Canada v. Doiron, (2012) 432 N.R. 80 (FCA)

• Judge: Noël, Pelletier and Gauthier, JJ.A.
• Court: Federal Court of Appeal (Canada)
• Case Date: February 07, 2012
• Jurisdiction: Canada (Federal)
• Citations: (2012), 432 N.R. 80 (FCA);2012 FCA 71

Can. v. Doiron (2012), 432 N.R. 80 (FCA)

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[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

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Temp. Cite: [2012] N.R. TBEd. MR.023

Sa Majesté la Reine (appelante) v. Éric Doiron (intimé)

(A-437-10; A-438-10; 2012 FCA 71; 2012 CAF 71)

Indexed As: Canada v. Doiron

Federal Court of Appeal

Noël, Pelletier and Gauthier, JJ.A.

March 7, 2012.

Summary:

In his tax returns for the 2004 and 2005 taxation years, Doiron claimed deductions for the legal fees he paid to defend himself against criminal charges laid against him and for the interest incurred to finance the payment of these fees. The Minister of National Revenue disallowed the deductions claimed under the Income Tax Act (ITA) as well as the credits claimed under the Excise Tax Act (ETA). In making these assessments, the Minister relied on the assumption that the expenses had not been incurred for the purpose of producing income within the meaning of ss. 9(1) and 18(1)(a) of the ITA and that, furthermore, these were personal expenses that could not be deducted under s. 18(1)(h). Regarding the disallowance of the input tax credits, the Minister took the position that the services relating to the credits claimed had not been supplied in the course of a commercial activity within the meaning of s. 169(1) of the ETA. Doiron appealed.

The Tax Court of Canada allowed the appeals. The court held that the expenses claimed had been incurred to earn income during the two years at issue. The court also held, without giving any additional explanations, that Doiron was entitled to input tax credits under the ETA. The Minister appealed.

The Federal Court of Appeal allowed the appeals, and rendering the decision the Tax Court should have rendered, dismissed Doiron's appeals.

Income Tax - Topic 1142

Income from a business or property - Deductions - Legal expenses - In his tax returns for the 2004 and 2005 taxation years, Doiron claimed deductions for the legal fees he paid to defend himself against criminal charges laid against him and for the interest incurred to finance the payment of these fees - The Minister of National Revenue disallowed the deductions claimed under the Income Tax Act (ITA) as well as the credits claimed under the Excise Tax Act (ETA) - In making these assessments, the Minister relied on the assumption that the expenses had not been incurred for the purpose of producing income within the meaning of ss. 9(1) and 18(1)(a) of the ITA and that, furthermore, these were personal expenses that could not be deducted under s. 18(1)(h) - Regarding the disallowance of the input tax credits, the Minister took the position that the services relating to the credits claimed had not been supplied in the course of a commercial activity within the meaning of s. 169(1) of the ETA - Doiron appealed - The Tax Court judge allowed the appeals - The Tax Court judge held that the expenses claimed had been incurred to earn income during the two years at issue - The court also held, without giving any additional explanations, that Doiron was entitled to input tax credits under the ETA - The Minister appealed - The Federal Court of Appeal allowed the appeals, and rendering the decision the Tax Court should have rendered, dismissed Doiron's appeals.

Sales and Service Taxes - Topic 5284

Goods and services tax (incl. harmonized sales tax) - Administration, collection and enforcement - Tax rebates - Persons entitled to apply for - [See Income Tax - Topic 1142 ].

Cases Noticed:

R. v. Doiron (E.) (2005) 281 N.B.R.(2d) 210; 736 A.P.R. 210; 2005 NBQB 147, affd. (2007), 315 N.B.R.(2d) 205; 815 A.P.R. 205; 2007 NBCA 41, leave to appeal refused (2007), 383 N.R. 393; 333 N.B.R.(2d) 429; 855 A.P.R. 429 (S.C.C.), refd to. [para. 6].

R. v. Doiron (E.) (2004), 274 N.B.R.(2d) 120; 718 A.P.R. 120 (T.D.), refd to. [para. 6].

R. v. Doiron (E.) (2005), 286 N.B.R.(2d) 8; 748 A.P.R. 8; 2005 NBQB 89, refd to. [para. 6].

R. v. Doiron (E.) (2005), 283 N.B.R.(2d) 156; 740 A.P.R. 156; 2005 NBQB 39, refd to. [para. 6].

Symes v. Minister of National Revenue, [1993] 4 S.C.R. 695; 161 N.R. 243, refd to. [para. 19].

Rolland Paper Co. v. Minister of National Revenue, [1960] 60 D.T.C. 1095 (Ex. Ct.), refd to. [para. 20].

Vango v. Canada, [1995] C.T.C. No. 659, refd to. [para. 20].

Mercille v. Canada, [1999] C.T.C. No. 941, refd to. [para. 20].

65302 British Columbia Ltd. v. Minister of National Revenue, [1999] 3 S.C.R. 804; 248 N.R. 216, refd to. [para. 25].

Housen v. Nikolaisen et al., [2002] 2 S.C.R. 235; 286 N.R. 1; 219 Sask.R. 1; 272 W.A.C. 1; 2002 SCC 33, refd to. [para. 29].

Hammill v. Minister of National Revenue (2005), 338 N.R. 162; 257 D.L.R.(4th) 1; 2005 FCA 252, leave to appeal refused (2006), 350 N.R. 198 (S.C.C.), refd to. [para. 37].

Evans v. Minister of National Revenue, [1960] S.C.R. 391, refd to. [para. 39].

Ferguson v. Minister of National Revenue, 63 D.T.C. 997, dist. [para. 41].

D.P. v. Wagg (2004), 187 O.A.C. 26; 71 O.R.(3d) 329 (C.A.), refd to. [para. 47].

Statutes Noticed:

Excise Tax Act, R.S.C. 1985, c. E-15, sect. 169(1) [Appendix].

Income Tax Act, R.S.C. 1985 (5th Supp.), c. 1, sect. 18(1) [Appendix].

Counsel:

Sophie-Lyne Lefebvre and Catherine McIntyre, for the appellant;

Éric Doiron appeared on his own behalf.

Solicitors of Record:

Myles J. Kirvan, Deputy Attorney General of Canada, Ottawa, Ontario, for the appellant.

These appeals were heard at Ottawa, Ontario, on February 7, 2012, by Noël, Pelletier and Gauthier, JJ.A., of the Federal Court of Appeal. The following judgment of the Court of Appeal was delivered by Noël, J.A., on March 7, 2012.