Case information

Taxation — Income tax — Assessment — Minister of National Revenue issuing tax assessments — Whether lower courts erred at law by contemplating an issue not under appeal that had been determined against respondent at trial — Whether lower courts erred in finding prescribed method for filing RRSP tax returns results in assessments not being statute-barred — Whether lower courts erred in their determination of what is required to create a mutual fund trust, and how applicable securities regulatory framework worked at material time — Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.).

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The RRSP of James T. Grenon (Grenon RRSP) acquired units in certain trusts that the annuitant, James Grenon, took the initiative in establishing. The applicant is a self-directed RRSP of which Mr. Grenon is the annuitant and CIBC Trust Corporation is the trustee. At Mr. Grenon’s direction, the applicant invested in six income funds of which he was the promoter, manager, and trustee. Mr. Grenon sought to have the six income funds qualify as mutual fund trusts so that they would be qualified investments under the Income Tax Act for the applicant.

In 2013, the Minister of National Revenue issued assessments under Part I of the Income Tax Act to Grenon RRSP for its 2004 to 2009 taxation years assessing tax on the income it earned from those trust units. Grenon RRSP appealed those assessments to the Tax Court, challenging their merits and submitting that the 2004 to 2008 assessments were statute-barred.

At the Tax Court, the appeal from assessment made by the Minister on March 6, 2013, in respect of the 2004 to 2009 taxation years, pursuant to s. 146(10.1) of the Income Tax Act was allowed and the appeal was referred back to the Minister for reconsideration and reassessment on that basis that the income of the RRSP Trust received from the Income Funds during the 2005 taxation year, shall be reduced by $136,654,427. The appeal from reassessment dated March 6, 2013, in respect of the 2004 to 2009 taxation years, pursuant to s. 207.1(1) of the Income Tax Act, was dismissed.

At the Federal Court of Appeal, the appeal was allowed in part. The amended judgment of the Tax Court was set aside and, giving the decision the Tax Court of Canada should have given,

(i) the appeal from assessments the Minister issued on March 6, 2013 under Part I of the Income Tax Act for the 2004 to 2009 taxation years was dismissed; and
(ii) the appeal from assessments the Minister issued on March 6, 2013 under Part XI.1 of the Income Tax Act for the 2004 to 2009 taxation years was allowed and those assessments shall be vacated.