Some children dream of joining the circus. Others dream of being an astronaut. Guy Laliberté did both. He was the founder of circus company Cirque du Soleil and clean water charity One Drop Foundation. He had a life-long dream to go into space.
In 2009 he travelled to the International Space Station. He viewed the trip as promoting One Drop and Cirque du Soleil, but also as the realisation of a childhood fantasy.
The promotion involved, amongst other things, writing and reading a poem from space entitled: “a poem to planet earth and its inhabitants in regard to the situation with water”. Laliberté also took pictures while at the space station as souvenirs and for a book benefitting One Drop, and filmed a documentary about his space journey, which partially benefitted One Drop.
The ticket for the Space ride (with extras) cost around $42m Canadian dollars. A family company paid for the ticket.
Canadian tax law provides that where a shareholder receives a benefit other than remuneration or dividends, the value of that benefit will be taxed.
Laliberté argued that this was predominantly a business trip. The Tax Court disagreed and allowed 10% of the trip as a business expense and that CA$37.6 m was taxable as a personal benefit. The Appeal Court agreed.
The classification of personal benefit and business expense is not an unusual tax question. But in this case the implications were off the planet.
Read the full appeal decision here.