Use Your Own After-Tax Money for Fun


In Canada, the truth of the matter is that generally you pay for having fun with your own after-tax money. If you pursue a childhood dream and take a trip to the International Space Station for $41.8 million, the trip may be “unusual and exotic”, but the personal nature is not. That is, in essence, what the Tax Court of Canada and the Federal Court of Appeal said in Guy Laliberte v. The Queen (2020 FCA 97, affirming 2018 TCC 186). In this case, Mr. Laliberte, the founder and, at the relevant times, the controlling shareholder of a group of Cirque du Soleil companies, had his $41.8 million cost paid by one of the companies. He took the position that the 19 days  of space travel was a “stunt-type promotional activity” intended to highlight the Cirque’s operations. He also conducted a worldwide broadcast as a benefit for a charity he founded. The courts drew an analogy with a trip taken by a shareholder in less exotic circumstances – a personal cross-country trip with a few stops along the way to visit business clients and suppliers; the business aspects are tacked on to the predominantly personal trip. Shareholders’ personal trips paid for by their companies give rise to a taxable shareholder benefits (income), the value of which is taxable to the shareholders. In this case, Mr. Laliberte’s taxable income was assessed to be approximately $37.6 million. Other Canadian taxpayers are spared from paying for most of his once-in-a-lifetime space travel experience.


Click here to read the decision in Guy Laliberte v. The Queen, 2020 FCA 97.


- Professor Jinyan Li