Landbouwbedrijf Backx B.V. v. The Queen, 2019 FCA 310 is an appeal from Landbouwbedrijf Backx B.V. v. The Queen, 2018 TCC 142. The Tax Court ruled that the plaintiff, incorporated in the Netherlands, was a resident of Canada for tax purposes in 2009 and liable to pay Part 1 tax on the capital gain it acquired from the disposition of its partnership interest in a dairy farm operation in Ontario. Canada was found to be the location of the corporation’s central management and control. 

On appeal, Rivoalen J.A. upheld the Tax Court’s ruling. It stated that the record supported the Tax Court’s finding that it was the corporation’s shareholders in Canada, and not the sole director in the Netherlands, who made key corporate decisions. 

Tax Foresight correctly predicted that the plaintiff’s central management and control resided in Canada based on several factors, including:

  • The sole director in the Netherlands did not have any participation in the decision to dispose of the partnership interest 

  • The director was not involved in significant email exchanges in 2009 between the shareholders in Canada and their advisors and accountants 

  • The director’s function was more clerical and administrative in nature by executing the decisions of the Canadian shareholders

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