1398874 Ontario Inc. v. Minister of National Revenue, 2010 FCA 14

• Judge: Létourneau, Noël and Trudel, JJ.A.
• Court: Federal Court of Appeal (Canada)
• Case Date: Wednesday January 13, 2010
• Jurisdiction: Canada (Federal)
• Citations: 2010 FCA 14;(2010), 399 N.R. 24 (FCA)

1398874 Ont. Inc. v. MNR (2010), 399 N.R. 24 (FCA)

MLB headnote and full text

Temp. Cite: [2010] N.R. TBEd. FE.012

1398874 Ontario Inc. on behalf of the Pension Plan for Presidents of 1398874 Ontario Inc. (appellant) v. Minister of National Revenue (respondent)

(A-406-08; 2010 FCA 14)

Indexed As: 1398874 Ontario Inc. v. Minister of National Revenue

Federal Court of Appeal

Létourneau, Noël and Trudel, JJ.A.

January 15, 2010.

Summary:

A retired police officer (Adderson), rather than collecting his Ontario Municipal Employees Retirement Pension System (OMERS) pension, had the commuted value of the pension ($622,657.02) transferred to a newly created individual pension plan (IPP) set up by 1398874 Ontario Inc., a company that purportedly employed Adderson. Adderson was the sole member of the Plan. Following an audit, the Canada Revenue Agency gave Notice of Intent to Revoke under s. 147.1(3) of the Income Tax Act that it proposed to retroactively revoke registration of the IPP on the ground that it failed to comply with the prescribed registration conditions in s. 8502(a) of the Income Tax Act Regulations. Particularly, the Agency submitted that the primary purpose of the IPP, which was to provide lifetime retirement benefits to Adderson as an employee of 1398874 Ontario Inc. in respect of his service as an employee, was not met. 1398874 Ontario Inc. appealed.

The Federal Court of Appeal dismissed the appeal.

Income Tax - Topic 4661

Deferred and other special income arrangements - Registered pension plans - Revocation - General - A retired police officer (Adderson), rather than collecting his Ontario Municipal Employees Retirement Pension System (OMERS) pension, had the commuted value of the pension ($622,657.02) transferred to a newly created individual pension plan (IPP) set up by 1398874 Ontario Inc., a company that purportedly employed Adderson - Adderson was the sole member of the Plan - Following an audit, the Canada Revenue Agency gave Notice of Intent to Revoke under s. 147.1(3) of the Income Tax Act that it proposed to retroactively revoke registration of the IPP on the ground that it failed to comply with the prescribed registration conditions in s. 8502(a) of the Income Tax Act Regulations - Particularly, the Agency submitted that the primary purpose of the IPP, which was to provide lifetime retirement benefits to Adderson as an employee of 1398874 Ontario Inc. in respect of his service as an employee, was not met - 1398874 Ontario Inc. appealed - The Federal Court of Appeal dismissed the appeal - The court agreed that the whole scheme constituted mere window dressing designed to create the appearance that the real purpose was something other than to shelter Adderson's commuted value of his OMERS pension - The burden was on 1398874 Ontario Inc. to provide credible and verifiable evidence which, in the Agency's view, it failed to do - It was not unreasonable for the Agency, bearing in mind all the other circumstances surrounding and characterizing the transfer of funds, to give little or no weight to the self-serving evidence - There was no error of law in the Agency's decision to issue a Notice of Intent to Revoke the registration of the IPP; nor any other error justifying the intervention of the court.

Income Tax - Topic 4665

Deferred and other special income arrangements - Registered pension plans - Revocation - Judicial review - [See Income Tax - Topic 4661].

Cases Noticed:

1346687 Ontario Inc. v. Minister of National Revenue (2007), 366 N.R. 275; 2007 FCA 262, leave to appeal refused (2008), 384 N.R. 398 (S.C.C.), refd to. [para. 1].

Jordan Financial Ltd. v. Minister of National Revenue (2007), 366 N.R. 261; 2007 FCA 263, leave to appeal refused (2008), 384 N.R. 398 (S.C.C.), refd to. [para. 1].

Loba Ltd. v. Minister of National Revenue, [2004] N.R. Uned. 186; 2004 FCA 342, leave to appeal refused (2005), 341 N.R. 199 (S.C.C.), refd to. [para. 1].

New Brunswick (Board of Management) v. Dunsmuir, [2008] 1 S.C.R. 190; 372 N.R. 1; 329 N.B.R.(2d) 1; 844 A.P.R. 1; 2008 SCC 9, refd to. [para. 9].

Counsel:

Eric Fournie, for the appellant;

Pascal Tétrault, 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 on January 13, 2010, at Toronto, Ontario, by Létourneau, Noël and Trudel, JJ.A., of the Federal Court of Appeal. The following judgment of the Court of Appeal was delivered by Trudel, J.A., at Ottawa, Ontario, on January 15, 2010.