Tax court sides with Cirque founder on space trip

Nearly a decade after Cirque du Soleil founder and thencontrolling shareholder Guy Laliberté blasted off to the International Space Station and broadcast his exploits via live video link to fundraising concerts and events featuring the likes of Bono and Al Gore, the repercussions continue to ripple through Canada’s tax courts.

At issue is whether the $41.8-million price tag for the space trip in the fall of 2009 should have been claimed by Laliberté as a taxable benefit as the company paid the tab. The Canada Revenue Agency said it should and, this week, the Tax Court of Canada weighed in on Laliberté’s appeal that maintains a significant portion of the CRA’s assessment.

“I find that the motivating, essential and overwhelmingly primary purpose of the travel was personal,” wrote Justice Patrick J. Boyle in Wednesday ’s Tax Court of Canada decision. “Simply put, there is a difference between a business trip which involves or includes personal enjoyment aspects, and a personal trip with business aspects ... tacked on . ... I have found that this space trip falls into the latter category ...”

Following testimony last September and in April, there was no evidence Cirque du Soleil would have considered sending anyone else “on this trip, or any comparable stunt … to raise its brand awareness or to generate helpful media ...,” Boyle wrote.

What’s more, the judge noted the Space Flight Agreement was between Space Adventures and Laliberté and his family holding company, which also took out his insurance policies for the trip. Cirque du Soleil reimbursed costs of the trip.

While there was some evidence that the company used Laliberté’s space trip to promote itself and some of its activities, “Cirque du Soleil did not do any analysis or investigation of the value to it of the anticipated media coverage.”

Nicolas Simard, a tax litigation specialist, said the next step will be for the CRA to reassess Laliberté based on the tax court’s decision. “Ninety per cent of the assessment is maintained — so this is a clear loss for the taxpayer,” he said.

He estimated the $37.6-million benefit could come with a possible $18.1-million tax bill, plus interest, based on combined federal and provincial taxation rates.