On October 1, 2021, TEI issued a letter in support of the taxpayer’s application for leave to appeal to the Supreme Court of Canada in Deans Knight Income Corporation v. Her Majesty the Queen. The case concerns the meaning of “control” for purposes of subsection 111(5) of Canada’s Income Tax Act, which imposes a limitation on a loss corporation’s ability to carry forward and use non-capital losses after “control” of the corporation is acquired by a person or persons. The meaning of the term “control” for this purpose is at issue, with the Federal Court of Appeal having issued a surprising decision in the case that departed from well-established precedents and raised fundamental questions about the current interpretation of Canada’s loss use restrictions.
TEI’s letter of support, which is addressed to taxpayer’s counsel, does not take any position on the merits of the case. Rather, TEI’s advocacy was limited to supporting the taxpayer’s application for leave to appeal to the Supreme Court of Canada by adding our cross-industry voice to the choir of business taxpayers concerned about the newfound uncertainty created by the Federal Court of Appeal’s decision. TEI’s letter was cited on pages 9-10 of taxpayer’s Memorandum of Argument in support of its application for leave to appeal.