GAARbage in… GAARbage out? – Even if you do everything by the letter of the tax law, can you pass the “smell test”? – A June 2018 Federal Court of Appeal ruling might make it difficult?
By Cory G. Litzenberger, CPA, CMA, CFP, C.Mgr – President & Founder of CGL Strategic Business & Tax Advisors.
No, those aren’t typos. For the non-tax nerds (ie: normal people) reading this, GAAR is the General Anti-Avoidance Rule under Section 245 of the Income Tax Act. More commonly referred to as “the smell test.” In other words, even if you do everything by the letter of the law, if it looks and smells funny, the government might not agree with you and you might be reassessed.
To the tax nerds, I will be simplifying this article but with a few legislative references to keep you happy.
This smell test brings us to the Pomerleau v Canada (2018 CAF 129) ruling issued in French on June 29, 2018 by the Federal Court of Appeal.
To put this in context, the transactions occurred in 2004 and 2005. We are now looking at items that are 13-14 years old, that were also common practice among many tax practitioners back then.
Let’s take a high-level approach to see how we got here:
The taxpayer, Pomerleau, and his family sought tax advice on how to transfer the $3 million family owned business from the parents to their children. There are many provisions that allow us to do this on a tax-deferred (not tax-free) basis.
The advisors had developed a plan to pass on the family business on this tax-deferred basis, but also thought they had discovered a way to reduce the amount of that deferred tax as well.
Layman Technical Background
In tax planning with company shares we have two types of adjusted cost bases (ACB) referred to as “hard ACB” and “soft ACB”. Hard ACB is when tax was fully paid on the transfer or was acquired from someone not related to you. Soft ACB is when you have bought the shares from a related person and that person had used part of their Lifetime Capital Gains Deduction on the sale.
Hard ACB can be planned with to eventually convert into a shareholder loan without triggering a dividend under 84.1, whereas soft ACB cannot.
In 1995, the family started to reflect on the continuity of the business. Several decisions were taken. One of those decisions was that the business would be divided among the original shareholder’s four children. As a result, the business was divided as follows: the two daughters obtained part of the business, which consisted of real estate, and the two sons obtained the other part, which consisted of the construction business.
As part of this transfer of the family business, which had been in the works for over 10 years, a series of transactions was undertaken in 2004 and 2005.
One of the transactions was the redemption by Pomerleau’s holding company (HoldCo) of its shares. The ACB and the paid-up capital (PUC) of these shares totaled $2 million.
If the ACB was considered hard ACB, then Pomerleau could sell the shares to a new corporation for a $2M Promissory Note, have the old corporation redeem the shares, pay the $2M to the new corporation (inter-corporate dividends from connected corporations don’t create tax) then use the $2M to pay out the promissory note.
This is similar to what is done as a pipeline transaction for deceased persons after capital gains have been triggered on death.
If the ACB is soft ACB, then the transactions above would actually cause a taxable dividend under 84.1 of the Income Tax Act.
How did we get to $2M of PUC and ACB?
In 1989 (likely under fears that the capital gains deduction may be eliminated in the next federal election) Pomerleau, his mother, and his sister, all increased their ACB in their Operating Company (OpCo) shares utilizing a provision of the Act under Section 85, that (with a lot of complexity) allows you to sell shares to a corporation in exchange for more shares. If done properly, you can do this with your own corporation and trigger capital gains on purpose in order to use your lifetime capital gains deduction under 110.6 (as was the case here).
Some of these shares were eventually transferred to Pomerleau from his mother and sister in taxable events. As a result, the shares had both soft and hard ACB at this point.
Fast forward 15 years.
Those previously mentioned shares of OpCo were eventually transferred to HoldCo.
In 2004, as the sole shareholder of HoldCo, Pomerleau wanted to split his $3M company among his children. He had $1M in soft ACB with only $15,000 of PUC (the tax-free amount you can get back) tied up in Class G Preferred Shares (Class G) and had at least $2M in value of Class A common shares with $1M in hard ACB.
The Transactions and Application of Law
On January 3, 2005, HoldCo repurchased the $1M of Class G shares that the taxpayer owned, this triggered a deemed dividend under 84(3) and was taxable to Pomerleau.
When a deemed dividend occurs, the shares are considered to be sold for zero proceeds. Since there was ACB of $1M on those shares, this would be a capital loss.
40(3.6)(a) deems the loss to be zero since Pomerleau was affiliated with HoldCo because he still owned the Class A shares.
Since it would not be fair to pay tax on a dividend for something with ACB (meaning someone likely paid tax on it before), then the Act transfers this capital loss that has been denied to ACB of existing shares owned. In this case, the ACB then moved over to the Class A shares under 40(3.6)(b) and 53(1)(f.2).
This increased the ACB from $1M to $2M.
So far so good right?
All that was left was to create a pipeline transaction, so Pomerleau transferred his Class A shares to a newly created corporation using Section 85 for new shares with $2M in ACB, PUC, and Fair Market Value.
These shares were then repurchased and eventually paid out $2M to Pomerleau with no additional tax.
So, how was the ACB cooked? Soft or Hard?
According to the transactions, the ACB would be considered hard.
Enter the Canada Revenue Agency (CRA) and the smell test (GAAR).
In order for something to be considered abusive under the GAAR in section 245, there must be:
1) A tax benefit
2) An avoidance transaction, and
3) A misuse or abuse of the Income Tax Act
Pomerleau’s position (in sort-of-simple terms) = hard ACB and no misuse of the Act
1) The stop-loss rules of 40(3.6) converted the cost basis from soft ACB to hard ACB.
2) Section 85 allows for transfers to another corporation, and hard ACB can be used to create Paid Up Capital
3) 84.1 only creates a dividend for shares that have been redeemed for more than their Paid Up Capital.
4) Although there was a tax benefit, the motivation for the transactions was to assist in the transfer of the family business.
5) No misuse of the Act occurred, rather, to the contrary, the Act operated as written.
The Government’s position (in sort-of-simple terms) = GAAR (it stinks)
1) Even though you followed the law, we don’t like it and so we think it shouldn’t be treated like this, so we’re going to apply GAAR under Section 245 because we think it smells funny.
The Lower Court Ruling
At the Tax Court of Canada, Justice Favreau concluded that the GAAR was applicable in this case since section 84.1 of the Act prevents taxpayers from undertaking surplus stripping transactions on a tax-free basis. In the TCC Justice’s opinion this is what Pomerleau had done in this case, because the series of transactions resulted in the avoidance of the purpose of section 84.1.
More specifically, Justice Favreau opined that the effect of paragraph 40(3.6) of the Act permitted the taxpayer to increase the PUC of the shares in a subsequent rollover and therefore to avoid the application of section 84.1 of the Act.
As a result, this planning had the effect of circumventing in an abusive manner the purpose of section 84.1 of the Act (i.e., to prevent surplus stripping on a tax-free basis).
As a result, the Tax Court of Canada maintained the Minister’s initial assessment, as it determined that the GAAR applied to the series of transactions so that a taxable dividend of $994,628 had to be attributed to the taxpayer.
The Federal Court of Appeal Decision
In paragraph 78 of their unanimous ruling, the Federal Court of Appeal asked what is the purpose and spirit of section 84.1?
Upon analysis, the court decided that the purpose and intent of this provision, is to prevent amounts that have not been taxed to a related person from being distributed tax-free.
Even though the letter of the law was followed by Pomerleau, the court ruled against him in deciding that the intent and spirit of 84.1 was avoided, and so the GAAR under Section 245 applied.
Since it was a unanimous ruling, the taxpayer is not able to appeal to the Supreme Court of Canada as a matter of “right” … so we will wait to see if Pomerleau attempts to apply for a “Leave to Appeal” and if he is granted.
Translation: the smell test said the transactions stink like GAARbage.
My European Favourites – Segovia, Spain
Spain is one of our favourite countries to visit in Europe. The warm sunshine, the history, the architecture, the gastronomy, and above all, the passionate and friendly people make it a desirable location. We have been to Spain with sightseeing groups, school groups and soccer groups. Madrid, the Spanish capital is always included in our itineraries. In addition to exploring the city, there are numerous worthwhile day trips to surrounding towns. Segovia is one of those towns.
Segovia is located about an hour northwest from Madrid and the day trip is sometimes combined with a stop in the nearby medieval walled city of Ávila. Segovia is just inside the large northwestern Castile and León region of Spain. The region consists of an expansive high plateau surrounded by a ring of mountains.
Segovia’s old town is perched high on a rocky hill surrounded by the Eresma and Clamores rivers. Declared a UNESCO World Heritage site in 1985, the old town features an impressive cathedral, numerous Roman churches, a Jewish quarter, and the striking Alcazar or castle. The town is full of Roman and medieval structures including the massive Roman aqueduct.
A Brief History Of Segovia
There was already a settlement by the Aravaci, a Celtic people, for over 600 years in Segovia prior to the Romans arriving in 96 BC. The Romans installed a military installation here to control access to the Douro River region in the north, and they built the aqueduct to bring in fresh water from the surrounding mountains. After the Romans left, Segovia was inhabited by people from northern Europe until the Spanish invasion by the Moors in the early 8th century.
After the reconquest by Christian Kin Alphonso VI in 1079, Segovia was resettled by Christians. Numerous parishes and monasteries were established in area. Due to its location on main trading routes, Segovia reached its golden age during the middle ages due to the foundation of a cloth industry. The town experienced a rise in the Jewish population and became an important centre for wool and textiles.
In the 13th century, Alfonso X, King of Castile, León and Galicia, made Segovia his residence.
Later in the 15th century Henry IV, King of Castile, also made Segovia his residence, built important buildings, renovated the Alcazar, and made Segovia the site of the Royal Mint.
Segovia is also known as the place where Isabella the Catholic pronounced herself Queen of Castile in the church of San Miguel in 1474. Afterwards, she married king Ferdinand II, King of Aragon, to create a unified Spain. They are probably best known for financing the voyages of Christopher Columbus.
In the mid 16th century there was a revolt by the citizens of Castile against King Charles I and his administration. The “War of the Communities of Castile” lasted 18 months from April 1520 to October 1521. One of the rebel leaders, Juan Bravo, was from Segovia and has a statue in the main square. He was captured in the Battle of Villalar along with two other prominent rebel leaders. They were beheaded the following day. Despite the rebellion Segovia remained prosperous and the population grew to approximately 27,000.
Segovia’s decline started with an outbreak of the plague in the late 16th century and then mostly by the subsequent 17th century collapse of the textile industry. By 1694, the population dropped to just 8,000. Later attempts to revive the textile industry by King Charles III failed. In 1764 a military academy, the Royal School of Artillery, was established and is still in operation. In 1808, during the Napoleonic wars, Segovia was sacked by French troops.
19th century Spain had three Carlist Wars related to claims to the throne of Spain. During the first Carlist War, Segovia was unsuccessfully attacked. Since then, it has escaped military destruction, including during the Spanish Civil war from 1936 to 1939 that pitted the Republicans against the Nationalists led by Francisco Franco. In fact, since 1920 the population of Segovia has grown from 16,000 to over 50,000 in the early 80s. The population has stabilized in the last 40 years and the economy along with it.
The Roman Aqueduct
Our walking tour begins at the Plaza del Azoguejo and you can find a google map of our walk at www.azorcan.net/media to follow along. Once a market place, the plaza is located at the foot of the colossal Aqueduct of Segovia. The 28.5 meters tall aqueduct bridge, known locally as El Puente (the bridge), is one of the best preserved in the world. Built by the Romans at the end of the 1st century from stacked granite, the aqueduct transported water over 15 kilometers over rolling hills from the Sierra mountains to the town. The pillars and arches are solid rock with very little mortar in between. The aqueduct continued to supply water for many centuries after being built by the Romans and is one of the most recognizable landmarks in Spain.
The Artillery Academy of Segovia, which recently celebrated a 250 year anniversary in Segovia, is located a few blocks from the plaza in a former 15th century Franciscan convent with an interesting Gothic cloister.
Located in a half-timbered house on the south side of the Plaza del Azoguejo, you will find the famous Cándido restaurant. Since 1905, three generations of the Cándido family have been serving their famous suckling pig, stews and wines. The official Tourist Office of Segovia is located across the square from the Cándido. From the plaza, we will walk up the Calle Cervantes. Calle means street, and this one is named after the most famous Spanish literary figure, Miguel de Cervantes. Cervantes is best known for being the author of the literary classic, Don Quixote.
The Medina de la Campo and the Jewish Quarter
About 200 meters from the Plaza del Azoguejo, we arrive at an observation terrace named the Mirador de la Canaleja. Here we can admire a fantastic panoramic view of the lower town’s pastel colored buildings with red roof tops.
There is an interesting light blue building on the north side of the Mirador with three stacked sunrooms. We walk along the side of this building on the Calle Juan Bravo, the street named after Segovia’s rebel leader. A few steps away on the right is the eye-catching Casa de los Picos. The 15th century historic Gothic-Renaissance building is decorated with numerous pyramids or diamond tips made from granite and now houses the School of Art and Superior Design.
A bit further on the Calle Juan Bravo we will come upon a little plaza on the left that leads to the Palacio de Cascales. The palace is known by a few names from its past including the Aspiroz or the del Conde Alpuente. Nowadays, it is used for the offices of the Ministry of Development of the Junta de Castilla y León. The palace was built in the 15th century by a prominent knight from Segovia named, Alonso Cascales. Its façade features Gothic windows, a unique pattern on the walls, and a Moorish or Mudejar arch kept from the original Arab building that was once there.
A short distance away along the Calle Juan Bravo is the square of Medina del Campo. The square contains three notable buildings, the house of Juan Bravo, the Tower of Lozoya and the Church of San Martin. The 14th century rectangular shaped Tower of Lozoya, was once used as an armoury. The tower is now used to exhibit contemporary art. The 12th century catholic Church of San Martin, at the centre of the square, is an interesting mix of Arabic and Romanesque elements.
Moving forward on the Calle Juan Bravo, we will reach the small square Plaza Corpus. The square is named after the Corpus Christi Church which is located on the left side of the square. The church was once the largest Jewish Synagogue in Segovia starting in the 13th century. You can visit the interesting church that was converted from a synagogue in 1410 as it is open to the public.
At the Plaza Corpus you will reach a fork in the rod. The Calle la Juderia Vieja (Old Jewish Quarter Street) is on the left, and as the name implies, it leads to the Jewish Quarter. We will take the Calle Isabella la Catolica (Isabella the Catholic) on the right to the Plaza Mayor (Main Square).
The Plaza Mayor is the central hub of the town of Segovia. The large rectangular cobblestone square has a performance gazebo at its centre surrounded by trees. The square was once a market place in medieval times, and Segovia’s citizens still meet here to celebrate festivals and to enjoy the numerous bars and restaurants spilling onto the square from the arcades. The square still hosts a market every Thursday. The La Concepción on the north side of the square is a bit pricy, but its terrace is a great place from which to people watch. Next to the restaurant is the 17th century Segovia town hall.
On the east side of the Plaza Mayor is the Juan Bravo Theatre. Built in 1917 and refurbished in the 1980s, it is the principal theatre of Segovia. A few steps away on the south east of the square behind the luxury priced Villena restaurant is the 16th century gothic San Miguel Church.
The church is famous for being the place where, in 1474, Isabella the Catholic was crowned Queen of Castile. Exploring the maze of alleys and squares behind the San Miguel Church, you will find various interesting and moderately priced bars and restaurants. The El Sitio and the El Figon de los Comuneros are two great choices for lunch.
Located on the west side of the square, the main building on the Plaza Mayor is the Cathedral of the Assumption. As the highest point of Segovia, the cathedral, built in late gothic style between 1525-1577, can be seen for miles around. Construction began after the original cathedral, located near the Alczar, burned in 1520. The cathedral can be toured and the view from the cathedral tower is memorable.
From the cathedral, we will walk about 600 meters on the Calle Marques del Arco which becomes the Calle Daoiz to the Plaza la Reina Victoria Eugenia (Square of Queen Victoria Eugenia). The Queen’s square is a nice garden located at the forefront of the entrance to the Alcazar. In addition to the imposing castle façade, there are great views of the Spanish countryside from the garden. On the left, there is a building called the Casa de la Química. There is a cafeteria there with a nice terrace with an amazing view of the town. There are better places for a meal, but it’s a good place to enjoy a drink under the shade of a patio umbrella on a hot day.
Like most fortresses, the Alcazar is built on an elevated area that offers a natural defensive advantage. The Alcazar’s site, on a large rock promontory at the spur of the Eresma and Clamores rivers, was a fort during the Roman occupation in the 1st century. Since Roman times, the castle has been rebuilt and expanded many times over hundreds of years by different people including the Romans, the Muslim Umayyad Dynasty in the 8th century and eventually the Spanish in the 12th century. Over time, the Alcazar has been used as a fortress, a royal palace, a prison, and a military school. The picturesque Alcazar is now a museum, a major tourist attraction, and one of the most recognizable castles in Europe. The original building from the 13th century was painstakingly restored after a devastating fire in 1862.
Approaching the Alcazar from the Queen’s square, we are faced with the imposing Tower of John II and the draw bridge. Once inside there are two staircases with 156 steps leading to the top of the tower where you can enjoy a great view of Segovia. Entering further, we arrive at the first major open area of the fortress, the Parade or Weapons Patio with a colonnade and upper walk way. This is the largest open space in the Alcazar, and along with the next outdoor area, the Clock Yard, has a great deal of Moorish influence.
At the back of the fortress, there is the Armoury with medieval flags, lances, swords, knights armour and even armour for horses. The “V” shaped well terrace at the very back looks like the bow of a boat gives the castle the appearance of being a large rock ship. The Alcazar’s garden, with shrubs in geometric shapes, is also located at the back of the castle.
Other interesting rooms include the Chapel, Throne Room, Royal Bedrooms, a Pineapple Room, the Alabaster Hall and the Kings Hall with 52 sculptures of kings that ruled the area for hundreds of years. The Museum of the Royal Artillery School in the Alcazar contains documents, scale models, weapons and uniforms from the 18th and 19th centuries. At the base of the castle and along exterior of the city walls there is a network of connected gardens and wooded areas.
View from the Alcazar
From the Alcazar’s Tower of John II, you will have a great view of the surrounding area’s rolling hills, churches and monasteries. You can’t miss the impressive 15th century Monastery of Santa Maria del Parral that was founded by Henry IV of Spain. The monastery’s church was built in gothic style, while the later built bell tower has a Romanesque top. The monastery, currently owned by the Order of St. Jerome, has four interesting cloisters in built in various architectural styles.
Looking to the left from the monastery, we see the tower of the Romaesque Church of San Marcos at the bottom of a winding road. As we look up along the road, we will see the larger Convent of San Juan de la Cruz on the left and the unique Church of Vera Cruz on the right. The Church of the Vera Cruz was founded by the Knights of the Order of the Holy Sepulchre of Jerusalem in 1208. The Romanesque style church was built in the shape of a twelve-sided polygon with three semi-circular chapels. The design of the church was inspired by the Holy Sepulchre in Jerusalem that the order was named after.
Segovia is a great place to enjoy traditional Spanish cuisine and in restaurants with matching architecture and atmosphere. The local specialities include roasted suckling pig (cochinillo), suckling lamb (lechazo), Cantimpalos chorizos, wild mushrooms and a traditional layer cake named Ponche Segoviano.
One of the best places to enjoy a meal in Segovia is near the aqueduct. We have already mentioned the famous Candido restaurant and dinner upstairs with a view of the illuminated aqueduct as a backdrop is a memorable experience.
On the Calle De Cevantes, not far from the aqueduct, there are two more great restaurants serving traditional dishes. The Conde Duque, one of the oldest restaurants in Segovia, has a unique interior while the Asador El Bernardino has a terrace with a great view.
On the Plaza Mayor, we wrote about enjoying a drink and people watching at La Concepción. Near the square we have three recommendations. El Figon de los Comuneros is a great place for sampling local tapas. At El Sitio you can have a nice traditional meal or try their pinchos in the bar area. The Restaurante Jose Maria has excellent wines, a tasting menu and a nice selection of tapas at the bar.
After dinner at any of these restaurants, you may want to take a walk of the historic centre with all the town’s monuments lit up.
Let’s Go To Segovia
Segovia is a great place to visit at any time of year, and you can easily spend a couple of days exploring the town’s historic buildings, walls, churches, monuments, narrow streets, shops, museums, bars, cafes and restaurants. The town is also known for two special religious events, the Holy Easter Week (Semana Santa) and the Three Kings parade (los Reyes Magos) held on January 5th.
Segovia is well worth the journey from the hustle and bustle of Madrid and is one of my favourite destinations in Spain. If you get a chance to visit the town, I think you will agree.
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My European Favourites – Helsinki, Finland
Founded only in the 16th century, Helsinki is the geographic, political, financial and cultural capital of Finland. In addition to the area Helsinki encompasses on the mainland, it includes over 300 islands on the inlets and bays of the easternmost arm of the Baltic Sea, the Gulf of Finland. Combined with Stockholm and Tallinn, Helsinki is one of our top tour destinations for youth hockey and ringette teams for over twenty years. Finns are avid sports people and great hosts for our Canadian groups.
Before gaining independence in 1917, Finland was ruled by the Swedes and Russians. The city was founded by Sweden’s King Gustav in 1550 to rival the Hanseatic League member city once known as Reval. Today, Reval is known as Tallinn, Estonia, and it can be reached by a two hour ferry ride.
In 1809, Russia gained control of Helsinki, and in 1812, moved Finland’s capital city from Turku to Helsinki. The decision was made because Helsinki was closer to St. Petersburg and easier to defend because of the Sveaborg sea fortress which guards the sea entrance into the city. Today the sea fortress is named Suomenlinna, and is one of the city’s most popular attractions.
The population of Helsinki proper is about 650,000, and it has a metro population of around 1.5 million including its neighboring municipalities like Vantaa and Espoo. This makes it the 3rd largest city of the Nordic countries, after only Stockholm and Copenhagen. While having all the conveniences of a modern city, Helsinki is a great destination for nature lovers. There are parks and vast areas of unspoilt nature to explore year round. In the summer months, when days are long, there are beaches, boating and watersport opportunities on the sea or at nearby lakes.
Helsinki has an interesting mix of various architectural styles including modern structures that are on the cutting edge of design. The city has a vibrant nightlife with many clubs, bars and late night eateries. The culinary scene is varied from the popular local hamburger chain, Hesburger, to Michelin-star restaurants. There is even a restaurant in the city centre decorated with rustic tables and old tractors serving traditional reindeer dishes. If you want to enjoy a beer while passing Helsinki’s main sights, you may be interested in the Sparakoff Pub Tram. The red colored tram with the destination board reading “PUB” takes about 45 minutes to make a round trip. Plenty of time to enjoy a beverage or two.
Inaugurated in 1868, the Uspenski Cathedral is the center of the Eastern Orthodox faith in Finland. The cathedral was built using 700,000 red bricks that were brought in by barge from a demolished fortress in the Baltic. Entrance to the cathedral is free, and about half a million tourists visit it annually to see the elaborately decorated interior and several valuable icons. The cathedral was built upon a hillside of the Katajanokka island, which forms the eastern side of the city center and the Helsinki harbour. Overlooking the city, the cathedral is a great place to start our journey through Helsinki.
Walking down from the cathedral to the waterfront, we immediately see the 40 meter tall Sky Wheel Helsinki. The wheel offers great views of the city, the sea and the surrounding islands. The wheel has two unique gondolas. One’s interior has leather seats with a glass floor and includes a bottle of champagne for a 30 minute ride. The other is the SkySauna. Yes, we all know Finns love their saunas, so why not combine a ferris wheel ride with a sauna.
Next to the wheel, we find the Allas Sea Pool which has three pools right in the Heslinki harbour. One pool is for lap swimming, one is for families and one is a salt water pool. The fresh water pools are heated, the salt water pool is not. In addition to the pools, there are saunas and a restaurant with terraces to enjoy the views. For those looking to experience a Finnish sauna, it’s a convenient location. If you have time, I would recommend the Löyly sauna which is located near the Tallin ferry terminal. There are many places in Helsinki offering a sauna, so finding one is easy.
Kauppatori Market Square
Taking one of the little bridges from Katajanokka island to the market square we will pass the yellow Presidential Palace. The former Russian imperial palace, contains the Office of the President of the Republic and is used for official functions and receptions. Continuing past the palace, we arrive at the Kauppatori Market Square. The square has been a marketplace for hundreds of years and is a popular tourist attraction. The year round market’s kiosks sell fresh fish, fruit, vegetables, handcrafts, clothing and souvenirs. There are also stands that sell prepared food and beverages. A warm bowl of salmon soup with rye bread or a plate of grilled fish with vegetables make a quick, inexpensive and tasty lunch. The square faces the busy Port of Helsinki (Helsingen Satama) and from here you can take boat tours of the archipelago or to the Suomenlinna Island fortress. You can also see the huge Viking and Silja Line ferries arriving in the morning and departing in the evening for Stockholm.
The light blue Helsinki City Hall is located right in front of the Market Square. Taking a side street along the City Hall we will arrive at the expansive Senate Square with a statue of Russian Czar Alexander II at its centre. The white neo-classical Lutheran Helsinki Cathedral, built in 1852, dominates the north side of the square and towers over the city center. The west and east sides of the square have two similarly looking yellow buildings. The eastern building houses the offices of the prime Minister of Finland and the cabinet. The one on the west side is the main building of the University. North of the University building is the National Library of Finland. The ‘Sederholm house” on the southeast corner of the square is the oldest, built in 1757. The square is used for many events including art displays, food festivals, concerts, New Year’s celebrations and the Christmas market.
The Old Market Hall and the Esplanadi
Walking back towards the harbour, we will go past the market square on the west side of the harbour to Helsinki’s Old Market Hall. Open in 1889, it is Finland’s oldest indoor market. In the lively market you will find merchants selling meat, fish, shellfish, cheese, fruit, vegetables, baked goods, spices, coffee, tea and even a small wine and spirits shop. The cafés and restaurants in the Old Market Hall are a great place to have a break from sightseeing or have a nice lunch.
After grabbing a coffee at the Market, we head back towards the market square and to an interesting fountain that was built in 1908. The Havis Amanda fountain has a nude female statue, often referred to as Manta, at the centre. It was created by Finnish artist Ville Vallgren at his studio in Paris, France. The fountain has four seals looking up to the sea nymph as she rises out of the water. The first of May is the start of the summer for students and in celebration they would don a white cap. Since the early days of the fountain, students have celebrated “May Day” by placing a cap on the head of Manta.
The Havis Amanda fountain sits at the foot of the National urban park called the Esplanadi. This elongated park, opened in 1818, has a wide pedestrian center with numerous benches and green space on either side. The historic Kappeli restaurant, open since 1867, and the Espa Stage, used for concerts, are at the eastern entrance to the Esplanadi. There are pieces of art throughout the Esplanadi including a statue of Finland’s national poet, Johan Ludvig Runeberg, at the very centre of the park. At the western end of the park, we find the Swedish language theatre aptly named, the Swedish Theatre. Originally built in 1860, it burned down just three years later. In 1866, it was rebuilt in neo-classical style, but in 1935 it was renovated and the richly decorated exterior was changed by the architects to a simpler “functionalist” style.
The Esplanadi has a street on either side of the park and the surrounding buildings, especially on the north side, have upscale shopping and restaurants. On the north west end of the park just across the street from the Swedish Theatre is the Stockmann Department Store. The iconic Stockmann building, the largest department store in the Nordic countries, was built in 1930 and the brand’s history dates back to 1858.
The Central Station, Art and A Chapel of Silence
Turning right at the Mannerheimintie street, we walk about 200 meters to Kaivokatu street where we can see the train station on the right. The Helsinki Central Station is the main hub for commuter and long-distance trains for approximately 200,000 people per day. The impressive Finnish granite building was inaugurated in 1919 and has a pair of statues standing guard while holding spherical lamps on each side of the grand entrance. Along with the “stone men,” the station is known for the clock tower on its east side. The Helsinki Central Station has a city metro station, restaurants and an underground shopping centre.
Beyond the train station is a huge open space called the Rautatientori, or Railway Square. On the south side of the square is the Ateneum, the museum of Finnish and international art. The museum, in a beautiful 1887 building, has Finnish works of art from the 18th century to the 20th century and is one of the three museums that form the Finnish National Gallery. In addition to the extensive art from Finland, it has over 600 international pieces.
Going back on Kaivokatu street we cross Mannerheimintie street to Simonkatu street and walk about a block. We will see a curious looking oval cylindrical building with a wood exterior. This is the very unique Kamppi Chapel or the “Chapel of Silence.” The chapel holds up to 60 people and is intended to be a place of calm and silence in a busy urban centre. The chapel is free to visit during opening hours.
Parliament and Museum District & Rock Church
After enjoying a moment of silence, we make our way back to Mannerheimintie street and continue along it until we reach Mannerheim Square and the equestrian statue of Marshall Gustaf Mannerheim. The bronze statue of the Finnish military leader and statesman was erected in 1960. The statue sits in front of the Kiasma, the museum of contemporary art, which was built in 1990. Like the Ateneum, the Kiasma is part of the Finnish National Gallery. Near the Kiasma, you will find the architecturally striking Helsinki Central Library Oodi, the Helsinki Music Centre, the National Museum of Finland and the event and congress center, Finlandia Hall. Across the street from the Mannerheim statue, we also find the Finnish Parliament building. The red granite parliament building with fourteen Corinthian columns was built in 1931.
Only a couple of minutes walk from the Mannerheim Square is the Temppeliaukion Kirkko, which is better known as the Rock Church. Designed by architect brothers Timo and Tuomo Suomalainen and opened in 1969, the Lutheran church was built into solid rock, and is filled with natural light from the large skylight that leads up to the copper dome. The acoustics in the church are exceptional and it is frequently used for concerts. The exposed rock walls of the church create an interesting backdrop for the altar and an interesting contrast with the church organ with 3001 pipes. The church welcomes over half a million visitors a year.
The Sibelius Monument and the Olympic Stadium
West of Helsinki’s city center is Seurasaarenselkä Bay. On the eastern side of the bay, you will find Sibelius Park and the Sibelius Monument. The monument, made from more than 600 hollow steel pipes, is dedicated to Finland’s greatest composer, Jean Sibelius. He is noted for having encouraged, through his works, the rise of a Finnish national identity and independence from Russia. In the center of the bay is the densely forested Seurasaari island which is home to the Seurasaari Open-Air Musuem. The museum has transplanted wooden buildings from throughout Finland.
In 1952, Helsinki was the host city for the 15th Olympiad and is the northernmost city to host the summer Olympics. The flame was lit by Finland’s greatest Olympian, runner Paavo Nurmi, who won 9 gold and 3 silver medals at the 1920, 1924 and 1928 games. The Olympic Stadium is located only two kilometers north of the city centre and was originally built for the 1940 Olympics that were cancelled due to the second World War. The stadium has undergone renovations in the early 1990s, in 2005 for the World Championships in Athletics, and another renovation phase was scheduled to be completed in 2020. Over time, the stadium has gone from being able to host 70,000 spectators to just over 40,000. The stadium today hosts mainly soccer games, athletics competitions and concerts. The stadium’s 72 meter tower is a Helsinki landmark and its height is equal to the length of Matti Järvinen’s gold medal javelin throw in the 1932 Summer Olympics. The stadium visitor center is located at the foot of the tower. While in Finland, you may want to try the alcoholic “Long Drink” that was developed to serve visitors to the 1952 Olympics. Locally the Long Drink is called a “Lonkero” and the original, a mix of gin and grapefruit soda, is made by Hartwall.
Not far from the Olympic Stadium is the Linnanmäki amusement park, which opened in 1950. The park is owned by a non-profit agency that operates the park to raise funds for Finnish child welfare programs. South of the park is Töölö Bay with a surrounding green space, walking paths and two important cultural centres, the Helsinki City Theatre and the Finnish National Opera and Ballet.
A couple of kilometers north of Linnanmäki is the 14,000 seat Hartwall Arena, which is the home of the KHL’s Jokerit hockey team. The arena was built in 1997 and is used mostly for basketball, hockey and concerts. In 2016, we had a large group of Canadian hockey fans in Helsinki for the IIHF World Junior Hockey Championships, and the Hartwall Arena was the main venue for the tournament. Finland won gold with a team loaded with future NHLers Sebastian Aho, Patrick Laine, Mikko Rantanen, Kasperi Kapanen, Olli Juolevi and tournament MVP Jesse Puljujarvi. The atmosphere in the arena was electric with thousands of patriotic Finns erupting in joy at the final whistle. If Canada can’t win, the next best thing is to get caught up in the passion of the local fans.
In the fall of 2018, we had a group of Edmonton Oilers fans in Gothenburg, Sweden for the NHL season’s opening game against the New Jersey Devils. At the end of the tour, we took the overnight ferry from Stockholm to Helsinki. During our city tour, we stopped at the Hartwall arena and we surprised the group with a meeting with Oilers legend Jari Kurri. After many photos and autographs, Kurri, who was the General Manager of local team Jokerit, graciously talked hockey and watched practice with us.
The Suomenlinna, or Sveaborg, is an inhabited sea fortress built on eight islands south east of the city centre at the entrance to Helsinki harbour. A UNESCO World Heritage site, it was originally founded by the Swedes in 1748, but in 1808, the fortress was overtaken by Russia. It remained in Russian control until Finnish independence in 1918. The fortress welcomes over half a million tourists and locals annually. The summer months are especially busy and Suomenlinna can be easily reached by a short ferry ride from Market Square.
There are just under 1000 permanent residents on Suomenlinna and just under 400 people who work on the island year-round. Some of the reconstruction of the fortifications and general maintenance is done by volunteer inmates, who are part of an on-site minimum-security penal labour colony. A guided visit to the fortress includes Great Castle Courtyard, Piper’s Park and the large Dry Dock. There are various museums at Suomenlinna including one detailing the life of Swedish officers in the 18th century, a toy museum, a military museum, a submarine museum and a customs museum. The main Suomenlinna Museum, located in the Suomenlinna Centre, details the history of the fortress and its restoration.
Ferry to Stockholm, Tallinn, Riga and St. Petersburg
Getting around the Baltic Sea is easy with the numerous daily sailings by large ferry boats that include onboard shopping, restaurants, entertainment, and cabin quarters for overnight trips.
From the Helsinki Harbour in the city center, there are two sailings per day to Stockholm, Sweden. The Tallink Silja line uses the Olympia Terminal on the west side of the harbour, while the Viking Line has their terminal on the east side of the harbour on Katajanokka island. The overnight ferries leave in the early evening, and arrive in Stockholm the next morning, about 17 hours later. Prices for a return trip are very affordable.
The newer West Harbour outside of the city center is where you can catch the numerous daily two hour ferries to Tallinn, Estonia. A day trip to Tallinn departing Helsinki in the morning and returning in the evening is common although I would recommend a stay in Tallinn if you have time. The West Harbour is also where you can take the St. Peters Ferry to St. Petersburg, Russia, and with a stay of less that 72 hours you can do it without a visa. These are the main ferry routes, but there may be ferry services to Latvia, Germany and other destinations available.
Lets Go To Helsinki
Even though Helsinki is young city by European standards, it is a great place to visit. In addition to the activities and sights I have outlined here, other parts of Finland, including Lapland, are worth exploring. I have found people in Finland to be friendly, warm, open and sincere. Finland is very safe, and the country regularly ranks high on the list of the best places to live in the world. With convenient and low cost travel by ferry to neighboring countries, it is an easy add to any itinerary of the Baltic region. I look forward to returning to Helsinki with a hockey or ringette group very soon, and in 2027, Finland is scheduled to host the World Juniors again.
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Images compliments of Paul Almeida and Azorcan Tours.
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