1346687 Ontario Inc. v. Minister of National Revenue, (2007) 366 N.R. 275 (FCA)

• Judge: Sexton, Malone and Ryer, JJ.A.
• Court: Federal Court of Appeal (Canada)
• Case Date: April 25, 2007
• Jurisdiction: Canada (Federal)
• Citations: (2007), 366 N.R. 275 (FCA);2007 FCA 262

1346687 Ont. Inc. v. MNR (2007), 366 N.R. 275 (FCA)

MLB headnote and full text

Temp. Cite: [2007] N.R. TBEd. AU.004

1346687 Ontario Inc. on behalf of The Pension Plan for Presidents of 1346687 Ontario Inc. (appellant) v. Minister of National Revenue (respondent)

(A-471-05; 2007 FCA 262)

Indexed As: 1346687 Ontario Inc. v. Minister of National Revenue

Federal Court of Appeal

Sexton, Malone and Ryer, JJ.A.

July 27, 2007.

Summary:

In 1999, Greenhalgh had the commuted value of her pension transferred from the Teachers' Pension Plan to a newly created pension plan that had been set up by a newly incorporated corporation. Greenhalgh was the new plan's sole member by virtue of her position as the president of the corporation. In September 2005, Canada Revenue Agency gave notice to the new plan that the Minister of National Revenue proposed to revoke the plan's registration because its primary purpose was not to provide lifetime retirement benefits to employees respecting their service as employees. The corporation appealed on behalf of the plan.

The Federal Court of Appeal dismissed the appeal.

Administrative Law - Topic 221

The hearing and decision - Right to be heard - General - In 1999, Greenhalgh had the commuted value of her pension transferred from the Teachers' Pension Plan to a newly created pension plan that had been set up by a newly incorporated corporation - Greenhalgh was the new plan's sole member by virtue of her position as the corporation's president - In September 2005, Canada Revenue Agency (CRA) issued a notice of intent to revoke the new plan's registration because its primary purpose was not to provide lifetime retirement benefits to employees respecting their service as employees - The Federal Court of Appeal rejected an assertion that the corporation was denied an opportunity to respond to the CRA's concern respecting the plan's primary purpose - CRA's concern was communicated to the corporation in three letters (June 28, 2000, August 22, 2001 and November 2, 2004) that it sent between the date of the plan's registration and the date of the notice of intent - Moreover, each of those letters invited further submissions - The corporation had multiple opportunities to provide additional information - By August 22, 2001, at the latest, the corporation was aware of the possibility that the notice of intent would issue - The onus was on the corporation - It could have easily provided answers to questions that the CRA had "neglected to ask" - See paragraphs 35 to 37.

Administrative Law - Topic 2266

Natural justice - The duty of fairness - What constitutes procedural fairness - [See Administrative Law - Topic 221 ].

Income Tax - Topic 4661

Deferred and other special income arrangements - Registered pension plans - Revocation - General - [See Administrative Law - Topic 221 ].

Income Tax - Topic 4661

Deferred and other special income arrangements - Registered pension plans - Revocation - General - In 1999, Greenhalgh had the commuted value of her pension transferred from the Teachers' Pension Plan to a newly created pension plan that had been set up by a newly incorporated corporation - Greenhalgh was the new plan's sole member by virtue of her position as the corporation's president - In September 2005, Canada Revenue Agency (CRA) issued a notice of intent to revoke the new plan's registration because its primary purpose was not to provide lifetime retirement benefits to employees respecting their service as employees - The CRA provided two reasons for the determination respecting the plan's primary purpose - Firstly, there was no bona fide employment relationship between Greenhalgh and the corporation - The Minister relied on the fact that Greenhalgh had received no remuneration from, and provided no services to, the corporation until at least the end of 2003; she was employed by, and received remuneration from third parties, during that period; and a number of inconsistent statements respecting her employment with, and earnings from, the corporation - Secondly, the plan was established primarily for the purpose of receiving a transfer of funds from the Teachers' Pension Plan rather than for the provision of lifetime retirement benefits to Greenhalgh for her service as an employee of the corporation - The Minister relied on the fact that within days of the transfer of funds from the Teachers' Pension Plan to the new plan, Greenhalgh caused a portion of the funds to be paid to herself as a payment out of a "surplus" in the plan - The Federal Court of Appeal dismissed an appeal.

Cases Noticed:

Loba Ltd. v. Minister of National Revenue, [2004] N.R. Uned. 186; 2004 FCA 342, refd to. [para. 5].

Boudreau v. Minister of National Revenue et al. (2005), 340 N.R. 268; 2005 FCA 304, refd to. [para. 31].

Renaissance International v. Minister of National Revenue, [1983] 1 F.C. 860; 47 N.R. 1 (F.C.A.), refd to. [para. 33].

Human Life International in Canada Inc. v. Minister of National Revenue, [1998] 3 F.C. 202; 232 N.R. 174 (F.C.A.), refd to. [para. 34].

Canadian Committee for the Tel Aviv Foundation v. Minister of National Revenue (2002), 287 N.R. 82; 2002 FCA 72, refd to. [para. 34].

Counsel:

Eric Fournie, for the appellant;

Roger LeClaire and Justine Malone, for the respondent.

Solicitors of Record:

Fournie Mickleborough LLP, Toronto, Ontario, for the appellant;

John H. Sims, Q.C., Deputy Attorney General of Canada, Ottawa, Ontario, for the respondent.

This appeal was heard at Toronto, Ontario, on April 25, 2007, by Sexton, Malone and Ryer, JJ.A., of the Federal Court of Appeal. Ryer, J.A., delivered the following judgment for the court on July 27, 2007.