Emerson v. The Queen, 86 DTC 6184, [1986] 1 CTC 422 (FCA)

Heald, J.:—We do not need to hear you, Ms. Lee. We are all of the view that the learned trial judge correctly applied the provisions of paragraph 20(1 )(c) of the Income Tax Act to the facts of this case. We share his view that an essential requirement for interest deductions thereunder is the continued existence of the source to which the interest expense relates. We also agree that where, as in this case, the source has been terminated, the interest expense is no longer deductible. If there were any ambiguity in the English words "a business or property” in subsection 20(1) as to whether the indefinite article "a” should be understood to be repeated before "property”, that potential problem is removed by the French version of the Act, where the indefinite article is inserted before both nouns: "d'une enterprise ou d’un bien” (emphasis added). This is also true of the French versions of the same phrase when used in subsections 9(1), 9(2), 12(1) and 18(1) of the Act. The word "property” in subsection 20(1) clearly, therefore, cannot have the collective meaning urged by the appellant.

Accordingly the appeal is dismissed. Since this appears to be a test case in this Court, the Court exercises its discretion in favour of the appellant and does not award costs against him in this Court.

Appeal dismissed.