All posts tagged: accounting

Federal Court of Appeal allows use of mark-to-market tax accounting

Taxpayers are entitled to use the mark-to-market method to compute income for federal tax purposes if it provides a more accurate picture of a taxpayer’s income, ruled the Federal Court of Appeal.

The federal appeal court decision bolsters the possibility for taxpayers to use methods to compute income that are not forbidden by the Income Tax Act (Act), affirms Canada Revenue Agency’s administrative position that allows regulated financial institutions to tax derivatives on a mark-to-market basis, and may open the door to allow financial accounting to become more influential in determining what constitutes an acceptable method of computing income from business, according to tax experts.

Scrambling to convert to IFRS

When the Canadian Securities Administrators issued a staff notice during the summer that all registrants regulated directly by Canadian securities regulatory authorities would be required to prepare financial statements using International Financial Accounting Standards beginning on January 1, 2011, it literally set off a scramble. Registrants such as investment counsel and portfolio managers, limited market dealers, exchange-contracts dealers, restricted dealers (and in Quebec, mutual fund dealers), who are not members of a self-regulatory organization (SRO) like the Investment Industry Regulatory Organization of Canada and the Mutual Fund Dealers Association of Canada, suddenly were faced with a significant undertaking that could materially affect their reported financial position and results of operations. “For smaller portfolio managers who may not have been thinking about IFRS, this was a crucially important notice,” remarked Scott McEvoy, a lawyer with Borden Ladner Gervais LLP in Vancouver who specializes in the investment management industry. “Now they have to be thinking about it darn quick.”

Canada’s longest trial again in the news

Nearly 15 months after the Quebec Court of Appeal griped about the legal war of attrition that has lasted more than a decade in the case against a former accounting giant and its partners over the infamous collapse of Montreal real-estate firm Castor Holdings Inc., the highest court of the province recently dismissed yet another appeal. The defendants sought to appeal an interlocutory judgment that dismissed their motion to obtain an additional $17-million in payment bonds from the respondents, and declare them to be jointly and severally liable of costs. Judge Lise Côté of the Quebec Court of Appeal upheld the lower court ruling.