Citation: 2011 TCC 327
Date: 20110629
Docket: 2009-1660(IT)G
BETWEEN:
LUCIEN RÉMILLARD,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
[OFFICIAL ENGLISH
TRANSLATION]
REASONS FOR JUDGMENT
McArthur J.
[1]
This is an appeal from
the following notices of reassessment for the 2002 taxation year:
[Translation]
14. In a notice of reassessment dated May 7, 2007, the Minister of
National Revenue (the Minister) added to the income reported by the appellant
for his 2002 taxation year the amount of $5,000,000, as additional income,
following a forgiveness of debt by the company RCI Environnement inc.
15. In a notice of reassessment dated June 2, 2008, the Minister
confirmed the changes made in the reassessment dated May 7, 2007, and added to
the appellant's income for his 2002 taxation year an amount of $1,159,574 as
foreign accrual property income.
[2]
Those notices of reassessment
for the 2002 taxation year were issued outside of the normal reassessment
period.
The facts
[3]
Here are the facts that
the parties agree on or that I have decided on:
[4]
There is no dispute
between the parties as to the facts relevant to the case. The appellant is the
president and sole director of the company RCI Environnement (RCI). He is also an
employee. On December 15, 2000, RCI loaned the appellant $5,000,000. The loan
was for 1 year and bore a 10% interest rate. On July 31, 2002, the
$5,000,000 loan was written off in RCI's accounting records, and the appellant received
an acquittance for $5,000,000 that same day. The interest payable under the
loan agreement was paid in full. However, the principal was not repaid.
[5]
Before giving the
appellant the acquittance, RCI did not take any steps to try to recover its
loan from the appellant. In its income tax return for the 2002 taxation year,
RCI provided no information on the appellant's creditworthiness and claimed a
capital loss, which the Minister disallowed.
[6]
On April 28, 2006, the
appellant signed a waiver in respect of the normal reassessment period for the
2002 taxation year. On May 7, 2007, the Minister reassessed the appellant, adding
to the income he reported for the 2002 taxation year the amount of $5,000,000 as
additional income. The respondent did not explain in detail why the notice of
reassessment had not been issued during the normal period.
[7]
On June 2, 2008, the
Minister issued another notice of reassessment. In that reassessment, he
confirmed the changes made in the reassessment dated May 7, 2007, and
added to the appellant's income for the 2002 taxation year the amount of
$1,159,574 as foreign accrual property income. That amount is not at issue
here.
[8]
Jacques Plante,
chartered accountant, testified that he was the Director of Finance and the
appellant's advisor. He looks after the appellant's personal affairs and the
companies that he holds. He was the only witness for the appellant.
[9]
On December 15, 2000, as
a representative of RCI, Mr. Plante signed the loan agreement for an amount of
$5,000,000. The appellant used the amounts advanced by Placements
Saint-Mathieu, a company of which he is president, shareholder and sole
director, to pay for the following personal expenses:
(a) A $2,100,000 gift was made to Fiducie Remdev. That
trust was created for the appellant's children and descendants.
(b) An $800,000 gift was made to his sons Mathieu and
Lucien Rémillard.
(c) A $250,000 gift was made to his nephew Robert
Berthelet.
(d) An amount of $2,500,000 was used to purchase a
residence and personal furnishings for the appellant.
[10]
The appellant paid the
interest; RCI reported it in its income, and the appellant did not deduct it
from his income.
[11]
Mr. Plante explained
that RCI forgave the repayment of the $5,000,000 principal and issued an
acquittance because a public corporation wanted to buy RCI. That public
corporation wanted advances and loans to disappear from RCI's balance sheet. Thus,
as the sole director of RCI, the appellant adopted a resolution in order to
forgive the debt. The loan was then written off in RCI’s accounting records. The
company made no attempt to recover its loan from the appellant.
[12]
Daniel Fleurant, an
auditor with the Canada Revenue Agency, testified. He corroborated Mr. Plante's
testimony that the appellant was the sole director and an employee of RCI, that
he had received a T4 slip indicating an amount of $273,000, and that there was
no particular ground for RCI to write off the debt of $5,000,000.
[13]
The limitation date for
the appellant's normal reassessment period for the 2002 taxation year was
May 20, 2006. When Mr. Fleurant noticed that the date was coming up, he asked
the appellant to sign a waiver in respect of that period. The appellant and his
representatives thus had more time to find the answers to the written questions
they had received. Mr. Fleurant explained that, if he had not obtained a waiver
from the appellant, he would probably have assessed him sooner, without waiting
for the appellant's answers.
The issues
[14]
The appellant's appeal
raises two main issues. First, if the appellant signed a waiver in respect of
the normal reassessment period, could the Minister issue two notices of
reassessment after the normal reassessment period provided for in
subsection 152(4) of the Act, for the 2002 taxation year?
[15]
Second, if so, do
paragraph 6(1)(a) and subsections 6(15), 6(15.1) and 80(1) of the Act
allow the Minister to add $5,000,000 to the appellant's income for the 2002
taxation year?
The parties'
arguments
[16]
Counsel for the
appellant argues that the reassessment dated June 2, 2008, is not valid because
it was made more than three years after the first original assessments, that
is, after the normal reassessment period provided for in subsection 152(3.1) of
the Act, even though the appellant waived the normal reassessment period. He
maintains that the waiver was valid only for the notice of reassessment dated
May 7, 2007, and not for that dated June 2, 2008. In addition, he submits that
there was no forgiveness of debt since the benefit from the loan was not
conferred by virtue of an office or employment within the meaning of paragraph
6(1)(a). For there to be forgiveness of debt, there needs to be a
"forgiven amount" within the meaning of subsection 6(15.1). Subsection
6(15.1) is clear and unambiguous: a "forgiven amount" requires four conditions,
and the debt in question must, among other things, be a "commercial
obligation" within the meaning of subsection 80(1). Accordingly, in this
case, there is no "forgiven amount".
[17]
Counsel for the
Minister submits that, by signing a waiver on April 28, 2006, the appellant
waived the normal reassessment period for the 2002 taxation year. Under these
circumstances, the Minister was justified in making reassessments for the year
in question, and he was not restricted to one reassessment only. Thus, the
reassessment dated June 2, 2008, is valid. Second, the Minister argues that a
debt was forgiven as a result of paragraph 6(1)(a) and subsection 6(15)
when RCI Environnement inc. wrote off the debt of $5,000,000 that the appellant
owed it. Counsel for the Minister referred to the English version of paragraph
6(15.1), which, according to him, provides for assumptions, not conditions. Thus,
the debt in question does not necessarily have to be a "commercial
obligation" that arises from a "commercial debt obligation"
within the meaning of subsection 80(1) of the Act.
Analysis
[18]
I have no difficulty in
ruling that paragraph 6(1)(a) and subsection 6(15) of the Act may be
applied together without requiring the application of subsection 6(15.1). That
subsection is an additional relief measure provided for taxpayers who meet the
conditions set out in it. The appellant does not meet those conditions on the
following grounds. There is no need to conduct a thorough analysis, but in case
the ruling above is incorrect, I will address the appellant's alternative position.
[19]
The appellant maintains
that the Minister cannot make more than one assessment in respect of a taxpayer
who has signed a limitation waiver. Since the purpose of the waiver is to give
the CRA more time to perform its audit and to avoid an arbitrary assessment,
the appellant's waiver of the reassessment period is valid only for the
reassessment dated May 7, 2007, and not for that dated June 2, 2008. He cites
Royal Bank of Canada v. Québec (Sous-ministre du Revenu), a Court of
Québec decision in which Judge Desmarais made the following comments at
paragraphs 47 and 48:
[Translation]
47 The waiver is an accommodation between the parties enabling the
tax authorities to carry on with an audit or another type of work leading up to
an assessment.
48 It is helpful to the taxpayer as it will prevent an arbitrary
taxation that may be imposed by the Minister because of lack of time. He can therefore
finish examining the situation.
[20]
The appellant added
that, in this case, the Minister benefited from the additional time to complete
his audit.
[21]
He also cites two Court
of Québec decisions: Strulovitch v. Québec (Sous-ministre du Revenu) and Banque National du Canada v. Québec (Sous‑ministre
du Revenu); in the latter, Judge Tisseur made the
following comments at page 217:
[Translation]
It should be added that, as argued by the applicant, Parliament
wanted to provide for some finality in the taxpayer's liability to pay tax. In Thyssen
Mining Construction of Canada Ltd. v. The Queen, (1975) F.C. 81, 89, The
Federal Court ruled that
In all fiscal statutes, it is in the public interest to provide for
some finality in fixing liability for taxes. To achieve this end, taxing and
appeal mechanisms invariably provide for limitations in this area.
It must therefore be ruled that the Minister cannot assess a
taxpayer who has waived the limitation two, three or more times, indefinitely.
[22]
I do not agree with the
argument that the Minister may make only one reassessment in respect of a taxpayer
who signed a limitation waiver.
[23]
Indeed, as stated by
counsel for the Minister, the Federal Court of Appeal was called to address
this issue in Canada v. Agazarian.
It wrote the following with respect to subsection 152(4) of the Act, at
paragraphs 32 and 33 of its decision:
[32] One last
point of comparison is the power to reassess more than once. In the former
enactment, this power was found in the words "as the circumstances may
require". In the present disposition, the Minister is given the power to
assess or reassess "at any time". Stroud's Judicial Dictionary (5th
Ed.) (London, Sweet and Maxwell Limited, 1986) gives as the primary
definition of "at any time" the following:
(1) A power to do a thing e.g. to revoke uses
"at any time" is not confined to one execution; the words are
equivalent to "from time to time, as often as the donee of the power shall
think good" (Digges Case 1 Rep. 173) …
[33] On the basis of the plain meaning of the
words "at any time", I have little difficulty in concluding that
the power to assess and reassess more than once applies not only to those
reassessments which come within the normal reassessment period but also to
those which fall outside that period. There is nothing in the language of
the subsection which would support the opposite conclusion.
[Emphasis added]
[24]
Even if a carry-over of
a loss was at issue in this case, I am satisfied that the same principles could
be applied to the case at bar. I am of the view that the Minister may reassess
more than once.
[25]
The way to make a
waiver invalid is to revoke it. A waiver remains valid as long as it is not
revoked. This mechanism is set out in subsection 152(4.1).
[26]
In this case, the
appellant produced a waiver before the end of the limitation period. That
waiver was never revoked. The waiver was therefore valid when the Minister made
the reassessment dated June 2, 2008.
[27]
Furthermore, under
subparagraph 152(4.01)(a)(ii), a reassessment is valid only if it
pertains to the taxation year and matter specified in the waiver. In this case,
the waiver clearly indicates that it is limited to the 2002 taxation year and
to the following issue:
[Translation]
Possible tax impact with respect to the forgiveness of debt by RCI
Environnement Inc. to Lucien Rémillard in the principal amount of $5,000,000 +
interest + incidental fees.
[28]
Thus, the question that
should be asked is whether the reassessment dated June 2, 2008, pertains
to the 2002 taxation year and the matter specified in the waiver.
[29]
The notice of
reassessment dated May 7, 2007, added $5,000,000 in additional income to the
appellant's reported income for the 2002 taxation year.
[30]
The notice of
reassessment dated June 2, 2008, restated the changes made in the reassessment
dated May 7, 2007, and added to the appellant's income for his 2002 taxation
year an amount of $1,159,574 as foreign accrual property income. That amount is
not at issue here.
[31]
The notice of
reassessment dated June 2, 2008, added other points, which are not being
appealed from. However, like the notice of reassessment dated May 7, 2007,
the notice of reassessment dated June 2, 2008, pertains to the forgiveness of
debt of $5,000,000, which was the matter specified in the appellant's waiver,
which validates it. I agree with the argument of counsel for the Minister that
the reassessment dated June 2, 2008, is a reassessment, and not an additional
assessment because it replaces that dated May 7, 2007.
[32]
In TransCanada
PipeLines Ltd. v. Canada,
the Federal Court of Appeal held that a reassessment replaces and vacates a
previous assessment.
[33]
Counsel for the
appellant argues that it would be absurd for a waiver to be perpetually valid. Indeed,
although it is true that a waiver can last for a taxpayer's entire lifetime, it
is limited to a certain taxation year and a particular issue. Moreover, the Act
provides a solution for taxpayers who do not want to waive a reassessment
period forever: it is the revocation mechanism.
[34]
Another argument
invoked by counsel for the appellant is that the Minister cannot make a
reassessment when the previous assessment is disputed, which, he argues, would
be contrary to subsection 152(9) of the Act. He cites R. v. Loewen and Anchor
Pointe Energy v. The Queen.
[35]
I am not persuaded by
that argument. As stated by counsel for the Minister, in subsection 165(7) of
the Act, Parliament has provided that the taxpayer may, when he or she has objected
to an assessment and appealed from it before the Tax Court of Canada, amend the
notice of appeal to add to it the notice of reassessment issued by the
Minister.
[36]
Subsection 248(1)
includes reassessment in the meaning of "assessment". Thus,
Parliament has provided that the Minister could make reassessments even when a
taxpayer has objected to an assessment and appealed from it.
[37]
The appellant suffered
no prejudice because he is not in a more unfavourable position than that which
he was in after the 2007 reassessment, other than with respect to interest that
was being accrued and which he had agreed to when he signed the waiver.
[38]
In Anchor Pointe
Energy, the Federal Court of Appeal did not rule that the Minister could
not make more then one reassessment for a taxation year. As held by the Federal
Court of Appeal in TransCanada Pipelines Ltd. v. Canada, a reassessment vacates
a previous assessment for the same year.
[39]
In conclusion, the
Minister has the power to make several assessments as long as the waiver has
not been revoked, and the effect of a reassessment is a vacation of the
previous assessment. The notice of assessment dated June 2, 2008, is therefore
valid.
[40]
The parties agree that
the appellant benefited from a forgiveness of debt relative to a $5,000,000
loan given to him by RCI while he was the director for and an employee of that
company during the 2002 taxation year. However, they do not agree on the
interpretation of subsections 6(15) and 6(15.1).
[41]
Allow me first to
describe how paragraph 6(1)(a) and subsections 6(15), 6(15.1) and 80(1)
apply to the facts of this case before examining the arguments presented by the
parties. As the parties have located no cases on the issue of whether
forgiveness of debt constitutes a "forgiven amount" within the
meaning of subsection 6(15.1) of the Act, we must therefore turn to a literal
reading of the Act and to the rules of statutory interpretation.
Paragraph 6(1)(a)
[42]
Paragraph 6(1)(a)
provides that the value of a benefit received or enjoyed by the taxpayer in the
year in respect of, in the course of, or by virtue of an office or employment
must be included in the computation of his or her income as income from an
office or employment.
Subsection
6(15)
[43]
Subsection 6(15)
provides that, for the purpose of paragraph 6(1)(a), the value of the
benefit from a forgiven obligation is the forgiven amount in respect of the
obligation:
6(15) For the purpose of paragraph 6(1)(a),
(a) a benefit shall be deemed to have been enjoyed by a
taxpayer at any time an obligation issued by any debtor including the taxpayer)
is settled or extinguished; and
(b) the value of that benefit shall be deemed to be the
forgiven amount at that time in respect of the obligation.
[44]
Mr. Plante testified
that the appellant had been an employee of RCI in 2002 and that a T4 slip
indicating the amount of $273,000 had been issued to him. In addition, it is
not disputed that the appellant had benefited from a $5,000,000 loan from RCI
while he was RCI's employee in 2002. For these reasons, I am of the view that
paragraph 6(1)(a) and subsection 6(15) apply to this case.
[45]
As for subsection
6(15.1), I will start with a rule of interpretation based on reading the words
in the ordinary sense, in harmony with
the scheme of the Act, the object of the Act, and the intention of Parliament. In Canada Trustco Mortgage Company
v. Canada,
The Supreme Court of Canada wrote the following:
10 . . . The
interpretation of a statutory provision must be made according to a textual,
contextual and purposive analysis to find a meaning that is harmonious with
the Act as a whole.
. . . The
relative effects of ordinary meaning, context and purpose on the interpretive
process may vary, but in all cases the court must seek to read the provisions
of an Act as a harmonious whole.
[46]
The French version of subsection
6(15.1) reads as follows:
(15.1) Pour l’application du paragraphe (15), le « montant
remis » à un moment donné sur une dette émise par un débiteur s’entend au
sens qui serait donné à cette expression par le paragraphe 80(1) si les
conditions suivantes étaient réunies :
a) la dette est une dette commerciale,
au sens du paragraphe 80(1), émise par le débiteur;
b) il n’est pas tenu compte d’un montant
inclus dans le calcul du revenu en raison du règlement ou de l’extinction de la
dette à ce moment;
c) il n’est pas tenu compte des alinéas f)
et h) de l’élément B de la formule figurant à la définition de
« montant remis » au paragraphe 80(1);
d) il n’est pas tenu compte des alinéas
80(2)b) et q).
[47]
In the French version,
Parliament used the words "si les conditions suivantes étaient
réunies", which means that in paragraphs 6(15.1)(a) to (d),
Parliament was providing for conditions, not assumptions. In my opinion, this
provision is precise and unambiguous. For that reason, the meaning of the words
plays an essential role. Following the ordinary and grammatical sense of the
words used in subsection 6(15.1), the words "forgiven amount" in
respect of an obligation has the meaning that would be assigned by subsection
80(1) if certain conditions were met.
[48]
To conclude on this
point, it is appropriate to also refer to another principle of interpretation
of tax statutes set out by the Supreme Court of Canada in Canada Trustco
Mortgage Company v. Canada, supra, at paragraph 11:
. . . However,
the particularity and detail of many tax provisions have often led to an
emphasis on textual interpretation. Where Parliament has specified
precisely what conditions must be satisfied to achieve a particular result, it
is reasonable to assume that Parliament intended that taxpayers would rely on
such provisions to achieve the result they prescribe.
[Emphasis added.]
[49]
I am of the opinion
that the principle of textual interpretation should be respected. If emphasis
is placed on the textual interpretation of subsection 6(15.1), the reference
made by this subsection to the definition of "forgiven amount" in
subsection 80(1) is still subject to conditions set by Parliament.
The meaning common
to both versions
[50]
As for the English
version of subsection 6(15.1), I am of the view that it has the same import as the
French version. It reads as follows:
(15.1) For the purpose of subsection 6(15), the “forgiven
amount” at any time in respect of an obligation issued by a debtor has the
meaning that would be assigned by subsection 80(1) if,
(a) the obligation were a commercial obligation (within the
meaning assigned by subsection 80(1)) issued by the debtor;
(b) no amount included in computing income because of the
obligation being settled or extinguished at that time were taken into account;
(c) the definition “forgiven amount” in subsection 80(1)
were read without reference to paragraphs (f) and (h) of the
description of B in that definition; and
(d) section 80 were read without reference to
paragraphs 2(b) and (q) of that section.
[Emphasis added.]
[51]
Here, Parliament used
"if" before the list and "and" at the end of paragraph (c).
Thus, these two versions show that the condition that applies to the definition
of "forgiven amount" in subsection 80(1) is satisfied only if all conditions
in paragraphs (a) to (d) are met.
[52]
The meaning that is
common to both versions and consistent with Parliament's intention is the
following, in my opinion: subsection 6(15.1) provides for an assumption, and not
a condition, for the application of paragraph 6(1)(a) and subsection
6(15). In other words, subsection 80(1) does not provide additional conditions
in order for there to be an obligation to include the value of a benefit
received by virtue of an office or employment in computing income. It follows
that the words "forgiven amount" in respect of an obligation have the
meaning assigned to them by subsection 80(1) only if all four conditions listed
in subsection 6(15.1) are met.
[53]
In conclusion, if all
four conditions are met, according to subsection 80(1), the "forgiven
amount" in respect of an obligation is essentially the lesser of the principal
amount of the obligation and the amount for which the obligation was issued,
minus any amount paid in satisfaction of the principal amount of the obligation
and any other adjustment that takes into account how much of the obligation had
been taken into account for income tax purposes. If all four conditions have not
been met, the taxpayer cannot take advantage of the relief set out in
subsection 6(15.1).
Parliament's
intention
[54]
In my opinion, the
interpretation that I chose is consistent with Parliament's intention. I am of
the view that, by adopting subsection 6(15.1), Parliament wanted to provide an additional
measure of relief for the taxpayer who meets the conditions listed in it.
[55]
Contrary to the
appellant's claims, I do not believe that there must be a commercial obligation
for the taxpayer to include the value of the benefit that he or she received by
virtue of an office or employment in computing his or her income. The fact that
the loan given by RCI is not a commercial obligation therefore has no incidence,
contrary to the appellant's submissions.
Mood of the
verb used
[56]
Counsel for the
appellant argues that the use of a verb in the conditional mood indicates that the
element is hypothetical and that, when a legislative provision has an error,
the Court must intervene to correct it. He referred to paragraphs 25
and 26 of Genex Communications inc. v. The Queen, which I
reproduce below:
[25] In order to
avoid the ambiguity of paragraph (b) in the French version, Parliament
should have used the verb "auraient" rather than "avaient"
to indicate that the paragraph made an assumption. . . .
[26] Paragraphs (a)
and (b) of the French version of the definition of "commercial debt
obligation" are drafted in practically the same way. Considering that
Parliament does not speak for nothing, it is quite reasonable to believe that
in paragraph (b) it intended to cover a situation different from that
dealt with in paragraph (a ). . . .
[57]
Although it is true
that the use of a verb in the conditional indicates that an element is hypothetical,
it should be noted that the part of the French version of subsection 6(15.1)
that precedes the list uses the verb "être" in two different moods:
(15.1)
Pour l’application du paragraphe (15), le « montant remis » à un moment donné
sur une dette émise par un débiteur s’entend au sens qui serait donné à cette
expression par le paragraphe 80(1) si les conditions suivantes étaient réunies
. . .
[58]
The first verb,
"serait", is in the conditional and states an assumption, while the
second verb, "étaient", is in the imperfect tense and states the
conditions for applying that assumption. If all four conditions are met, the
assumption applies. If not, the assumption does not apply. Accordingly,
subsection 6(15.1) contains no ambiguity, and I do not find it necessary to
intervene to make any changes to it as it contains no errors.
Application of subsections
6(15.1) and 80(1)
[59]
As I previously
mentioned, subsection 6(15) specifies that the words "forgiven
amount" in respect of an obligation have the meaning assigned to them by
subsection 80(1) if four conditions are met.
[60]
Mr. Plante's testimony
revealed that the appellant had used the money loaned by RCI for gifts to his
relatives and to buy a residence and furniture and that he had repaid the
interest for the loan in full and did not deduct it from his income. I note
that the Minister did not ask Mr. Plante any questions on this subject in cross‑examination
before the Court.
[61]
In view of Mr. Plante's
testimony, which I find to be credible, the loan cannot be a commercial
obligation within the meaning of subsection 80(1). Thus, the first condition
for applying paragraph 6(15.1) is not met. Consequently, the appellant cannot
avail himself of the relief set out in subsection 6(15.1).
The amendment
proposed for subsection 6(15.1) and explanatory notes
[62]
Otherwise, I conclude
that this provision is clear, and, accordingly, although I have examined the
proposed amendment to subsection 6(15.1) and the explanatory notes accompanying
it, I do not believe it necessary to take it into account in order to find
Parliament's intention.
Other arguments
raised by the parties
[63]
Contrary to the
allegations of counsel for the appellant, I can infer from the fact that the
appellant was absent from the hearing that he thought it would be opportune not
to give testimony that would be contrary to his position. However, my decision
is not based on this fact.
[64]
Analogy with the
imposition of interest:
The Minister made an analogy with the imposition of interest at a prescribed
rate when a taxpayer receives a benefit from a company in the form of debt,
which is set out in subsection 6(9) and section 80.4. According to his
reasoning, subsection 6(9) and section 80.4 do not require a commercial
obligation for the taxpayer to have to pay tax on the value of the benefit he
or she received from a company in the form of debt. Similarly, for subsection
6(15) to apply, no commercial obligation is necessary for the taxpayer to have
to include the value of the benefit received by virtue of an office or
employment in computing his income. This argument has no merit.
[65]
I would tend to agree
with counsel for the appellant, who claims that the wording of subsection 6(9)
is completely different from that of subsection 6(15). Subsection 6(9) refers
to section 80.4. However, in this case, subsection 6(15) refers to subsection
6(15.1), which, in turn, refers to subsection 80(1). Moreover, subsection 6(9)
does not provide a list of conditions, unlike subsection 6(15.1). Therefore, I give
very little weight to the Minister's analogy.
[66]
Avoiding an absurd consequence: The Minister argues that it is a well recognized
principle of statutory interpretation that Parliament does not intend to
produce absurd consequences. I agree with his argument without hesitation, despite
the appellant's efforts to make a distinction between a personal and a
commercial obligation. I do not believe that there must be a commercial
obligation in order for the taxpayer to include the value of the benefit that
he or she received by virtue of an office or employment in computing his or her
income. Finding the contrary would inevitably lead to an absurd consequence, as
noted by the Minister.
[67]
Doctrine: The Minister submitted a doctrinal
commentary according to which, for subsection 6(15.1) to apply, the value
of the benefit received by the taxpayer must be included in computing his or
her income, and there is no need to distinguish between a commercial and a
personal obligation. In the Canadian Tax Reporter, the following
is stated on page 3429:
However, the provisions are worded broadly. Any forgiven loan is
deemed to be a benefit under subsection 6(15), and if that benefit is in
respect of, in the course of, or by virtue of, the employment of an employee, a
taxable benefit arises under paragraph 6(1)(a).
[68]
I agree with this
argument because it is consistent with Parliament's intention, which, in my
view, was to include the value of a benefit received by a taxpayer by virtue of
an office or employment in computing his or her income, regardless of whether
the loan given was a commercial obligation or not.
[69]
For these reasons, the
appeal from the reassessment made on June 2, 2008, under the Act in respect of
the 2002 taxation year is dismissed, with costs.
Signed at Ottawa, Canada, this 29th day of June 2011.
"C.H. McArthur"
on this 24th day of August 2011
François Brunet,
Revisor
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