The Federal Court of Appeal (“FCA”) recently released a judgment dealing with the tax treatment of “commitment fees” and “non-completion fees” (also known as “break fees”). The style of cause refers to Glencore Canada Corporation (“Glencore”). Glencore is a successor to Falconbridge Limited (“Falconbridge”).
Income Inclusions / Sommes à inclure dans le revenu
The taxpayer was assessed shareholder benefits because BBH Ltd. (of which he was also a direct shareholder) paid premiums in respect of insurance policies that insured his life and that of his spouse and for which the beneficiaries were his spouse and stepchildren.
Two taxpayers were reassessed, a corporation and its sole shareholder. The shareholder sold financial products and life insurance policies through his corporation although, for some provinces, he had to conduct business as a sole proprietor due to provincial regulations.
This case dealt with whether the monetary award received by the taxpayer following a labour dispute was taxable as income. The labour dispute revolved around the fact that the taxpayer was not offered the opportunity to work overtime whereas the collective agreement stated that overtime work would be offered on an equitable basis to readily available qualified employees.