Reasoning in Sommerer Reaffirmed by FCA

2012 FCA 207 · Federal Court of Appeal

Originally published on IncomeTaxAct.ca on 19 November 2014. The law may have changed since; check the current text in the tax wiki.

The FCA upheld the reasoning that subsection 75(2) of the Income Tax Act applies only to a settler or contributor and not where there is a fair market value disposition into the trust.

The FCA stated that future arguments on the basis that the decision in Canada v. Sommerer, 2012 FCA 207, is “manifestly wrong” for failure to consider the whole context of subsection 75(2) will not succeed at the FCA as there is no basis to make such a finding (Miller v. Canada (Attorney General) 2002 FCA 370 at para. 10.).

• Sas Tullo, JD, LLM, PhD (exp)