Space flight tax bid shot down to Earth
Expenses for 2009 space tourism jaunt not business-linked
EDMONTON • In an “unusual and exotic” court case, Canada’s Federal Court ruled that Cirque de Soleil founder Guy Laliberté — Canada’s first space tourist — won’t be able to recover the tens of millions of dollars he spent on his 12-day trip to the International Space Station.
Laliberté, the Quebec billionaire who co-founded the popular circus in 1984, had been trying to recover tax on the $41.8-million bill for his 2009 space odyssey, contending the expenditures for the trip were business expenses and not a personal luxury trip to outer space.
“The circumstances giving rise to this appeal are unusual and exotic, but the issues that arise in the appeal are not,” wrote Federal Court Justice Mary Gleason.
On Friday, the three-person court rejected Laliberté’s appeal. Jamie Golombek, managing director of tax and estate planning with CIBC in Toronto, and the Financial Post’s tax columnist, said while the details may be other-worldly, the underlying issues are rather common.
“It’s not common that people are flying into space every day, but it’s common that people are assessed with shareholder benefits,” Golombek said. “You and me are not flying into space every day, but the issue is really relevant in terms of the principle.”
Canada Revenue Agency disagreed with the assertion that the expedition to the International Space Station was a business trip. Laliberté had paid for the trip through his holding company, and then had been reimbursed by Cirque du Soleil’s controlling company, except for a self-assessed $4 million shareholder benefit.
When the issue ended up in tax court, the court ruled against Laliberté, first in 2018, finding “the appellant had directly or indirectly received a shareholder benefit from the space trip” and that it was a personal journey.
“I find that the motivating, essential and overwhelmingly primary purpose of the travel was personal,” wrote Tax Court Justice Patrick Boyle at the time.
Laliberté — who began his career as a busker, and was a candidate for the Rhinoceros Party in the 1980 election — had made various arguments that it was a promotional trip, including to boost the Cirque du Soleil’s launch in Russia, to celebrate the circus’s 25th anniversary, and to promote his clean water charity, One Drop.
He had described his trip as a “social and poetic mission” for the charity. The trip included a program featuring Bono, Shakira, David Suzuki and Al Gore.
The Tax Court had set the business portion of the trip at 10 per cent, or $4.2 million, which means that the remaining 90 per cent of the trip ($37.6 million) represented the amount that is a taxable benefit.
In his appeal, said a statement from his spokeswoman, Laliberté argued that “despite the personal satisfaction he derived from the space trip, such intention to enhance the value of Cirque du Soleil while promoting the objectives of the One Drop Foundation was determinative in applying the legal test for shareholder benefits.”
The actual ruling details a complex and jargon-heavy case that, in plain terms, was about whether or not the Tax Court “misconstru(ed)” its benefits test and wrongly applied the burden of proof upon Laliberté in the lower court decision. The Federal Court disagreed with Laliberté’s arguments.
“We are disappointed with the outcome of the appeal, though this decision will not give rise to any additional tax liability, as the related tax had been paid several years ago,” said Laliberté’s statement.