beneficial ownership

Whether the UK taxpayer (“Hargreaves”) was liable for failure to withhold UK tax on interest paid by it to a non-arm’s length UK company (“Houmet”) turned on whether, under a domestic UK tax provision, Houmet was “beneficially entitled” to such income.

CRA obtained an interim order to charge the interest of Mr. Shaker, as one of the trustees of a trust (the “VSI Trust”) for a Toronto property (Blue Jays Way), for a personal tax debt. In finding that such charge was not authorized under Rule 458(1)(a)(i), which referenced a judgment debtor’s “interest in real property,” i.e., in finding that the quoted words did not extend to Mr. Shaker’s legal interest in the Blue Jays Way property as trustee, and before ordering the interim charge to be discharged, Walker J stated (at paras. 30, 32-33):

The Crown challenged an order of the Alberta judge in CCAA proceedings regarding the Canada North group of companies that “priming charges” pursuant to s. 11 of the CCAA for counsel fees, costs of the monitor and financing charges of an interim lender would rank in priority to all other security interests and charges, arguing that this priority was contrary to s. 227(4.1). The Crown argued that (1) s. 227(4.1) created a proprietary interest in the debtors’ assets and a court could not attach a super-priority charge to assets that were not the debtors’ property, and (2) in any event, s.

The appellants, were private companies controlled by a resident individual (Grenon), whose RRSP held 58% of the units of a publicly traded income fund (“FMO”). They engaged in a series of transactions that were intended to result in the realization by them of substantial capital gains (resulting in additions to their capital dividend accounts (“CDAs”), that were immediately distributed by them), followed by the realization of largely offsetting capital losses later that day.

In very general terms, significant elements of the series of transactions included:

Before finding that there had been a transfer to the taxpayer of ½ of the beneficial ownership of the family home for s. 160 purposes from her husband (rather than her having been the full beneficial owner all along), MacPhee J adopted (at para. 24) a previous judicial formulation of the concept of beneficial ownership, viz:

A limited partnership was found to have immediately transferred the beneficial ownership of applications to the Saskatchewan government for potash exploitation rights (the “Purchased Applications and Purchased Permits”) to a corporation (“Devonian”) immediately upon entering into a sale agreement of the Purchased Applications and Purchased Permits with Devonian. In this regard, D’Arcy J referred (at para.

The taxpayer was found to continue to be the beneficial owner of shares that he transferred to a trust - of which he was one of the three trustees but of which he was found (under a poorly drafted trust agreement) to be the sole beneficiary until such time as, with his consent, any further beneficiary was added - notwithstanding that he had no control over the distribution of the trust property until the trust matured on its 21st anniversary. Woods, J. noted (at p.