Court that he wished to cross-examine her nor request an adjournment

to secure her presence. Given that 5-6 days remained in the scheduled time allotted

for the hearing of the appeals, there was still ample time to do so.

As excerpted above, subsection 244(9) indicates that an “affidavit of an officer

of the Canada Revenue Agency (…) setting out that the officer has charge of the

appropriate records and that a document annexed” is a true copy of “a print-out of

an electronic document (…) is evidence of the nature and contents of the document”.

Similarly, subsection 25(1) of the Canada Evidence Act, RSC, 1985, c C-5 provides

that “[w]here an enactment provides that a document is evidence of a fact (…) that

document is admissible in evidence and the fact is deemed to be established in the

absence of any evidence to the contrary”.

The Minister submits that the Appellant failed to introduce “any evidence to

the contrary” by way of documentary or viva voce evidence as to the age of unit-

holders in the Income Fund. As will be reviewed in greater detail below, the

Appellant confirmed in oral testimony that subscription documents signed by minors

or their guardian, had been accepted and units issued accordingly. This was also

confirmed by several fact witnesses, as noted above.

As noted by the Court at the hearing, the fact that minors had signed

subscription documents was relatively uncontroversial. In fact, CIBC Trust has since

indicated in written submissions (para. 44) that “[b]etween 35 and 40 unitholders

were under the age of 18 years old when they subscribed”.

In James Scott et al. vs. HMTQ, 2017 TCC 224 (“James Scott”) (paras 36-64),

Sommerfeldt J. conducted a review of the applicable law on the admissibility of an

affidavit under subsection 244(9). In that instance, the appellant had objected to the

Page: 24

filing of an affidavit without prior notice arguing that it “constituted prejudicial ‘last-

minute trial-by-ambush type tactics” and that the affidavit “should not be admitted

into evidence”.

Justice Sommerfeldt reserved on its admissibility and later reviewed

subsection 89(1) of the Tax Court of Canada Rules (General Procedure) SOR/90-

688a (the “Rules”) which provides as follows:

89 (1) Unless the Court otherwise directs, except with the consent in writing of

the other party or where discovery of documents has been waived by the other

party, no document shall be used in evidence by a party unless

(a) reference to it appears in the pleadings, or in a list or an affidavit filed

and served by a party to the proceeding,

(b) it has been produced by one of the parties, or some person being

examined on behalf of one of the parties, at the examination for discovery,

or

(c) it has been produced by a witness who is not, in the opinion of the

Court, under the control of the party.

(2) Unless the Court otherwise directs, subsection (1) does not apply to a

document that is used solely as a foundation for or as part of a question in

cross-examination or re-examination.

Justice Sommerfeldt noted (para 47) that “the opening words of subsection

89(1) (…) provide the Court with a discretion to allow a document into evidence

even if the requirements of that provision have not been met” and that:

(47) “(…) The Court must exercise its discretion judicially, according to the rules

of reason and justice, and not arbitrarily. In determining whether to admit a

previously undisclosed document, there must be a balancing of the competing

interest of justice and the overriding importance of having all of the relevant

information before the Court to enable it to arrive at a proper and just disposition

of the particular appeal (…).”

In this instance, as noted above, the Appellant reserved the right to make

written submissions as to the admissibility of the Affidavit but did not indicate that

he wished to conduct cross-examinations nor request an adjournment for that

purpose.

Page: 25

The contents of the Affidavit are relevant to these proceedings and are

relatively uncontroversial (as noted above) since the Minister had made an

assumption that minors had acquired units in the Income Funds. The Appellant has

not seriously disputed the Minister’s position on this issue but has not outright

admitted the actual number of minors (except as noted above by the CIBC Trust)

indicating in response to a request to admit that there was no reason to conclude that

the listed minors were not minors, arguing in any event that the issue was not

relevant since minors could acquire units in the Income Funds.

In the end, I find that the information appended to the Affidavit was readily

available or would have been readily available to the Appellant had he taken the time

to obtain it in order to contradict the Minister’s assumption. He chose not to do so

despite having the evidentiary burden of rebutting the assumption.

I conclude that the Court should exercise its discretion pursuant to subsection

89(1) of the Rules and that rejecting the Affidavit at this time, would be procedurally

unfair to the Minister. Having considered the written and oral submissions of the

respective parties and having considered the requirements of subsection 89(1) of the

Rules, the Court hereby rules that the Affidavit of Helen Little is admissible.

It establishes the birthdates of the minor Investors in the 2003 and 2006 series

of Income fund. The relevance of this information will be discussed below.

b) Admissibility of certain Read-ins

Parties are permitted to read into evidence examination for discovery

materials pursuant to the operation of section 100 of the Rules and Tax Court of

Canada Practice Note 8, titled “Use of Discovery/Undertakings”, July 19, 2001

(“Practice Note 8”) which governs the use of examinations for discovery and

undertakings as evidence at trial. An adverse party may request that other parts of

the evidence be introduced to qualify or provide some context concerning the

proposed read-ins.

Before the scheduled date for the hearing of theses appeals, the parties had

exchanged their list of read-ins from examination for discovery. The Appellant gave

notice of his proposed read-ins on February 1, 2019 and the Minister did not request

any contextual read-ins in respect of those read-ins.

The Minister served a notice of proposed read-ins on February 6, 2019,

exactly four days before the hearing was scheduled to commence. They consisted of

Page: 26

approximately 850 pages of discovery transcript, representing a substantial majority

of the discovery. The Appellants reviewed the Minister’s proposed read-ins within

the two days contemplated by Practice Note 8 and served their notice of proposed

contextual read-ins on February 7th and 8th, 2019.

On the last day of trial, the Minister tendered on the Appellant and the Court

her list of read-ins from examinations for discovery but the list was a significantly

abridged selection of the read-ins which the Minister had identified in her pre-trial

notice, constituting about one-third of that original list. The Appellants requested

time to perform a new contextual review of the Minister’s actual read-ins as the

previously identified contextual read-ins were rendered moot by the significant

reduction in the Minister’s read-ins. The Minister challenged the appellants’ request

for time to complete a contextual review of the read-ins.

The Court ordered that the parties provide written submissions on the matter

and the parties did so later in March of 2019. The Minister challenged certain of the

Appellant’s requests to read-in additional portions of the discovery evidence in order

to qualify or explain the Minister’s read-ins pursuant to subsection 100(3) of the

Rules. The Minister challenged these requests on the basis that section 100 and

Practice Note 8 did not allow additional read-ins at or following trial.

Only four contextual read-ins are at issue. For reasons set out in the attached

Appendix A, I find that the contextual read-ins #8, #10 and #18 are admissible and

that contextual read-ins #16 is also admissible but subject to certain limits.

RELEVANT STATUTORY PROVISIONS

a) The RRSP legislative framework

The basic legislative framework for RRSP’s is set out in Division G, entitled

“Deferred & Special Income Arrangements” and is governed by section 146 and

various other provisions of the Act in addition to certain regulations under the Income

Tax Regulations, CRC, c 945 (the “Regulations”).

Definitions

Définitions

146(1) In this section,

annuitant means

146(1) Les définitions qui suivent

s’appliquent au présent article.

Page: 27

(a) until such time after maturity of the

plan as an individual’s spouse or

déductions inutilisées au titre des

REER

common-law partner becomes entitled, as

a consequence of the individual’s death, a) Jusqu’au moment, après l’échéance

to receive benefits to be paid out of or du régime, où son conjoint acquiert le

under the plan, the individual referred to droit, par suite du décès du rentier, de

in paragraph (a) or (b) of the definition recevoir des prestations qui doivent être

retirement savings plan in this subsection versées sur ce régime ou en vertu de ce

for whom, under a retirement savings régime, le particulier visé aux alinéas a)

plan, a retirement income is to be ou b) de la définition de régime

provided, and

d’épargne-retraite au présent paragraphe

pour lequel est prévu, en vertu d’un

(b) thereafter, the spouse or common-law régime d’épargne-retraite, un revenu de

partner referred to in paragraph (a); retraite;

(rentier)

b) après ce moment, son conjoint.

benefit includes any amount received out (annuitant)

of or under a retirement savings plan other

than

prestation est comprise dans une

prestation toute somme reçue dans le

(a) the portion thereof received by a cadre d’un régime d’épargne-retraite, à

person other than the annuitant that can l’exception

reasonably be regarded as part of the

amount included in computing the income a) de la fraction de cette somme reçue

of an annuitant by virtue of subsections par une personne autre que le rentier et

146(8.8) and 146(8.9),

qu’il est raisonnable de considérer

comme faisant partie de la somme

(b) an amount received by the person with incluse dans le calcul du revenu d’un

whom the annuitant has the contract or rentier en vertu des paragraphes (8.8) et

arrangement described in the definition (8.9);

retirement savings plan in this subsection

as a premium under the plan,

b) d’une somme reçue à titre de prime en

vertu du régime par la personne avec

(c) an amount, or part thereof, received in laquelle le rentier a conclu le contrat ou

respect of the income of the trust under the l’arrangement visé à la définition de

plan for a taxation year for which the trust régime d’épargne-retraite au présent

was not exempt from tax by virtue of paragraphe;

paragraph 146(4)(c), and

c) d’une somme, ou d’une partie de cette

(c.1) a tax-paid amount described in somme, reçue relativement au revenu de

paragraph (b) of the definition tax-paid la fiducie en vertu du régime, pour une

amount in this subsection that relates to année d’imposition, à l’égard de laquelle

interest or another amount included in la fiducie n’était pas exonérée d’impôt

computing income otherwise than en vertu de l’alinéa (4)c);

because of this section

Page: 28

and without restricting the generality of c.1) d’un montant libéré d’impôt, visé à

the foregoing includes any amount paid to l’alinéa b) de la définition de cette

an annuitant under the plan

expression au présent paragraphe, qui se

rapporte à des intérêts ou à un montant

(d) in accordance with the terms of the inclus dans le calcul du revenu

plan,

autrement que par l’effet du présent

article.

(e) resulting from an amendment to or

modification of the plan, or

Sans préjudice de la portée générale de

ce qui précède, le terme vise toute

(f) resulting from the termination of the somme versée à un rentier en vertu du

plan; (prestation)

régime :

(…)

d) soit conformément aux conditions du

régime;

issuer means the person referred to in the

definition retirement savings plan in this e) soit à la suite d’une modification du

subsection with whom an annuitant has a régime;

contract or arrangement that is a

retirement savings plan; (émetteur)

(…)

f) soit à la suite de l’expiration du

régime. (benefit)

(…)

non-qualified investment, in relation to a

trust governed by a registered retirement émetteur la personne visée à la

savings plan, means property acquired by définition de régime d’épargne-retraite

the trust after 1971 that is not a qualified au présent paragraphe et avec laquelle

investment for the trust; (placement non un rentier a conclu un contrat ou un

admissible)

arrangement qui constitue un régime

d’épargne-retraite. (issuer)

(…)

qualified investment for a trust governed

by a registered retirement savings plan placement non admissible dans le cas

means

d’une fiducie régie par un régime

enregistré d’épargne-retraite, s’entend

(a) an investment that would be described des biens acquis par la fiducie après

in any of paragraphs (a), (b), (d) and (f) to 1971 et qui ne constituent pas un

(h) of the definition qualified investment placement admissible pour cette fiducie.

in section 204 if the references in that (non-qualified investment)

definition to a trust were read as

references to the trust governed by the (…)

registered retirement savings plan,

placement admissible« placement

admissible » Dans le cas d’une fiducie

Page: 29

(b) a bond, debenture, note or similar régie par un régime enregistré

obligation

d’épargne-retraite

(i) issued by a corporation the shares of a) placement qui serait visé aux alinéas

which are listed on a prescribed stock a), b), d) et f) à h) de la définition de

exchange in Canada, or

placement admissible à l’article 204 si la

mention « fiducie » y était remplacée par

(ii) issued by an authorized foreign bank la mention de la fiducie régie par le

and payable at a branch in Canada of the régime enregistré d’épargne-retraite;

bank,

b) obligation, billet ou titre semblable

(c) an annuity described in the definition qui, selon le cas :

retirement income in respect of the

annuitant under the plan, if purchased (i) est émis par une société dont les

from a licensed annuities provider,

actions sont inscrites à la cote d’une

bourse de valeurs au Canada visée par

règlement,

(…)

(d) such other investments as may be (ii) est émis par une banque étrangère

prescribed by regulations of the Governor autorisée et payable à sa succursale au

in Council made on the recommendation Canada;

of the Minister of Finance; (placement

admissible)

c) rente visée à la définition de revenu de

retraite relativement au rentier en vertu

du régime, si elle a été achetée d’un

fournisseur de rentes autorisé;

(…)

No tax while trust governed by plan

d) tout autre placement qui peut être

146(4) Except as provided in subsection prévu par règlement pris par le

146(10.1), no tax is payable under this gouverneur en conseil, sur

Part by a trust on the taxable income of the recommandation du ministre des

trust for a taxation year if, throughout the Finances. (qualified investment)

period in the year during which the trust

was in existence, the trust was governed (…)

by a registered retirement savings plan,

except that

Exonération d’impôt d’une fiducie

régie par le régime

(a) if the trust has borrowed money (other

than money used in carrying on a 146(4) Sous réserve du paragraphe

business) in the year or has, after June 18, (10.1), aucun impôt n’est payable en

1971, borrowed money (other than money vertu de la présente partie par une

used in carrying on a business) that it has fiducie sur son revenu imposable pour

not repaid before the commencement of une année d’imposition si, tout au long

the year, tax is payable under this Part by de la période de l’année où la fiducie

the trust on its taxable income for the year;

Page: 30

(b) in any case not described in paragraph existait, elle était régie par un régime

146(4)(a), if the trust has carried on any enregistré d’épargne-retraite; toutefois :

business or businesses in the year, tax is

payable under this Part by the trust on the a) si la fiducie a emprunté de l’argent

amount, if any, by which

(autre que de l’argent utilisé pour

l’exploitation d’une entreprise) au cours

(i) the amount that its taxable income for de l’année ou a emprunté, après le 18

the year would be if it had no incomes or juin 1971, de l’argent (autre que de

losses from sources other than from that l’argent utilisé pour l’exploitation d’une

business or those businesses, as the case entreprise) qu’elle n’a pas remboursé

may be,

avant le début de l’année, un impôt est

payable par la fiducie, en vertu de la

présente partie, sur son revenu

imposable pour l’année;

exceeds

(ii) such portion of the amount determined

under subparagraph 146(4)(b)(i) in b) dans tout cas non visé à l’alinéa a), si

respect of the trust for the year as can la fiducie a exploité une ou plusieurs

reasonably be considered to be income entreprises au cours de l’année, un impôt

from, or from the disposition of, qualified est payable par elle en vertu de la

investments for the trust; and

présente partie sur l’excédent éventuel

du montant visé au sous-alinéa (i) sur le

(c) if the last annuitant under the plan has montant visé au sous-alinéa (ii):

died, tax is payable under this Part by the

trust on its taxable income for each year (i) le montant qui constituerait le revenu

after the year following the year in which imposable de la fiducie pour l’année si

the last annuitant died.

elle n’avait pas tiré de revenu, ni subi de

pertes de sources autres que l’entreprise

ou les entreprises en question,

(…)

(ii) la partie du montant déterminé selon

Disposition of non-qualified investment

le sous-alinéa (i) à l’égard de la fiducie

146(6) Where in a taxation year a trust pour l’année, qu’il est raisonnable de

governed by a registered retirement considérer comme un revenu provenant

savings plan disposes of a property that, soit de placements admissibles pour elle,

when acquired, was a non-qualified soit de la disposition de tels placements;

investment, there may be deducted, in

computing the income for the taxation c) si le dernier rentier en vertu du régime

year of the taxpayer who is the annuitant est décédé, un impôt est payable par la

under the plan, an amount equal to the fiducie en vertu de la présente partie sur

lesser of

son revenu imposable pour chaque

année postérieure à l’année suivant

(a) the amount that, by virtue of l’année du décès de ce rentier.

subsection 146(10), was included in

computing the income of that taxpayer in (…)

Page: 31

respect of the acquisition of that property,

Disposition d’un placement non

and

admissible

(b) the proceeds of disposition of the 146(6) Lorsque, au cours d’une année

property.

d’imposition, une fiducie régie par un

régime enregistré d’épargne-retraite

dispose d’un bien qui, au moment où il a

été acquis, était un placement non

admissible, il est permis de déduire, dans

le calcul du revenu du contribuable qui

(…)

Benefits taxable

146(8) There shall be included in est le rentier du régime, pour l’année

computing a taxpayer’s income for a d’imposition, une somme égale au

taxation year the total of all amounts moins élevé des montants suivants :

received by the taxpayer in the year as

benefits out of or under registered a) le montant qui était, en vertu du

retirement savings plans, other than paragraphe (10), inclus dans le calcul du

excluded withdrawals (as defined in revenu de ce contribuable à l’égard de

subsection 146.01(1) or 146.02(1)) of the l’acquisition de ce bien;

taxpayer and amounts that are included

under paragraph (12)(b) in computing the b) le produit de disposition du bien.

taxpayer’s income.

(…)

Prestations imposables

Where acquisition of non-qualified

investment by trust

146(8) Est inclus dans le calcul du

revenu d’un contribuable pour une année

146(10) Where at any time in a taxation d’imposition le total des montants qu’il

year a trust governed by a registered a reçus au cours de l’année à titre de

retirement savings plan

prestations dans le cadre de régimes

enregistrés d’épargne-retraite,

(a) acquires a non-qualified investment, l’exception des retraits exclus au sens

à

or

des paragraphes 146.01(1) ou 146.02(1),

et des montants qui sont inclus, en

(b) uses or permits to be used any property application de l’alinéa (12)b), dans le

of the trust as security for a loan,

calcul de son revenu.

the fair market value of

(…)

(c) the non-qualified investment at the

time it was acquired by the trust, or

Acquisition d’un placement non

admissible par une fiducie

(d) the property used as security at the 146(10) Lorsque, à un moment donné

time it commenced to be so used, d’une année d’imposition, une fiducie

Page: 32

as the case may be, shall be included in régie par un régime enregistré

computing the income for the year of the d’épargne-retraite :

taxpayer who is the annuitant under the

plan at that time.

a) acquiert un placement non admissible;

b) utilise à titre de garantie d’un prêt un

bien quelconque de la fiducie ou en

permet l’utilisation,

la juste valeur marchande :

c) du placement non admissible au

moment de son acquisition par la

fiducie;

d) du bien utilisé à titre de garantie, au

moment où il a commencé à être ainsi

utilisé,

selon le cas, doit être incluse dans

le calcul du revenu, pour l’année,

du contribuable qui est le rentier

en vertu du régime à ce moment.

Subsection 146(10) was amended in 2011 (Keeping Canada’s Economy and

Jobs Growing Act, SC 2011, c. 24 at s.65) to introduce the concept of a “controlling

individual” for Registered Retirement Savings Plans in section 207.04 of Part XI.01

of the Act and impose a tax of 50% on the fair market value of non-qualified

investments held by the controlling individual in the calendar year. Those

amendments only apply to non-qualified investments acquired after March 22, 2011

such that they are not at issue in this appeal.

In any event, the Appellant, being “the taxpayer” who is the annuitant under

the plan, was not assessed by the Minister pursuant to subsection 146(10) and the

Minister assessed the RRSP Trust pursuant to subsection 146(10.1) which provides

as follows:

Where tax payable

Impôt payable

146(10.1) Where in a taxation year a trust 146(10.1) Lorsqu’une fiducie régie par

governed by a registered retirement un régime enregistré d’épargne-retraite

savings plan holds a property that is a non- détient, au cours d’une année

qualified investment,

Page: 33

(a) tax is payable under this Part by the d’imposition, un bien qui est un

trust on the amount that its taxable income placement non admissible :

for the year would be if it had no incomes

or losses from sources other than non- a) la fiducie doit payer un impôt en vertu

qualified investments and no capital gains de la présente partie sur le montant qui

or losses other than from dispositions of serait son revenu imposable pour l’année

non-qualified investments; and

si les sources de ses revenus et pertes

n’étaient que des placements non

(b) for the purposes of paragraph admissibles et si ses gains en capital et

146(10.1)(a),

pertes en capital ne résultaient que de la

disposition de tels placements;

(i) income includes dividends described in

section 83, and

b) pour l’application de l’alinéa a):

(ii) paragraphs 38(a) and 38(b) shall be (i) sont compris dans le revenu les

read without reference to the fractions set dividendes visés à l’article 83,

out in those paragraphs

(ii) aux alinéas 38a) et b) il n’est pas tenu

(…)

compte des fractions qui y figurent.

PART X.I - Tax in Respect of Over-contributions to Deferred Income Plans

Tax payable by individuals

Impôt payable par les particuliers

204.1 (1) (…)

204.1(1) (…)

Tax payable by individuals -- Impôt payable par les particuliers —

contributions after 1990 cotisations postérieures à 1990

204(2.1) Where, at the end of any month 204(2.1) Le particulier qui, à la fin d’un

after December, 1990, an individual has a mois donné postérieur au mois de

cumulative excess amount in respect of décembre 1990, a un excédent cumulatif

registered retirement savings plans, the au titre de régimes enregistrés

individual shall, in respect of that month, d’épargne-retraite doit, pour ce mois,

pay a tax under this Part equal to 1% of payer un impôt selon la présente partie

that cumulative excess amount.

égal à 1 % de cet excédent.

(…)

Waiver of tax

Renonciation

204.1(4) Where an individual would, but 204.1(4) Le ministre peut renoncer à

for this subsection, be required to pay a l’impôt dont un particulier serait,

tax under subsection 204.1(1) or compte non tenu du présent paragraphe,

204.1(2.1) in respect of a month and the redevable pour un mois selon le

Page: 34

individual establishes to the satisfaction paragraphe (1) ou (2.1), si celui-ci établit

of the Minister that

à la satisfaction du ministre que

l’excédent ou l’excédent cumulatif qui

(a) the excess amount or cumulative est frappé de l’impôt fait suite à une

excess amount on which the tax is based erreur acceptable et que les mesures

arose as a consequence of reasonable indiquées pour éliminer l’excédent ont

error, and

été prises.

(b) reasonable steps are being taken to (…)

eliminate the excess, the Minister may

waive the tax.

Excédent cumulatif au titre des REER

(…)

204.2(1.1) L’excédent cumulatif d’un

particulier au titre des régimes

enregistrés d’épargne-retraite à un

Cumulative excess amount in respect of

RRSPs

moment

donné

d’une

année

d’imposition correspond à l’excédent

204.2(1.1) The cumulative excess amount éventuel du montant visé à l’alinéa a) sur

of an individual in respect of registered le montant visé à l’alinéa b):

retirement savings plans at any time in a

taxation year is the amount, if any, by a) les primes non déduites, à ce moment,

which

qu’il a versées à des régimes enregistrés

d’épargne-retraite;

(a) the amount of the individual’s

undeducted RRSP premiums at that time b) le résultat du calcul suivant :

exceeds

A + B + R + C + D + E

(b) the amount determined by the formula

où :

A + B + R + C + D + E

A représente les déductions inutilisées

where

au titre des REER du particulier à la fin

de l’année d’imposition précédente,

A is the individual’s unused RRSP

deduction room at the end of the B l’excédent éventuel du moins élevé du

preceding taxation year,

plafond REER pour l’année et de 18 %

du revenu gagné du particulier, au sens

du paragraphe 146(1), pour l’année

d’imposition précédente sur le total des

B is the amount, if any, by which

(i) the lesser of the RRSP dollar limit for montants représentant chacun :

the year and 18% of the individual’s

earned income (as defined in subsection (i) le facteur d’équivalence du particulier

146(1)) for the preceding taxation year pour l’année d’imposition précédente

exceeds the total of all amounts each of quant à un employeur,

which is

Page: 35

(ii) the individual’s pension adjustment (ii) le montant prescrit quant au

for the preceding taxation year in respect particulier pour l’année,

of an employer, or

C si le particulier a atteint 18 ans au

(iii) a prescribed amount in respect of the cours d’une année d’imposition

individual for the year,

antérieure, 2 000 $; sinon, zéro,

C is, where the individual attained 18 D le montant relatif à un REER collectif

years of age in a preceding taxation year, quant au particulier à ce moment,

$2,000, and in any other case, nil,

E si le particulier a atteint 18 ans avant

D is the group RRSP amount in respect of 1995, le montant de transition qui lui est

the individual at that time,

applicable à ce moment; sinon, zéro;

E is, where the individual attained 18 R le facteur d’équivalence rectifié total

years of age before 1995, the individual’s du particulier pour l’année.

transitional amount at that time, and in

any other case, nil, and

Déclaration et paiement de l’impôt

R is the individual’s total pension 204.3 (1) Les contribuables visés par la

adjustment reversal for the year.

présente partie doivent, dans les 90 jours

qui suivent la fin de chaque année

postérieure à 1975:

Return and payment of tax

204.3 (1) Within 90 days after the end of a) produire auprès du ministre, sans avis

each year after 1975, a taxpayer to whom ni mise en demeure, une déclaration

this Part applies shall

pour l’année en vertu de la présente

partie, selon le formulaire prescrit et

(a) file with the Minister a return for the contenant les renseignements prescrits;

year under this Part in prescribed form and

containing

prescribed

information, b) estimer, dans cette déclaration,

without notice or demand therefor;

l’impôt dont ils sont redevables en vertu

de la présente partie pour chaque mois

(b) estimate in the return the amount of de l’année;

tax, if any, payable by the taxpayer under

this Part in respect of each month in the c) verser cet impôt au receveur général.

year; and

Dispositions applicables

(c) pay to the Receiver General the

amount of tax, if any, payable by the 204.3(2) Les paragraphes 150(2) et (3),

taxpayer under this Part in respect of each les articles 152 et 158, les paragraphes

month in the year.

161(1) et (11), les articles 162 à 167 et la

section J de la partie I s’appliquent à la

présente partie, avec les adaptations

nécessaires.

Provisions applicable to Part

Page: 36

204.3(2) Subsections 150(2) and 150(3),

sections 152 and 158, subsections 161(1)

and 161(11), sections 162 to 167 and

Division J of Part I are applicable to this

Part with such modifications as the

circumstances require.

PART XI.I – Tax in Respect of Deferred Income Plans and Other Tax Exempt

Persons

Tax payable by trust under registered Impôt payable par les fiducies régies

retirement savings plan

par

des

régimes

enregistrés

d’épargne-retraite

207.1(1) Where, at the end of any month,

a trust governed by a registered retirement 207.1(1) La fiducie régie par un régime

savings plan holds property that is neither enregistré d’épargne-retraite et qui, à la

a qualified investment (within the fin d’un mois donné, détient des biens

meaning assigned by subsection 146(1)) qui ne sont ni un placement admissible

nor a life insurance policy in respect of (au sens du paragraphe 146(1)) ni une

which, but for subsection 146(11), police d’assurance-vie à l’égard de

subsection 146(10) would have applied as laquelle, sans le paragraphe 146(11), le

a consequence of its acquisition, the trust paragraphe 146(10) aurait été applicable

shall, in respect of that month, pay a tax à la suite de son acquisition doit payer,

under this Part equal to 1% of the fair pour ce mois, en vertu de la présente

market value of the property at the time it partie, un impôt égal à 1 % de la juste

was acquired by the trust of all such valeur marchande des biens au moment

property held by it at the end of the month, où ils ont été acquis par la fiducie, de

other than

tous ces biens qu’elle détient à la fin du

mois, autres que :

(a) property, the fair market value of

which was included, by virtue of a) les biens dont la juste valeur

subsection 146(10), in computing the marchande a été incluse, en vertu du

income, for any year, of an annuitant paragraphe 146(10), dans le calcul du

(within the meaning assigned by revenu, pour une année donnée, d’un

subsection 146(1)) under the plan; and

rentier (au sens du paragraphe 146(1))

en vertu du régime;

(b) property acquired by the trust before

August 25, 1972.

b) les biens acquis par la fiducie avant le

25 août 1972.

(…)

Return and payment of tax

Déclaration et paiement de l’impôt

Page: 37

207.2 (1) Within 90 days after the end of 207.2 (1) Le contribuable assujetti à la

each year, a taxpayer to whom this Part présente partie doit, dans les 90 jours qui

applies shall

suivent la fin de chaque année :

(a) file with the Minister a return for the a) produire auprès du ministre, sans avis

year under this Part in prescribed form and ni mise en demeure, une déclaration

containing

prescribed

information, pour l’année en vertu de la présente

without notice or demand therefor;

partie, selon le formulaire prescrit et

contenant les renseignements prescrits;

(b) estimate in the return the amount of

tax, if any, payable by it under this Part in b) estimer dans cette déclaration l’impôt

respect of each month in the year; and

dont il est redevable en vertu de la

présente partie pour chaque mois de

(c) pay to the Receiver General the l’année;

amount of tax, if any, payable by it under

this Part in respect of each month in the c) verser cet impôt au receveur général.

year.

Responsabilité du fiduciaire

Liability of trustee

207.2(2) Le fiduciaire d’une fiducie qui

207.2(2) Where the trustee of a trust that est assujettie à l’impôt en application de

is liable to pay tax under this Part does not la présente partie qui ne remet pas au

remit to the Receiver General the amount receveur général le montant de l’impôt,

of the tax within the time specified in dans

le

délai

imparti,

est

subsection 207.2(1), the trustee is personnellement tenu de verser, au nom

personally liable to pay on behalf of the de la fiducie, le montant total de l’impôt

trust the full amount of the tax and is et a le droit de recouvrer de la fiducie

entitled to recover from the trust any toute somme ainsi versée.

amount paid by the trustee as tax under

this section.

Dispositions applicables

(3) Les paragraphes 150(2) et (3), les

articles 152 et 158, les paragraphes

Provisions applicable to Part

(3) Subsections 150(2) and 150(3), 161(1) et (11), les articles 162 à 167 et la

sections 152 and 158, subsections 161(1) section J de la partie I s’appliquent à la

and 161(11), sections 162 to 167 and présente partie, avec les adaptations

Division J of Part I are applicable to this nécessaires.

Part with such modifications as the

circumstances require.

(…)

b) Mutual Fund Trusts

Page: 38

132(1) (…)

Meaning of mutual fund trust

132(6) Subject to subsection 132(7), for

Sens de fiducie de fonds commun de

placement

the purposes of this section, a trust is a 132(6) Sous réserve du paragraphe

mutual fund trust at any time if at that time 132(7) et pour l’application du présent

article, une fiducie est une fiducie de

(a) it was a unit trust resident in Canada,