What is the impact of sophisticated financial management on the calculation of the gross-up for the purposes of calculating the value of management fees?
British Columbia, Canada
The following excerpt is from Rhodes v City of Surrey, 2020 BCSC 1318 (CanLII):
The decision of Townsend v. Kroppmanns, 2004 SCC 10, rejected the submissions of the defence that: (i) a reduction should be made for the increased rate of return which would result from sophisticated financial management; and (ii) that future care amounts spent on legal fees and real estate should be deducted from the amount upon which management fees and tax gross-up are calculated.
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