The chairman of the Investment Funds Institute of Canada tax committee is looking to champion an appeal to the Supreme Court to overturn a court decision that could adversely affect brokers buying books of business.

“We’re interested in helping to fund a appeal,” says Jamie Golombek, who is also VP of tax and estate planning for AIM Funds Management Inc in Toronto. Golombek made the statement during a presentation at the annual IFIC conference that wrapped up in Toronto on Thursday.

The case that Golombek is referring to is Gifford v. The Queen. In the spring of 2001, Thomas Gifford, a broker in North Bay, Ont., sought to deduct expenses incurred when buying the client list of a retiring broker. His deductions were disallowed by the Canada Customs and Revenue Agency, but he took his case to tax court and won.

Had the decision stood, it would have allowed him to claim the deductions, and probably encouraged other commissioned salespeople to try the same tax-saving tact. But the CCRA appealed the tax court decision to the Federal Court of Appeal and won.

The FCA judgment was released in mid-August. There is a 60-day limit to file an appeal. But Gifford himself won’t be pursuing the case. The cost of a Supreme Court of Canada appeal outweighs the tax benefit he would receive if he won, says his lawyer, Michael Templeton, who practices litigation with McMillan Binch in Toronto.

If an appeal is not brought, though, the outcome will adversely affect any commissioned salesman wishing to purchase a client list. In other words: the appeal needs a backer. Templeton says he is willing to entertain calls from potential backers. Meanwhile, Golombek will do the same in order to raise a defence fund. But interested parties must act quickly in order to file the application for leave to appeal to the SCC by mid-October.

For a full explanation of the case and its implications see the Legal Matters column in the upcoming October 2002 issue of Investment Executive.