Reuters recently reported a study showing that corporations face very long
odds in tax appeals heard by the United States Supreme Court. There
were 919 income tax cases in the Supreme Court of the United States
from 1909 to 2011. 364 of those cases involved corporations. In
"abuse" cases, the government won 61% of the time. In
other cases, the government won 68% of the time. The real story is
likely much grimmer since the statistics show that the US Supreme Court only
grants review in about 2% of leave applications.
The Canadian Supreme Court heard 356 income tax cases between
1920 and 2003. Of these, the statistics show that the government won 223,
or roughly 2/3. The record of Supreme Court tax cases between 2004
and 2012 is essentially similar. While an exact breakdown of
corporate cases is not available, anecdotal evidence suggests that
the success rate of corporations is roughly 1/3 (a more detailed
analysis will be available in the future).
While the Canadian experience appears superficially to mirror
the American statistics, a very different story is disclosed by
Canadian leave to appeal statistics.
As the chart demonstrates, roughly 12% of leave applications are
granted in Canada. Thus, corporations and other taxpayers may have
as high as 6 times more likelihood of success in a tax appeal
before the Supreme Court of Canada than in cases before the Supreme
Court of the United States.
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Today (May 2, 2013), Ontario Finance Minister, Charles Sousa tabled the province’s 2013 Budget. This year’s budget, titled "A Prosperous and Fair Ontario" is committed to eliminating the deficit by 2017-18 and then reducing the net debt-to-GDP ratio to the pre-recession level of 27%.
Canada’s 2013 federal budget released on March 21, 2013 introduces a number of measures to strengthen the ability of the Canada Revenue Agency to address international aggressive tax avoidance and to combat international tax evasion so as to maintain and protect Canada’s tax base.