Marceau,
J:—On
March
18,
1975,
the
Deputy
Minister
of
National
Revenue
directed
that,
for
the
purpose
of
the
Income
Tax
Act,
two
companies,
Covertite
Limited
and
Covertite
(Ontario)
Limited,
were
deemed
to
be
associated
with
each
other
for
the
1971
and
1972
taxation
years.
Covertite
Limited
(to
which
I
will
refer
in
these
reasons
as
the
“Quebec
Company”)
was
a
Quebec-based
corporation
which
had
carried
on
a
roofing
business
from
its
head
office
in
Montreal
since
1958;
it
was
a
one-man
corporation,
98
of
its
100
issued
common
shares
having
been
owned
since
the
beginning
by
Mr
Albert
Warner.
Covertite
(Ontario)
Limited
(hereinafter
referred
to
as
the
“Ontario
Company”)
had
been
incorporated,
on
February
4,
1970,
to
carry
on
a
similar
roofing
business
from
a
head
office
in
Ottawa
with
Mrs
Mary
Warner,
Albert
Warner’s
wife,
owning
98
of
its
100
issued
common
shares.
The
direction
with
respect
to
the
year
1971
was
made
under
subsection
138A(2)
of
the
Act
as
it
was
then
applicable
and
that
with
respect
to
the
year
1972,
under
subsection
247(2)
of
the
“new”
Act.
Both
subsections
are
identical
and
provide
as
follows:
Where,
in
the
case
of
two
or
more
corporations,
the
Minister
is
satisfied
(a)
that
the
separate
existence
of
those
corporations
in
a
taxation
year
is
not
solely
for
the
purpose
of
carrying
out
the
business
of
those
corporations
in
the
most
effective
manner,
and
(b)
that
one
of
the
main
reasons
for
such
separate
existence
in
the
year
is
to
reduce
the
amount
of
taxes
that
would
otherwise
be
payable
under
this
Act
the
two
or
more
corporations
shall,
if
the
Minister
so
directs,
be
deemed
to
be
associated
with
each
other
in
the
year.
Pursuant
to
the
Minister’s
directions,
notices
of
reassessment
were
issued
against
the
Quebec
company,
the
defendant
herein,
for
each
of
the
two
years,
since
the
tax
payable
by
either
of
the
two
companies
had
to
be
calculated
on
the
basis
of
the
combined
taxable
incomes
of
both
of
them.
The
defendant
objected
to
the
assessments
claiming
that
the
directions
which
had
given
rise
thereto
were
unjustified,
and,
when
the
assessments
were
confirmed,
it
launched
an
appeal
before
the
Tax
Review
Board
in
accordance
with
the
provisions
of
subsection
138A(3)
of
the
old
Act
for
the
year
1971
and
subsection
247(3)
of
the
new
Act
for
the
year
1972.
Again
both
subsections
are
identical;
the
relevant
portions
read
as
follows:
On
an
appeal
from
the
assessment
made
pursuant
to
a
direction
under
this
section,
the
Tax
Review
Board
or
the
Federal
Court
may
(a)
confirm
the
direction;
(b)
vacate
the
direction
if
(i)
...
(ii)
in
the
case
of
a
direction
under
subsection
(2),
it
determines
that
none
of
the
main
reasons
for
the
separate
existence
of
the
two
or
more
corporations
is
to
reduce
the
amount
of
tax
that
would
otherwise
be
payable
under
this
Act;
or
(c)
vary
the
direction
and
refer
the
matter
back
to
the
Minister
for
reassessment.
The
member
of
the
Board
called
upon
to
hear
the
matter
was
forced
to
dismiss
the
appeal
in
respect
of
the
assessment
for
the
year
1971,
the
appellant
having
declared
at
the
outset
of
the
hearing
that
it
was
withdrawing
its
contentions
in
so
far
as
that
year
was
concerned
(and
I
will
explain
the
reason
later),
but
he
came
to
the
conclusion
that
the
direction
relating
to
the
year
1972
could
not
stand
and,
vacating
it,
he
allowed
the
appeal
in
respect
of
the
reassessment
issued
pursuant
thereto.
This
is
an
appeal
by
Her
Majesty
the
Queen
against
the
decision
of
the
Tax
Review
Board.
This
Court
has
had
to
deal
with
cases
similar
to
the
one
at
bar
on
many
occuasions
in
the
past
and
the
principles
governing
their
disposition
are
well
known.
(See,
for
instance,
Alpine
Furniture
Co
Ltd
v
MNR,
[1968]
CTC
532;
68
DTC
5338;
Holt
Metal
of
Manitoba
Ltd
et
al
v
MNR,
[1970]
CTC
144;
70
DTC
6108;
Classic’s
Little
Books
Inc
v
The
Queen,
[1973]
CTC
94;
73
DTC
5096;
Pay-Less
Meat
Market
Ltd
et
al
v
MNR,
[1973]
CTC
102;
73
DTC
5102;
Industrial
Trailer
Rentals
Ltd
v
The
Queen,
[1974]
CTC
775;
74
DTC
6577;
The
Queen
v
Decker
Contracting
Ltd,
[1976]
CTC
731;
76
DTC
6477;
[1978]
CTC
838;
79
DTC
5001;
Honeywood
Limited
et
al
v
The
Queen,
[1981]
CTC
38;
81
DTC
5066.)
This
is
a
type
of
case
that
needs
to
be
approached
with
a
clear
appreciation
of
both
the
real
issue
to
be
determined
and
the
method
of
making
that
determination.
A
direction
under
subsection
247(2)
necessarily
implies
that
the
Minister
(or
his
Deputy)
was
satisfied
that
one
of
the
main
reasons
for
the
separate
existence
of
the
two
corporations
in
question,
in
the
year
referred
to,
was
to
reduce
the
amount
of
taxes
that
would
have
otherwise
been
payable
under
the
Act.
He
must
have
come
to
that
conclusion.
Thus,
in
this
case,
the
direction
implies
that
the
Minister
has
concluded
that
the
Ontario
company
was
caused
to
be
formed,
and
thereafter
was
kept
in
existence
as
a
separate
entity
from
that
of
the
Quebec
company,
for
reasons
among
which
one
of
the
main
ones
was
to
reduce
the
taxes
that
would
have
been
payable
if
the
whole
operation
had
been
carried
on
by
only
one
corporation.
The
taxpayer
corporation,
on
its
being
reassessed
pursuant
to
a
direction
under
subsection
247(2),
is
given
a
right
of
appeal
but
to
succeed
it
must
sap
the
foundations
on
which
the
direction
was
based,
it
must
refute
the
conclusion
reached
by
the
Minister.
The
appeal
tribunal,
the
Board
or
the
Court,
is
entitled
to
vacate
the
direction
if,
but
only
if,
it
can
determine
that
none
of
the
main
reasons
for
the
separate
existence
of
the
two
corporations
was
that
of
reducing
taxes.
The
onus
on
the
taxpayer
appellant
is
complete
and
the
role
of
the
Court
is
clear.
All
that
may
appear
simple
but
it
is
so
only
in
theory
and
not
in
practice.
The
difficulty
stems
from
the
very
nature
of
the
conclusion
of
the
Minister
that
is
put
into
question
and
must
be
verified.
It
is
indeed
a
conclusion
of
fact
as
opposed
to
a
conclusion
of
law,
but
one
of
a
purely
psychological
content,
since
it
refers
to
the
state
of
mind
and
the
intention
of
those
responsible
for
the
creation
and
the
continued
separate
existence
of
the
two
entities.
It
is
obviously
a
conclusion
that
cannot
be
the
object
of
direct
evidence,
at
least
in
the
absence
of
a
clear
prior
statement
of
the
parties
concerned
or
an
admission
made
by
them
afterwards,
it
must
necessarily
be
based
on
inferences
drawn
from
a
series
of
material
facts
directly
ascertainable.
The
Minister
has
inferred
from
a
certain
number
of
facts
that
the
saving
of
taxes,
which
was
actually
realized,
was
not
a
mere
side
effect
but
rather
one
of
the
main
goals
contemplated
by
the
individuals
acting
behind
the
corporations.
In
verifying
the
conclusion,
the
Court
cannot
but
adopt
an
approach
similar
to
that
followed
by
the
Minister,
the
mere
denial
of
the
taxpayer,
whether
or
not
accompanied
by
a
simple
indication
of
the
other
causes
that
could
have
prevailed,
can
be
given
no
weight.
Being
a
mere
assertion
of
a
negative
fact,
and
a
fact
which
has
to
do
with
the
state
of
mind
of
the
witness,
it
can
have
no
convincing
probative
force;
it
cannot
constitute
the
proof
required
to
annihilate
the
conclusion
of
the
Minister.
To
succeed,
the
taxpayer
must:
(a)
disprove
the
facts
assumed
by
the
Minister
in
reaching
his
conclusion;
or
(b)
convince
the
Court
that
the
inferences
drawn
by
the
Minister
from
the
facts
assumed
were
unreasonable
and
unwarranted;
or
(c)
add
further
facts
capable
of
changing
the
whole
picture
and
leading
to
different
inferences
pointing
to
the
conclusion
that
the
other
reasons
alleged
have
actually
been
prevalent.
I
will
now
turn
to
the
facts
of
this
case
and
will
endeavour
to
review
them
in
the
order
that
a
proper
application
of
the
principles
involved
requires.
It
will
be
seen
that,
in
the
view
I
take
of
those
facts,
the
attack
on
the
Minister’s
direction
here
cannot
succeed.
The
first
step
to
be
taken
is
naturally
to
review
the
facts
on
the
basis
of
which
the
direction
was
made.
Those
facts
were
alleged
in
several
subparagraphs
of
paragraph
4
of
the
statement
of
claim.
They
were
then,
of
course,
stated
as
being
assumed
but
they
were
undisputable
and
have
been
simply
admitted
in
the
pleadings.
The
recital
of
those
subparagraphs,
to
which
I
will
add
some
comments
suggested
by
the
evidence
adduced
with
respect
thereto,
will
provide
a
good
view
of
the
situation
and
at
the
same
time
bring
into
light
the
“reasonableness”
of
the
conclusion
drawn
by
the
Minister.
First,
the
Deputy
Minister
knew
the
history
and
the
background
of
the
two
companies
(subparagraphs
(a),
(b),
(c),
(d),
of
paragraph
4
of
the
statement
of
claim):
(a)
The
Defendant
was
incorporated
in
1958
Under
the
Québec
Companies
Act
and
has
carried
on
a
roofing
business
since
that
time
from
its
head
office
situated
in
Montréal;
(b)
Since
incorporation,
Mr
Albert
Warner
has
been
the
owner
of
98
of
the
100
issued
common
shares
of
the
Defendant
and
Mrs
Mary
Warner,
the
wife
of
Mr
Albert
Warner,
has
been
the
owner
of
one
share
of
the
issued
common
shares
from
March
29,
1967
to
January
29th,
1970;
(c)
Covertite
(Ontario)
Limited
was
incorporated
on
February
4th,
1970,
to
carry
on
a
roofing
business
and
its
head
office
is
in
Ottawa,
Ontario;
(d)
the
owners
of
the
issued
common
shares
of
Covertite
(Ontario)
Ltd
were
the
following
persons:
Mrs
Mary
Warner
98
shares
Mr
J
B
Chadwick
1
share
Mr
W
J
McKissock
1
share
The
statement
made
in
paragraph
(b)
to
the
effect
that
Mrs
Warner
had
been
the
owner
of
one
share
of
the
issued
common
shares
of
the
Montreal
Company
until
January
29,
1970,
therefore
prior
to
the
incorporation
of
the
Ontario
company,
turned
out
to
be
incorrect.
Mrs
Warner
did
not
transfer
her
share
in
the
Montreal
Company
until
1971
and
she
did
so
on
the
advice
of
one
Mr
Tretiak,
the
newly
hired
accountant
of
the
Montreal
Company,
in
order
to
avoid
the
technical
association
defined
by
subparagraph
39(4)(c)
of
the
old
Act.*
In
the
books
of
the
company,
however,
the
transfer
had
been
antedated.
That
is
the
reason
why
the
Minister’s
declarations
were
made
covering
both
years
1971
and
1972,
and
also
the
reason
why
the
appellant
company
before
the
Tax
Review
Board
promptly
withdrew
its
appeal
with
respect
to
the
1971
year.
second,
the
Deputy
Minister
had
been
able
to
verify
the
source
of
the
investment
required
to
establish
the
Ontario
company
(subparagraphs
(e),
(f),
(g),
of
paragraph
4
of
the
statement
of
claim):
(e)
Mrs.
Mary
Warner’s
investment
in
Covertite
(Ontario)
Ltd
consisted
of
$100
in
share
capital
and
a
loan
of
$29,406;
(f)
Mrs.
Mary
Warner
secured
the
money
loaned
to
Covertite
(Ontario)
Ltd
from
her
husband,
Mr.
Albert
Warner
as
follows:
(i)
sale
of
property
to
her
husband
for
$20,500;
and,
(ii)
loan
from
her
husband
of
$9,006.
(g)
Mr
Albert
Warner
secured
the
amount
of
$9,006
lent
to
his
wife
by
borrowing
it
from
the
Defendant;
The
evidence
provided
further
clarification.
Actually
all
the
moneys
needed
for
the
setting
up
of
the
Ontario
operation
were
advanced
by
the
Quebec
company,
except
that
they
were
entered
in
the
books
as
loans
to
a
director,
the
husband.
On
the
other
hand,
the
property
sold
to
the
husband
was
a
cottage
purchased
in
September
1968
for
a
price
that
had
been
fully
paid
by
the
husband,
and
the
deed
of
sale
is
dated
January
29,
1971,
a
year
after
the
incorporation
of
the
Ontario
company.
It
should
be
pointed
out
also
that
in
addition
to
the
sources
of
financing
alleged
in
the
above
quoted
subparagraphs,
Mr
Warner
personally
endorsed
an
important
bank
credit
secured
by
the
new-formed
company.
Third,
the
Deputy
Minister
had
also
been
made
aware
of
the
role
played
by
the
Quebec
company
in
the
establishment
of
the
Ontario
operation
and
of
the
link
between
the
two
firms
through
the
individuals
involved
in
their
operations
(subparagraphs
(h),
(i),
and
(o)
of
paragraph
4
of
the
statement
of
claim):
“which
reads
as
follows:
39.
(4)
For
the
purpose
of
this
section,
one
corporation
associated
with
another
in
a
taxation
year
if,
at
any
time
in
the
year,
(a)
each
of
the
corporations
was
controlled
by
one
person
and
the
person
who
controlled
one
of
the
corporations
was
related
to
the
person
who
controlled
the
other,
and
one
of
those
persons
owned
directly
or
indirectly
one
or
more
shares
of
the
capital
stock
of
each
of
the
corporations,
(h)
During
its
1971
taxation
year,
the
Defendant:
(i)
sold
equipment
and
machinery
to
Covertite
(Ontario)
Ltd
for
an
amount
of
$11,509;
(ii)
advanced
$35,000
in
cash
to
Covertite
(Ontario)
Ltd;
and,
(iii)
paid
for
material,
supplies
and
rent
on
Covertite
(Ontario)
Ltd’s
behalf
in
the
amount
of
$6,500;
(i)
Prior
to
the
incorporation
of
Covertite
(Ontario)
Ltd,
the
Defendant
executed
contracts
in
Eastern
Ontario
and
in
the
Fall
of
1969
and
in
1970
Mr.
W.
McKissock,
an
employee
of
the
Defendant,
supervised
the
activities
of
the
Defendant
in
Eastern
Ontario
from
his
residence
situated
at
1149F
Meadowlands
Drive
in
Ottawa;
(o)
Mr.
McKissock
became
an
employee
of
Covertite
(Ontario)
Ltd.
in
1970
after
having
been
on
the
payroll
of
the
Defendant
and
Mr.
McKissock
continued
to
discuss
the
type
of
material
used,
material
prices,
and
technical
problems
with
Mr.
Albert
Warner
for
Defendant’s
and
Covertite
(Ontario)
Ltd’s
contracts:
It
should
be
pointed
out
that
this
Mr
W
McKissock
was
not
a
mere
employee
of
the
Defendant;
he
had
been
with
the
Quebec
company
for
a
number
of
years,
and,
as
its
chief
estimator,
he
was
actually
running
the
operation
on
the
same
level
as
Mr
Warner
himself.
He
was
the
alter
ego
of
Mr
Warner,
in
the
words
of
the
latter,
and
a
very
good
personal
friend.
Another
point
worth
noting:
in
1969,
about
20%
of
the
volume
of
work
of
the
Quebec
company
was
in
Ontario,
an
unprecedented
situation,
and
all
of
the
contracts
had
been
secured
through
the
efforts
of
Mr
McKissock.
Fourth
and
finally,
the
records
of
the
two
companies
were
providing
some
revealing
figures
(the
last
six
subparagraphs
of
paragraph
4
of
the
statement
of
claim):
(m)
The
taxable
income
of
the
Defendant
for
each
of
the
taxation
years
ending
on
the
indicated
dates
was
the
following:
Jan.
31/67
$34,833.23
Jan.
31/68
$34,831.36
Jan.
31/69
$35,000.00
Jan.
31/70
$33,101.00
Jan.
31/71
4,070.00
Dec.
30/71
$34,502.00
Dec.
30/72
$50,015.00
(n)
Salaries
and
bonuses
paid
by
the
Defendant
to
Mr.
Albert
Warner
have
totalled
the
following
in
the
taxation
years
ending
on
the
indicated
dates:
Jan.
31/67
$16,040
Jan.
31/68
$27,021
Jan.
31/69
$24,034
Jan.
31/70
$10,011
Jan.
31/71
nil
Dec.
30/71
$65,275
Dec.
30/72
$145,673
(p)
Covertite
(Ontario)
Limited
commenced
its
operations
on
February
23rd,
1970
and
during
its
first
taxation
year
ending
on
January
31,
1971
it
reported
sales
of
$471,352
and
net
income
of
$26,152;
(q)
For
its
taxation
year
ending
on
January
31st,
1971,
the
Defendant
reported
sales
of
$564,068
and
a
net
income
of
$28,892.
(r)
Both
corporations
changed
their
taxation
year
to
December
30
in
1971
and
the
sales
and
net
income
reported
have
been
the
following
for
each
corpora-
|
Defendant
|
Covertite
(Ontario)
Ltd
|
|
Year
ending
|
|
|
Dec.
30/71
|
|
|
Sales
|
$
806,843
|
$501,957
|
|
Net
income
|
39,368
|
22,615
|
|
Year
ending
|
|
|
Dec.
30/72
|
|
|
Sales
|
$1,141,655
|
$577,096
|
|
Net
income
|
31,176
|
21,479
|
(s)
The
combined
taxable
incomes
of
the
Defendant
and
Covertite
(Ontario)
Ltd.
were
as
follows
for
the
taxation
years
ending
on
the
indicated
dates:
|
Jan.
31/71
|
62,315.09
|
|
Dec.
30/72
|
$70,907.00
|
From
the
figures
given
in
(m)
and
(n),
it
is
clear
that
the
defendant
company
was
consistently
adjusting
its
salaries
and
bonuses
so
that
the
net
profit
remained
just
below
the
amount
at
which
a
higher
tax
rate
would
have
been
payable,
which
showed
the
importance
of
tax
considerations
in
the
defendant’s
and
Mr
Warner’s
activities.
From
the
figures
reported
in
(p),
one
can
see
that
the
Ontario
operation
was
an
instant
success,
and
a
most
extraordinary
one
for
a
new
operation
of
this
type
commencing
business
on
its
own.
And
from
those
in
(s),
the
incidence
of
taxes
coming
into
play
can
easily
be
measured.
Those
are
therefore
the
facts
from
which
the
Minister
drew
the
conclusion
that
the
Ontario
operation
was
in
reality
an
extension
of
the
Quebec
operation
and
that
among
the
reasons
which
had
led
to
the
setting
up
of
a
separate
corporation
was
that
of
saving
taxes.
As
I
indicated
the
defendant
never
disputed
those
facts
and
in
any
event
they
are
now
established.
On
the
other
hand,
I
do
not
think
that
anyone
can
seriously
maintain
that
the
inferences
the
Minister
drew
from
those
facts
to
arrive
at
his
conclusion
were
unreasonable.
It
follows,
in
view
of
the
principles
I
outlined
above,
that
the
only
means
of
attack
against
the
Minister’s
direction
open
to
the
defendant
was
to
bring
forth
further
facts
capable
of
giving
substance
and
credibility
to
its
denial
of
the
Minister’s
conclusion.
In
my
appreciation
of
the
evidence
adduced
in
support
of
the
defence,
the
defendant
clearly
failed
to
do
so.
The
defendant
relied
wholly
on
the
testimonies
of
Mr
and
Mrs
Warner.
Mr
Tretiak,
the
private
accountant
of
whom
mention
was
made
earlier,
was
also
called
as
a
witness,
but
prior
to
his
becoming
auditor
of
the
Quebec
company,
in
January
1971,
this
gentleman
did
not
even
know
Mr
and
Mrs
Warner,
so
that
at
trial
he
could
only
testify
as
to
the
entries
appearing
in
the
records
of
the
company
from
that
date
on.
Of
course,
Mr
and
Mrs
Warner
both
stated
that
the
setting
up
of
the
Ontario
company
was
the
sole
idea
of
Mrs
Warner
and
had
nothing
to
do
with
the
Quebec
operation.
Those
statements
were
of
course
to
be
expected;
they
were
necessarily
implied
in
the
denial
by
the
defendant.
What
must
be
looked
at
is
what
was
alleged
to
corroborate
the
statements.
Mrs
Warner
explained
that
the
idea
of
commencing
a
business
in
Ontario
came
to
her,
in
1969,
as
a
result
of
three
factors:
first,
her
desire
to
leave
her
husband
and
her
home
in
Rosemere,
near
Montreal,
and
move
to
Ontario,
because
of
the
social
climate
in
Quebec;
second,
her
intention
to
invest
money
in
the
province
where
she
would
thenceforth
reside;
and
third,
the
decision
of
her
husband’s
chief
estimator
and
trustworthy
employee
and
friend
to
leave
Montreal
and
take
up
residence
in
Ottawa.
The
explanation,
in
my
view,
does
not
add
any
substance
to
the
statement:
it
is
to
me
unconvincing.
I
find
it
hard
to
believe
that
a
woman,
happily
married
and
with
five
young
children
between
the
ages
of
4
and
12,
would
decide
to
leave
her
husband
and
move
on
her
own
to
another
province
to
flee
the
social
climate
that
prevailed
in
Quebec
twelve
years
ago.
And
the
fact
is
that
Mrs
Warner
did
not
leave
Quebec
until
this
year,
1981,
when
she
moved
to
Ontario
with
her
husband
who
is
now
retired,
and
in
the
interval
between
1969
and
this
year,
after
the
completion
of
the
formalities
required
for
the
organization
of
the
new
company,
she
did
not
go
to
Ottawa
more
than
twice
a
year
and
on
each
visit
she
was
accompanied
by
her
husband.
I
likewise
find
it
hard
to
believe
that
a
woman
with
no
funds
would
seriously
think
of
investing
money
in
a
new
business
of
her
own
to
be
set
up
from
nothing,
when
she
had
never
directly
worked
in
any
capacity
in
a
business
of
that
kind,
or
of
any
kind
for
that
matter,
and
was
not
even
aware
of
the
possibilities
of
the
market
where
the
operation
was
to
be
launched.
As
to
the
third
factor,
the
alleged
decision
of
Mr
W
McKissock
to
move
to
Ontario,
apparently
also
because
of
the
social
climate
in
Quebec,
suffice
it
to
say
that
this
gentleman,
the
alter
ego
of
Mr
Warner,
was
never
called
as
a
witness
to
attest
to
his
intention
in
1969;
all
we
know
for
sure
is
that
in
the
fall
of
that
year,
he
was
in
Ottawa,
on
behalf
of
the
Quebec
company,
supervising
the
performance
of
the
important
contracts
the
firm
had
secured
in
Ontario.
Mr
Warner,
for
his
part,
corroborated
his
wife’s
testimony
by
explaining
that
he
did
not
want
to
interfere
with
her
decision,
and
that
he
took
pains
not
to
get
involved
in
any
way
and
at
any
time
with
her
new
operation
in
Ontario,
even
though
he
advanced
the
moneys
required
for
its
setting
up
and
thereafter
remained
in
constant
contact
with
the
individual
running
it,
his
friend,
Mr
McKissock.
Here
again
I
find
it
extremely
difficult
to
believe
that
such
could
have
been
the
behaviour
of
a
husband,
the
head
of
a
closely
knit
family
and
also
a
shrewd
businessman,
who
found
himself
in
the
situation
Mr
Warner
said
he
was
in.
To
be
fair
to
Mr
and
Mrs
Warner,
I
acknowledge
that
their
answers
to
the
questions
put
to
them
may
have
been
technically
correct.
The
role
of
Mr
McKissock
behind
the
whole
operation
could
perhaps
provide
some
explanations.
But
their
statements,
standing
alone,
are
not
to
me
sufficiently
convincing
to
be
relied
on
and,
in
any
event,
without
credible
facts
to
substantiate
them,
they
amount
to
no
more
than
a
mere
denial
of
the
Minister’s
conclusion
which,
as
I
have
said,
is
insufficient
to
allow
the
Court
to
vacate
the
direction
made
on
the
basis
thereof.
And
so,
I
have
come
to
the
conclusion
that
this
appeal
is
well
founded.
I
disagree
with
the
decision
of
the
Tax
Review
Board.
In
my
view,
the
defendant
company
has
not
satisfied
the
onus
of
proving
that
the
Ontario
company
was
not
formed,
at
this
juncture
in
the
expansion
of
its
operation,
as
an
attempt
to
reduce
the
amount
of
taxes
that
could
become
payable.
The
action
will
therefore
be
allowed,
the
decision
of
the
Tax
Review
Board
will
be
set
aside,
and
the
direction
of
the
Minister
with
the
reassessments
issued
pursuant
thereto
will
be
restored.
Email this Content