This morning's release of six severed letters from the Income Tax Rulings Directorate is now available for your viewing.

Graham J, who was the case manager for the remaining appeals respecting the Global Learning and Gifting Initiative (GLGI) donation program, decided on his own initiative that he was providing each appellant with the opportunity to give written submissions as to why their appeal should not be struck for abuse of process (along with a Crown response opportunity), after which he would decide whether or not to strike each appellant's appeal, based solely on the written submissions.

In this regard, Graham J noted the consistent failure to date of taxpayers’ appeals respecting the GLGI program and stated:

And yet a small number of appellants persist. They present no new grounds for appeal, no new facts, no new arguments, nothing.

Regarding his proceeding on his own initiative, he stated:

Although an allegation of abuse of process is usually raised by the opposing party, section 53(1) [of the Rules] allows the Court to raise it on its own initiative.

While abuse of process often refers to something that one party or the other has done in an appeal, it can also be about protecting the judicial process. Relitigating the same issue over and over wastes judicial resources and, more importantly, risks undermining the credibility of the judicial process.

Elaborating on that last point, he stated:

If, in the face of all of the prior GLGI decisions, a judge were now to somehow find that one of the Appellants had donative intent, this inconsistent result could seriously undermine the credibility of the judicial process.

Neal Armstrong. Summary of Kelly v. The King, 2026 TCC 53 under Tax Court of Canada Rules (General Procedure), s. 53(1)(c).

At the time the appellant acquired a former restaurant (now vacant), he was registered for GST purposes, so that he was not charged GST. After concluding that the sale was not exempted under s. V-I-2 et seq. because the property did not contain a “residential unit,” Rabinovitch J also concluded that the exemption under s. V-I-9(2) (commonly thought of as the “vacant land” exemption) did not apply on the basis that the (vacant) restaurant should be considered to be “used” in commercial activity “immediately before” the transfer of its ownership because it had been “last used” in commercial activity. He indicated that the opposite conclusion would have meant that the property could have been sold on an exempt basis even though the vendor would have been able to claim ITCs regarding its use in the former restaurant business, which would be contrary to the scheme of the ETA as noted by the Supreme Court.

After the sale, Revenu Québec retroactively cancelled the appellant’s registration, effective to before the time of the sale. Rabinovitch J was skeptical that Revenu Québec had the power to cancel a taxpayer's registration retroactively. However, this determination was not within his jurisdiction, so it was necessary for him to proceed on the basis that the appellant's registration had been retroactively invalidated.

He concluded that, even though the appellant thus was not registered at the time of his acquisition and was not charged GST by the vendor, the direct assessment of him by Revenu Québec was valid under s. 296(1)(b).

Note that this may have been an illusory victory for the Crown as ETA s. 278(2) likely indicates that the appellant would not be required to pay that assessment (see Royal Bank).

Neal Armstrong. Summaries of Moseley v. The King, 2026 TCC 59 under ETA s. V-I-9(2)(a), s. 242(1), s. 141.1(3), s. 296(1)(b) and s. 280.1.

On December 19, 2025, the CRA amended its “Guidance on the Common Reporting Standard” (CRS) to add a position that a partnership will be considered to be resident in Canada for purposes of the CRS rules if it was formed under provincial law, or all its partners were residents. In particular, the CRA amended paragraph 3.32 to include the following italicized words:

A partnership will be considered as a Canadian resident partnership if:

• All the partners, including all end members, are resident in Canada;
• The place of effective management and control of a partnership's business is situated in Canada; or
• The partnership was formed under the laws of a province or territory.

It is common for non-residents to choose an Ontario or other provincial limited partnership as a convenient vehicle to invest in non-Canadian assets. In addition, a limited partnership might have only Canadian partners, including a general partner that was deemed to be resident in Canada due to its Canadian incorporation but with its central management and control (and that of the partnership) outside Canada. These change will, in many situations, render such partnerships “Canadian financial institutions” for CRS purposes, so as to result in reporting obligations under those rules. No change has been made to the equivalent FATCA guidance, giving rise to a more pronounced dual regime.

An ad hoc group has represented to CRA that inter alia it is appropriate to provide grandfathering and transitional relief given that such partnerships would have had no notice for most or all of 2025 that they should have been collecting certifications from their investors.

Neal Armstrong. Summaries of Guidance on the Common Reporting Standard, Part XIX of the Income Tax Act, 19 December 2025 under s. 270(1) – investment entity, Canadian financial institution – (a), active NFE – (a), s. 263(1) – LFI – para. (k) and s. 277(4).