substantially all

The taxpayer was a micro-cap junior exploration company devoted to two projects in northern Quebec. For the four taxation years in issue (2007 to 2010), it claimed between 49% and 71% of the remuneration of its president and CEO (“Robinson”) as Canadian exploration expense that was eligible for Quebec exploration credits. The correctness of this claim turned principally on whether under paragraph (b) of the definition of “Canadian exploration and development overhead expense” (contained in s.

The taxpayer, a paper products manufacturer, engaged in a hybrid transaction in which it sold some of the assets of its “Tissue Division” directly to a third-party purchaser (“Cascades”) and rolled the balance of them down to a Newco under s. 85(1) for Newco shares and sold the Newco shares to Cascades. CRA assessed on the basis that the sale of the Newco shares was on income account.

The taxpayer was a paper products manufacturer. One of its five divisions was its Tissue Division which focused on the manufacturing and sale of toilet paper and paper towels. In 2009, the taxpayer entered into a number of transactions designed to effect the transfer of the Tissue Division to a competitor named Cascades Canada Inc. A rollover of certain assets of the Tissue Division was made to a newly formed corporation named 7228392 Canada Inc. (“722”) pursuant to s. 85(1) in exchange for common shares of 722, which were ultimately sold to Cascades.

In 2014, the taxpayer, who was an Irish national and resident, earned $32,728.52 in employment income from working in Fort McMurray, Canada for a few weeks, and also received the euro equivalent of $23,002.37 from the Irish government, mostly as means-tested assistance. In filing his 2014 return, the taxpayer claimed credits of $28,717, whose availability turned on whether he satisfied the condition in s. 118.94 that substantially all of his income for the year was included in computing his taxable income earned in Canada for the year.