Federal Court of Canada Strikes Down Ex Parte Jeopardy Order

Reprinted from Tax Notes Int'l, November 30, 2015, p. 767

The Federal Court of Canada has overturned an ex parte jeopardy order by the Tax Court of Canada to the Canada Revenue Agency, which feared that a C $283 million tax debt was at risk because a trust beneficiary had become a nonresident of Canada. There is no appeal to the Federal Court's judgment.

In MNR v. RRSP Trust of Grenon, 2015 FC 1050, the Federal Court of Canada struck down an ex parte jeopardy order granted to the Canada Revenue Agency (CRA) on March 7, 2013. The agency sought that order on the basis that the trust beneficiary was no longer a resident of Canada and that the collection of the assessed income tax of $283 million owed by the trust was in jeopardy.

James Grenon is the annuitant of a self-directed Canadian trust having CIBC Trust Corp. as its trustee. In 2012 Grenon canceled his Alberta driver's license, sold his principal residence, and moved to New Zealand with his partner. After his move, the CRA became concerned with transactions wherein $55 million of the trust's funds was moved to New Zealand. In February 2013 a transfer of $15 million was made to an account, presumably in Canada. Based on the movement of those funds...