- The reasons and judgment of the Supreme Court of Canada in MacDonald v. Canada, 2020 SCC 6 are appealed to the Bowman Moot Court for Tax Appeals.
- The questions in issue on appeal are:
- What is the proper test to apply in determining whether a taxpayer’s derivative contract is a hedge or speculation?
- Were the cash settlement payments made by Mr. MacDonald properly characterized as income losses or capital losses?
- All other issues raised before the Tax Court of Canada and the Federal Court of Appeal are not appealed from.
- The Moot is intended to promote advocacy pertaining to substantive tax law issues, not to questions relating to administrative law or the standard of review. Participants are expected to make very short written submissions and refer the judges to their factum when they state orally the applicable standard of review. We have done our best to inform the judges that the standard of review is not at issue and have advised them to refrain from asking any questions pertaining to it.
- The moot problem is an actual case, and therefore the parties’ factums are to be original works, as opposed to any copy or mere imitation of existing filed court materials.
Moot Problem Clarifications
- With respect to question B, it can be interpreted two ways:
- Depending on the test adopted in question A, should the settlement payments be qualified as income losses or capital losses? (such a question would require the application of the law to the facts of the case depending on the test adopted in question A); or
- Notwithstanding the criteria in determining whether a derivative contract is a hedge or speculation, the settlement payments should be qualified as income losses or capital losses by applying the usual criteria.
The correct interpretation is #1. However, mooters may make submissions on the proper characterization of the cash settlement payments no matter what version of the legal test may be accepted by the judges.
- Paragraph 4 of the description of the Moot Problem states that the standard of review is not in issue. I believe that a similar statement (and instruction to judges) has been made in past years, in response to the tendency of some judges to more or less automatically begin by asking counsel about the standard of review. In this case, however, the dissent of Justice Côté in the Supreme Court makes the standard a substantive issue in the appeal. Will that instruction to judges extend to questions about her judgment?
Yes, that instruction will be extended to questions about Justice Côté’s decision. However, the judges are free to ask questions about Justice Côté’s decision as they pertain to substantive tax law as opposed to administrative law.