The taxpayer devoted approximately 15 to 20 hours per week in 2019 and 2020 selling Amway products, generating a total of $8,706 in revenues from sales to 40 customers over the two years, while claiming expenses of over $32,000 for those years.

In finding that the taxpayer’s Amway activities did not constitute a source of income, so that his losses were not deductible, Cook J. first found that there was a significant, if not predominant, personal element in the taxpayer’s Amway activities. In particular, his level of activity (e.g., attending numerous workshops and other Amway functions) was disproportionate to his modest sales and likely reflected a strong interest in business networking, developing business partners, and participating in educational programs.

That was not the end of it, as Stewart had indicated that “where a taxpayer’s venture has elements that suggest it could be considered a hobby or other personal pursuit, it will be considered a source of income if it is undertaken in a sufficiently commercial manner”. However, Cook J found that the taxpayer’s activities were not undertaken in a sufficiently commercial manner to be considered a source of income.

Neal Armstrong. Summary of Sennaike v. The King, 2025 TCC 122 under s. 3(a) – business.

The taxpayer, a corporation resident in the United Arab Emirates, entered into a consultancy agreement (the “SOSA”) with an Indian company in respect of two hotels situated in Delhi and Mumbai pursuant to which it agreed over the term of 20 years to provide strategic planning services and know-how to ensure that the hotels were developed and operated as efficient and high-quality international full-service hotels.

In finding that the hotels constituted fixed permanent establishments (PEs) in India within the meaning of Art. 5(1) of the UAE-India DTAA, so that income received by the taxpayer under the SOSA was attributable to such PEs and taxable in India, R. Mahadevan J stated:

Formula One … expressly held that exclusive possession is not essential – temporary or shared use of space is sufficient, provided business is carried on through that space. …

[T]he functions performed by the appellant, through its staff operating from the hotel premises … clearly establishing their control over the day to-day operations of the hotel.

Art. 5(2)(i) of the DTAA provided:

2. The term "permanent establishment" includes especially: …

(i) the furnishing of services including consultancy services by an enterprise of a Contracting State through employees or other personnel in the other Contracting State, provided that such activities continue for the same project or connected project for a period or periods aggregating more than 9 months within any twelve-month period.

R. Mahadevan J went on to state:

[T]he appellant’s executives and employees made frequent and regular visits to India to oversee operations and implement the SOSA. … Under Article 5(2)(i) of the DTAA, the relevant consideration is the continuity of business presence in aggregate – not the length of stay of each individual employee.

In other words, the hotel was regarded as a “project.”

Neal Armstrong. Summary of Hyatt International Southwest Asia Ltd. v. Additional Director of Income-Tax, Civ. App. No. 9766 of 2025 under Treaties – Income Tax Conventions – Art. 5.

The taxpayer, in connection with changing the location of his employment in Toronto, moved his residence from Newmarket to Mississauga. Whether he could deduct almost $130,000 in relocation expenses turned on whether the reduction in commuting distance produced by his move exceeded 40 kilometers.

The taxpayer got from his new downtown office to his old home during rush hour (or the reverse, in the morning) following a circuitous route recommended by Google Maps (westward to Hwy. 427, north on Hwy. 400, then east on Hwy. 9) whereas the route proposed by the Crown was a more direct route (north on Hwy. 404, then west on Hwy. 9), but which per Google Maps was slower during rush hour.

In rejecting the Crown’s route and allowing the taxpayer's appeal, Bocock J stated (at para. 27) that “[t]he new norm of shortest normal route most people use deploys Google Maps to select such route.”

Neal Armstrong. Summary of De Kruyff v. The King, 2025 TCC 116 under s. 248(1) – eligible relocation – (d).

The settlement agreement between an employer and a terminated employee protected the employer against any claim in respect of failure to withhold income tax, CPP or EI. Was this a reportable transaction on the basis of being an avoidance transaction with a contractual protection hallmark?

Regarding that hallmark, CRA indicated that “[g]enerally, the person having contractual protection is the person that would be entitled to compensation in the event of a failure of the transaction to achieve a tax benefit” and that where an employer is protected by an indemnity clause like this “the contractual protection hallmark is unlikely to be triggered in most instances.” Presumably, this comment could reflect that the only tax “benefit” to the employer that is being protected by the indemnity is not bearing a 10% penalty under s. 227(8)(a) (assuming that the employee was resident.)

Regarding whether there was also an avoidance transaction, it noted that this is a “fact-driven determination” but went on to state:

Presumably, the main purpose of an employment settlement is to resolve a dispute between an employer and employee. In our view, the fact that damages are paid as a result of a settlement should not systematically lead to the conclusion that “one of the main purposes” of the settlement is to obtain a tax benefit. In situations where the parties negotiated in good faith and reached a principled settlement that provides for a proper characterization of the damages, it is unlikely that such settlement would qualify as an “avoidance transaction”.

However, it further indicated that a settlement could be reportable. For example, “the absence of legal or factual basis to the payment of non-taxable damages could lead to a determination that the settlement is an ‘avoidance transaction’.”

Neal Armstrong. Summaries of 7 June 2024 External T.I. 2024-1006831E5 under s. 237.3(1) - contractual protection - (a)(i)(A), - avoidance transaction.