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).

CRA has provided another ruling letter on a hybrid post-mortem pipeline transaction. At 24 pages long, it is roughly double the length of a typical letter, because the deceased held three investment corporations (Aco, Bco and Cco) rather than only one, and the transactions were somewhat intricate as a result.

• In the case of Aco, after engaging in preliminary transactions to access the capital dividend account, and NERDTOH, and ERDTOH accounts, of Aco, and to generate a capital loss for carryback under s. 164(6), the estate transfers its stepped-up common shares of Aco on an s. 85(1) rollover basis to a Newco in consideration for common shares and a promissory note of Newco.
• At the end of the transitional period (presumably one year), Aco and Newco can either amalgamate or Aco can be wound up under s. 88(1) into Newco. Thereafter, the amalgamated corporation or Newco, as the case may be (“Amalco”), commences the gradual repayment of the note (in light of the sentence below, at 25% per quarter).
• One year after such amalgamation or winding up, Amalco, in turn, is wound up pursuant to ss. 88(2) and 84(2) into the hands of the residuary beneficiaries of the estate, being two of the children.

Similar or simpler transactions will be undertaken in relation to Cco and Bco.

CRA presumably permitted a choice between amalgamation and winding-up since this did not bear on its rulings or analysis.

Neal Armstrong. Summary of 2025 Ruling 2025-1054291R3 under s. 84(2).

The applicant, a Canadian resident, was assessed further to a CRA audit of his 2006 to 2014 taxation years for failure to include in his income dividends from various Canadian public corporations that were held in two Israeli bank accounts. He applied pursuant to s. 221.2 (following the expiry of the two-year period for requesting a refund of Part XIII tax pursuant to s. 227(6)) for a credit - for Part XIII tax that had allegedly been withheld from those dividends and remitted to CRA - to be applied to the balance owing by him under such assessments.

Ferron J found that the CRA decision-maker had not acted unreasonably in refusing to provide the requested s. 221.2 credit in light inter alia of the following:

• It was not unreasonable for the decision-maker to want to be certain that the alleged sums withheld from the dividend payments had not been subject to more than one request for credit and reimbursement.
• Even if the applicant had actually paid Part XIII tax, this likely would not have been done in the applicant's name, as the Israeli banks did not know that Mr. Prince was a Canadian resident.
• Although CRA had requested that the applicant provide it with NR4 returns (which likely had not been issued to him given that the shares were not held by the applicant directly), the CRA decision-maker had been open to receiving alternative documents such as NR7s, affidavits from the Israeli banks, or any other probative evidence confirming the withholding and remitting of the Part XIII tax – which he did not provide.
• The applicant also admitted that, had he acted sooner, he would have been able to obtain such documents, at least for the period of seven years during which the banks retained their records.
• Furthermore, the CRA decision-maker conducted internal verifications to attempt to locate evidence that Part XIII tax had been remitted to CRA on behalf of the applicant, including various searches in the names of the Israeli banks, some of the Canadian corporations, and any Israeli beneficiary (but not for intermediaries as no names for them had been provided to the decision-maker) for amounts corresponding to those claimed.

Ferron J further stated that “[j]ust because taxpayers are to be given some leeway cannot mean that CRA officials are bound to exercise their discretion to grant credits when the taxpayer has not proven his entitlement, at the risk of granting several credits or refunds for a same amount of taxes paid.”

Neal Armstrong. Summary of Prince v. Canada (Attorney General), 2026 FC 367 under s. 221.2(1).