{"id":270,"date":"2012-12-02T21:23:10","date_gmt":"2012-12-02T21:23:10","guid":{"rendered":"https:\/\/thor.ca\/\/blog\/?p=270"},"modified":"2025-02-12T13:29:34","modified_gmt":"2025-02-12T21:29:34","slug":"taxpayer-loses-break-fee-appeal","status":"publish","type":"post","link":"https:\/\/www.thor.ca\/blog\/2012\/12\/taxpayer-loses-break-fee-appeal\/","title":{"rendered":"Taxpayer loses \u201cbreak fee\u201d appeal"},"content":{"rendered":"<p>In <a href=\"http:\/\/thor.ca\/blog\/wp-content\/uploads\/2012\/12\/Morguard-Corporation-v-The-Queen.pdf\"><em>Morguard Corporation v. The Queen<\/em><\/a>, the Federal Court of Appeal (FCA) upheld the Tax Court of Canada decision that a \u201cbreak fee\u201d received on an attempted acquisition of a target company was ordinary income to the recipient.\u00a0 \u00a0Critical to the FCA\u2019s decision was the trial judge\u2019s findings of fact: namely, that Morguard pursued the acquisition in accordance with its established business strategy and in the ordinary course of its normal business operations, and further, that the receipt of the break fee was a normal and expected incident of these business activities.\u00a0 The FCA distinguished the \u201cdeductible expense\u201d cases in <em>Neonex International Ltd. v. Canada<\/em> and <em>Firestone v. Canada<\/em> largely on the basis of the facts in those cases (even though the basic facts in those cases are strikingly similar to those in this case).\u00a0 The FCA further said that <em>Ikea Ltd v. Canada<\/em> is the leading case on the characterization of extraordinary or unusual <em>receipts<\/em> in the business context.\u00a0 There, the Supreme Court of Canada held that a tenant inducement payment was an income receipt inextricably linked to the business operations of Ikea, even though it was received as a result of negotiations for a long-term lease (which would clearly be a capital asset).\u00a0 I suspect Morguard will likely seek leave to appeal to the Supreme Court of Canada.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>In <a href=\"http:\/\/thor.ca\/blog\/wp-content\/uploads\/2012\/12\/Morguard-Corporation-v-The-Queen.pdf\"><em>Morguard Corporation v. The Queen<\/em><\/a>, the Federal Court of Appeal (FCA) upheld the Tax Court of Canada decision that a \u201cbreak fee\u201d received on an attempted acquisition of a target company was ordinary income to the recipient.\u00a0 \u00a0Critical&hellip;<\/p>\n","protected":false},"author":11,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9],"tags":[],"class_list":["post-270","post","type-post","status-publish","format-standard","hentry","category-corporate-tax"],"_links":{"self":[{"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/posts\/270","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/users\/11"}],"replies":[{"embeddable":true,"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/comments?post=270"}],"version-history":[{"count":1,"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/posts\/270\/revisions"}],"predecessor-version":[{"id":2833,"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/posts\/270\/revisions\/2833"}],"wp:attachment":[{"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/media?parent=270"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/categories?post=270"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/tags?post=270"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}