Interpretation Bulletins, etc.

Cases

Canada v. Marchessault, 2008 DTC 6496, 2007 FCA 345

Before going on to find that the interpretation of s. 128(2)(d) of the Act was not subject to any ambiguity and that a CRA directive should be disregarded, Trudel J.A. stated (at para 49) that "administrative policies and interpretation are not conclusive: at most they have a certain value".

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 128 - Subsection 128(2) 106
Tax Topics - Statutory Interpretation - Interpretation/Definition Provisions related interpretation provision not referenced 106

Imperial Oil Ltd. v. Canada, 2004 DTC 6702, 2004 FCA 361, rev'd 2006 SCC 46

rev'd on other grounds 2006 SCC 46

After noting that in the case before him the Crown was challenging the deduction under s. 20(1)(f) of amounts paid as a result of foreign currency appreciation whereas CRA had allowed deductions under that provision based on appreciation of commodities in commodity-based loans, LeBel J. stated (at para. 59):

"However much they are to be deplored, inconsistent administrative practices are not the determinative factor in statutory interpretation. We must nevertheless return to the statute itself and to the scope of its application in respect of the specific transactions at issue in these appeals ... . If an interpretation is wrong, it does not make law."

Placer Dome Canada Ltd. v. Ontario (Minister of Finance), 2006 DTC 6532, 2006 SCC 20, [2006] 1 S.C.R. 715

shifting CRA position could not be relied upon except to evidence ambiguity

After noting that the administrative position of the Minister had changed from a position initially supporting the taxpayer's reporting practice to one contrary to that practice, LeBel J. stated (at 6540):

"The shift in the Minister's practice is reflective of the ambiguity that inheres in the statute itself and cannot be relied upon as an interpretive tool except to support the view that the statutory definition falls short of being clear, precise and unambiguous."

Locations of other summaries Wordcount
Tax Topics - Statutory Interpretation - Redundancy/reading in words presumption against tautology 114
Tax Topics - Statutory Interpretation - Resolving Ambiguity residual presumption in favour of the taxpayer 125
Tax Topics - Income Tax Regulations - Regulation 1204 - Subsection 1204(1) - Paragraph 1204(1)(b) cash-settled derivatives had the effect of fixing mine production] 399
Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Futures/Forwards/Hedges “hedging “ includes cash settled derivatives including options 415
Tax Topics - Statutory Interpretation - Regulations addition of regulation did not significantly expand scope of tax 223

Canada v. Whitney, 2002 DTC 7145, 2002 FCA 266

After noting that the ambiguity which the Tax Court judge had found in s. 56(1)(v) was based entirely on Interpretation Bulletin IT-220R2, Noël J.A. stated (at p. 7147) that "the Act itself reflects no such ambiguity and the Bulletin, being a non-statutory document, cannot create an ambiguity where none exists in the relevant provisions of the Act."

Silicon Graphics Ltd. v. Canada, 2002 DTC 7113, 2002 FCA 260

Sexton J.A. noted (at p. 7120) with approval the indication in Canadian Occidental (U.S.) Petroleum Ltd. v. The Queen, 2001 DTC 295 (TCC) that "while the administrative position of Revenue Canada is not declarative of the law, it is nonetheless of assistance in circumstances where the Minster seeks to reassess the taxpayer in a manner inconsistent with its own administrative position."

OSFC Holdings Ltd. v. Canada, 2001 DTC 5471, 2001 FCA 260

In light of a statement made in the Canadian Tax Journal by the Senior Assistant Deputy Minister of Finance which referred to the Furniss v. Dawson, Rothstein J.A. stated (at p. 5479) that:

"I think it may reasonably be inferred that Parliament in enacting paragraph 245(3)(b), adopted the approach to a 'series of transactions' developed by the House of Lords."

London Life Insurance Co. v. Canada, [2000] GSTC 111 (FCA)

Rothstein J.A. noted that the departure by the Minister in the case before him from the position taken in a CCRA Memorandum cast doubt on the validity of the interpretation now advanced by the Minister, particularly since that Memorandum reversed a position appearing in an earlier Technical Information Bulletin.

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 123 - Subsection 123(1) - Improvement 100
Tax Topics - Excise Tax Act - Section 141.01 - Subsection 141.01(2) leasehold construction services were acquired for supply of leasehold improvements to landlord 167
Tax Topics - Excise Tax Act - Section 169 - Subsection 169(1) leasehold construction services were acquired for supply of leasehold improvements to landlord 206

Owen Holdings Ltd. v. The Queen, 97 DTC 5401 (FCA)

An application on behalf of the taxpayer, who had been assessed under s. 254(2), for all relevant advance income tax rulings (with names and other personal details removed) was denied because of the virtual impossibility of using the rulings for the purpose of establishing inconsistency in the Minister's interpretation and application of the relevant provisions, given the difficulties in establishing similarities between different and complex factual situations that are covered in such rulings. However, an application for disclosure for technical interpretations was granted since technical interpretations "are relatively simple and to the point" (p. 5404).

An application for reports leading up to the drafting of s. 245 and relating to testimony by various Finance officials before the Commons and Senate Committees relating to s. 245, was also rejected.

Riddell v. The Queen, 95 DTC 5526 (FCTD)

Rouleau J. found, on the basis of correspondence between a field auditor and his superiors, that it was the policy of Revenue Canada to allow an individual shareholder an interest deduction when the shareholder had received a benefit by virtue of his corporation paying interest on a loan that the shareholder had incurred for an income-producing purpose, and went on to find (at p. 5533):

"Since it was clearly Revenue Canada's practice to allow shareholders in this position to make the deductions for interest payments as if they had made the payments themselves, there can be no valid reason for prohibiting Mr. Riddell from also doing so."

Ludmer v. The Queen, 95 DTC 5311 (FCA)

Chevalier D.J. indicated that he would not allow pamphlets and other documents originating from the Minister into evidence for the purpose of showing that the Minister had bound himself in respect of the statements therein, and stated (p. 5315) that "when the Minister states what he believes to be the meaning and scope of legislation, he is simply giving an opinion".

The Queen v. Fibreco Export Inc., 95 DTC 5412 (FCA)

After finding that the trial judge had erred in excluding evidence as to administrative practice and parliamentary history, Hugessen J.A. went on to state (at p. 5414):

"Parliamentary debates and evidence of administrative practice are only useful as interpretative tools where the text is ambiguous. They cannot be used, as appellant's counsel seeks to do, to create ambiguity. In our view, this text is not ambiguous."

Ludmer v. The Queen, 95 DTC 5311 (FCA)

Pamphlets and other documents originating with Revenue Canada were not admissible for the purpose of establishing that the Minister had bound himself in respect of them and that, of necessity, his actions had to be consistent with the interpretations contained in those materials.

Harvey C. Smith Drugs Ltd. v. The Queen, [1995] 1 C.T.C. 143 (FCA)

After noting that paragraph 41 of IT-145R, dated June 19, 1981, was contrary to the taxpayer's position, Desjardin J. noted (p. 9):

"... It is now well settled that Interpretation Bulletins only represent the opinions of the Department. They do not bind either the Minister, the taxpayer or the courts and are only an important factor in interpreting the Act in the event of doubt as to the meaning of the legislation."

Connaught Laboratories Limited v. The Queen, 94 DTC 6697 (FCTD)

After distinguishing a technical interpretation of Revenue Canada, Reed J. stated (p. 6699) that "in any event, a departmental interpretation letter cannot alter the unambiguous terms of a provision of the Act."

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 161 - Subsection 161(7) 141

The Queen v. Silden, 93 DTC 5362 (FCA)

After finding that it was apparent from reading s. 15(2) in its entirety that it applied not only to loans made to shareholders as shareholders but also to loans made in the ordinary course of business to employees who happened to be shareholders, Pratte, J.A. went on to state (p. 5364):

"In our opinion the text of the subsection is so clear that the rulings of the Department of National Revenue giving it a different interpretation should be ignored."

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 15 - Subsection 15(2) loan to 1/3 shareholder made in ordinary course but without specific repayment arrangement 211

The Queen v. Kieboom, 92 DTC 6382 (FCA)

In finding that the taxpayer was subject to tax under ss.245(2)(c) and 69(1)(b)(ii), Linden J.A. stated (pp. 6385-6386):

"In addition, this interpretation is in harmony with Interpretation Bulletin 453 which, although not binding on this Court, is, according to the decision of Mr. Justice Dickson, 'entitled to weight and can be an important factor in the case of doubt about the meaning of the legislation'."

First Fund Genesis Corp. v. The Queen, 91 DTC 5361 (FCTD)

Before referring to a Revenue Canada, Taxation guideline, Joyal J. stated (pp. 5369-5370):

"While such an interpretation cannot bind this court or operate to change the clear wording of the statute, it does provide guidance as to the interpretation which ought to be given to ambiguous terms, especially when the administrative interpretation favours the taxpayer."

Vaillancourt v. The Queen, 91 DTC 5408 (FCA)

Before referring to IT-367R2 as confirming a conclusion he had already reached, Décary J.A. stated (pp. 5356-5357):

"It is well settled that Interpretation Bulletins only represent the opinion of the Department of National Revenue, do not bind either the Minister, the taxpayer or the courts and are only an important factor in interpreting the Act in the event of doubt as to the meaning of the legislation. Having said that, I note that the courts are having increasing recourse to such Bulletins and they appear quite willing to see an ambiguity in the statute - as a reason for using them - when the interpretation given in a Bulletin clearly contradicts the interpretation suggested by the Department in a given case or allows the interpretation put forward by the taxpayer."

Peter Cundill & Associates Ltd. v. The Queen, 91 DTC 5085 (FCTD), aff'd 91 DTC 5543 (FCA)

Cullen J. relied upon the definition in IT-468 of management or administrative services.

Mattabi Mines Ltd. v. Ontario (Minister of Revenue), [1988] 2 CTC 294, [1988] 2 S.C.R. 175

"An Interpretation Bulletin does not, of course, have the binding effect of law (I will discuss this later) but such Bulletins do have persuasive force in the event of ambiguity."

Johnson & Johnson Inc. v. D.MNR, 88 DTC 6235, [1988] 2CTC 1 (FCTD)

The Department's published list of exempt health goods was used to infer that interdental stimulators should also be exempt.

Smith, Kline & French Laboratories Ltd. v. A.G. Can. (1987), 12 F.T.R. 81

Internal government memoranda and statements by ministers were admissible to assist in establishing the effect (rather than the purpose) of legislation.

"The paragraph in issue does not in any way describe the practice carried out by the plaintiff ... The Court must deal with what the taxpayer actually did."

West Hill Redevelopment Co. Ltd. v. The Queen, 87 DTC 5210, [1987] 1CTC 310 (FCTD)

A paragraph in the taxpayer's statement of claim describing somewhat similar practices of other taxpayers which had gone unchallenged by Revenue Canada, was struck out as being "embarrassing".

The Queen v. Hoffman, 85 DTC 5508, [1985] 2 CTC 347 (FCTD)

Extensive reliance was placed on statements of Ministerial policy in interpretation bulletins, in finding against the taxpayer.

Mother's Pizza Parlour Ltd. v. The Queen, 85 DTC 5271, [1985] 1 CTC 361 (FCTD), aff'd supra.

Rouleau, J. stated: "I have no difficulty with the proposition that income tax interpretation bulletins may be consulted ... but these materials are not binding on Her Majesty and should be considered only as persuasive authority."

O'Brien v. The Queen, 85 DTC 5202, [1985] 1 CTC 285 (FCTD)

In rejecting the Crown's interpretation, Walsh, J. stated:

"Defendant's argument really is derived from Interpretation Bulletin 334R, which of course is no authority for the Court but merely expresses the way in which defendant contends the interpretation should be made."

Reilly Estate v. The Queen, 84 DTC 6001, [1984] CTC 21 (FCTD)

An accountant demonstrated that neglect or carelessness within the meaning of s. 152(4)(a)(i) was not attributable to him by showing that he had relied on a Revenue Canada Guide.

The Queen v. Royal Trust Corp. of Canada, 83 DTC 5172, [1983] CTC 159 (FCA)

It was stated to be "not without interest and significance" that two Interpretation Bulletins gave what was found to be the correct interpretation (and an interpretation favouring the taxpayer) to s. 20(1)(e).

Nowegijick v. The Queen, 83 DTC 5041, [1983] CTC 20, [1983] 1 S.C.R. 29

"Administrative policy and interpretation are not determinative but are entitled to weight and can be an 'important factor' in case of doubt about the meaning of legislation."

Wicks v. Firth, [1982] BTC 402 (HL)

An Inland Revenue press release was found to be relevant in allowing the taxpayer's appeals.

Brown v. The Queen, 79 DTC 5421, [1979] CTC 476 (FCTD)

It was suggested that a tax information pamphlet is inadmissible on evidentiary grounds if it does not indicate on its face that it was issued by the Deputy Minister of National Revenue or, at any rate, that the Department was the author. [See also s. 244(13.1)]

Harel v. Deputy Minister of Revenue (Quebec), 77 DTC 5438, [1977] CTC 441, [1978] 1 S.C.R. 851

S.45 of the Income Tax Act (Quebec) was modeled on the corresponding provision in the federal Act, at a time when the administrative interpretation of the federal provision was known. In a situation such as this, the federal administrative interpretation "has real weight and, in case of doubt about the meaning of the legislation, becomes an important factor."

See Also

Alta Energy Luxembourg S.A.R.L. v The Queen, 2018 TCC 152

taxpayers should be able to rely on CRA position in making a capital investment

After noting that the Treaty interpretation being advanced by the Crown (which had the effect of denying a Treaty benefit to a non-resident investor because, through its Canadian subsidiary, it was developing a Canadian shale deposit in an incremental manner) was narrower than that reflected in an earlier CRA position paper, and before going on to state (in footnote 10) that he “share[d] the opinion expressed in the Position Paper,” Hogan J stated (at para. 56):

It appears to me that the …CRA … is repudiating its early position without admitting that it is doing so. Taxpayers should be able to rely on stated positions that take into account how reserves are developed in Canada.

Locations of other summaries Wordcount
Tax Topics - Treaties - Income Tax Conventions - Article 13 a large exploration property in which only six wells had been drilled qualified as immovable property used in the business 390
Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) no abuse in non-resident investors using a s.à r.l. to avoid capital gains tax on a new Canadian exploration company 368

Pêcheries Yvon Savage Inc. v. The Queen, 2012 DTC 1059 [at 2781], 2011 TCC 477

The taxpayer argued that its renovated boat was qualified property even though it had, contrary to the definition of "qualified property" in s. 127(9), been used before "for any purpose whatever." The taxpayer was unsuccessful in relying on a cancelled bulletin to establish an exception. Apart from the fact that the bulletin was no longer in effect, Favreau J. stated (at para. 18):

The tax authorities are not bound by their own administrative positions and they may at any time decide to go against their administrative position in making an assessment. In such a case, the taxpayer has no recourse before the courts.

FLSmidth Ltd. v. The Queen, 2012 DTC 1052 [at 2745], 2012 TCC 3, aff'd 2013 DTC 5118 [at 6147], 2013 FCA 160

After referring to two CRA technical interpretations, Paris J. stated (at para. 44, and before citing Nowegijick):

While these interpretations are not binding, they can be taken into account in cases of doubt.

Fleet v. Canada (Attorney General), 2010 DTC 5094 [at 6912], 2010 FC 609

After referring to CRA's Information Circular respecting the circumstances in which the Minister may waive interest and penalties, Crampton, J. stated (at para. 25):

"It is well established that although administrative guidelines are not binding, they are an important tool of good public administration and may validly influence an administrative decision-maker's conduct."

Parker Brothers Textile Mills Limited v. The Queen, 2007 DTC 610, 2007 TCC 74

After noting that IT-350R indicated that the deduction under s. 20(1)(dd) was available to a person who would be a potential tenant of premises at an investigated site, Hershfield J. stated (at para. 34):

"Where there is doubt as to the construction of a provision, an administrative position favouring the taxpayer should be applied."

Karia v. Canada (Minister of National Revenue), 2005 DTC 5282, 2005 FC 639

A statement in Information Circular IC00-1R, that a disclosure will be treated as voluntary if the taxpayer initiated it without knowledge of an audit or investigation by the CCRA or an authority with which the CCRA had an information exchange agreement, was treated by Strayer D.J. as a promise by the CCRA, with the result that a breach of that promise to the taxpayer resulted in the Minister being estopped from treating a disclosure by the taxpayers as not being voluntary.

Kruco Inc. v. The Queen, 2001 DTC 668 (TCC), aff'd 2003 FCA 284

Dussault T.C.J. indicated (at p. 690) that accepting the administrative policy of the Minister in that case respecting the computation of safe income (a policy that was not clearly based on the terms used by Parliament) would be tantamount to an inappropriate attribution of a legislative character to departmental directives, and would have the effect of inappropriately treating the Minister as having the power to apply an administrative policy as though it were an independent source of law.

Safety Boss Ltd. v. The Queen, 2000 DTC 1767 (TCC)

Before referring to a statement at the 1981 Revenue Canada Round Table of the Canadian Tax Foundation, Bowman TCJ. stated (at p. 1773) that "while departmental practice is not determinative it is sometimes useful to look at it, particularly where the assessment in question is a departure from a beneficial and sensible practice".

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 15 - Subsection 15(1) conferral on corp increasing its value is benefit conferred on shareholder 143
Tax Topics - Income Tax Act - Section 247 - New - Subsection 247(2) 289

CSI Development Corp. v. The Queen, 99 DTC 1139 (TCC)

After noting that the capital dividend account definition in s. 89(1) was silent on the treatment of the non-taxable portion of a capital gain realized by a corporate partnership, and that IT-138R permitted a pro rata addition by a corporate partner to its capital dividend account, McArthur TCJ. stated (at p. 1143) that "while the Interpretation Bulletin does not have legislative authority, it is an important factor in interpreting the Act when there is a void".

Northwest Hydraulic Consultants Ltd. v. The Queen, 98 DTC 1839 (TCC)

Bowman TCJ. stated (at pp. 1840-1841):

"In general I am reluctant to rely too heavily on interpretation bulletins and information circulars in determining contested issues under the Income Tax Act. The reason for this is that in any litigious situation it seems somewhat unfair for an independent arbiter to place much weight on the rules of the game devised by one of the players."

Ainsley Financial Corp. v. Ontario Securities Commission, 21 O.R. (3d) 104, 121 D.L.R. (4th) 79 (C.A.)

In finding that the O.S.C. had no authority to issue Policy Statement 1.10 (relating to the marketing and sale of penny stocks by securities dealers who were not members of the TSE or the IDA), Doherty J.A. stated:

"Guidelines connote general statements of principles, standards, criteria or factors intended to elucidate and give direction. Policy Statement 1.10 sets out a minutely detailed regime complete with prescribed forms, exemptions from the regime, and exceptions to the exemptions. Policy Statement 1.10 reads like a statute or Regulation setting down a code of conduct ... and not like a statement of guiding principles.

... Policy Statement 1.10 suggests that non-compliance could evoke the Commission's sanction powers. The threat of sanctions for non-compliance is the essence of a mandatory requirement."

Kaplan Estate v. The Queen, 94 DTC 1816 (TCC)

Paragraph 9 of Article XIII of the U.S. Convention was interpreted contrary to the position of the Minister in light of the Technical Explanation of the U.S. Treasury Department and paragraph 14 of IT-173R2.

Locations of other summaries Wordcount
Tax Topics - Treaties - Income Tax Conventions - Article 13 period starts running no earlier than 1972 157

R. v. Inland Revenue Commissioners, Ex Parte Matrix Securities Ltd., [1994] BTC 85 (HL)

Because statements made in an application to Inland Revenue for an advance clearance were materially inaccurate or misleading, Inland Revenue was entitled to revoke the clearance.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 54 - Adjusted Cost Base 325

Ouellet v. The Queen, 94 DTC 1315 (TCC)

Before partially granting a motion for the filing of a list of administrative interpretations in connection with an appeal by a judge of a reassessment disallowing his RRSP deduction, Lamarre Proulx TCJ. stated (p. 1319) that she did not:

"see why, if there are administrative interpretations concerning contributions to a pension plan and to a registered retirement saving plan which have been sent or made available to the judges in a general manner, a list of both administrative interpretations should not be produced for the purposes of this appeal."

Stevens v. MNR, 93 DTC 291 (TCC)

After noting that the taxpayer was not, in fact, covered by a statement of administrative policy in an Interpretation Bulletin, Mogan J. noted that the Minister "is not estopped from assessing in a manner not consistent with one of his published Interpretation Bulletins" (p. 295).

Texasgulf, Inc. v. U.S., 89-1 U.S.TC 88079 (US Cl. Ct.)

"While it is true that private letter rulings reveal the agency's interpretation of statutes (and regulations promulgated pursuant to those statutes) it is charged with the responsibility of administering, Deluxe Check Printers, Inc. v. United States [88-1 USTC ¶9311], 14 Cl. Ct. 782, 792 (1988) (quoting Hanover Bank v. Commissioner [62-1 USTC ¶9487], 369 U.S. 672, 686 (1962)), and that a reviewing court should accord substantial weight to an agency's interpretations of its own statutes (and regulations), American Lamb Co. v. United States, 785 F.2d 994, 1001 (Fed. Cir. 1986), private letter rulings of the Internal Revenue Service, although instructive, have no precedential force and are not controlling authority, binding upon this court. Xerox v. United States [81-2 USTC ¶9579], 656 F.2d 659, 660 n.3, 228 Ct. Cl. 406, 408 n.2 (1981). Moreover, "even though a taxpayer receiving a private ruling issued by the ... Internal Revenue Service might be entitled to rely upon it until revoked, no court has held a private ruling binding on the government as against other taxpayers." Shakespeare Co. v. United States [68-1 USTC ¶15,797], 389 F.2d 772, 777, 182 Ct. Cl. 119,128 (1968) (citations omitted). In the instant case, the private letter ruling cited by the plaintiff concerned not only a different taxpayer, but interpreted a different foreign tax code provision, applicable to oil and gas revenues." [p. 88,089]

International Brotherhood of Teamsters v. Daniel, 439 U.S. 551 (1979)

At 566:

"It is a commonplace in our jurisprudence that an administrative agency's consistent, longstanding interpretation of the statute under which it operates is entitled to considerable weight ... This deference is a product both of an awareness of the practical expertise which an agency normally develops, and of a willingness to accord some measure of flexibility to such an agency as it encounters new and unforeseen problems over time. But this deference is constrained by our obligation to honor the clear meaning of a statute, as revealed by its language, purpose and history."

Administrative Policy

21 November 2017 CTF Roundtable Q. 7, 2017-0724261C6 - CRA Update

265 IT Bulletins are being replaced by Folios

When the Folios project commenced, 265 related IT Bulletins were identified as being in need of updating. Since 2013, 39 folios have been published and many more are under development. Folio preparation includes consultations within the CRA and with other government departments.

85 C.T. - Q.4

An Interpretation Bulletin can be relied upon in virtually every case.

85 C.R. - Q27

A statement at the 1980 Round Table was a public announcement of policy.

85 C.R. - Q.43

A ruling will be respected.

80 C.R. - Q.1

Where a change in RC interpretation is to the detriment of taxpayers, a coming-into force provision is usually provided where the consequences to taxpayers are serious.

79 C.R. - Q.8

Prepared statements of RC officials given at meetings such as Revenue Canada Round Tables are similar to Bulletins - as correct a statement of the RC position as possible.