The taxpayer successfully appealed from reassessments denying the deduction of interest by it on a participating bond for its 1987 and 1988 taxation years, but did not file objections or waivers with respect to reassessments denying the deduction of interest on the bond for its 1989-1991 taxation years. Following a successful appeal for the taxpayer's 1987 and 1988 taxation years, the Minister reassessed the 1989 to 1991 taxation years to allow the deduction of non-capital losses resulting from the successful appeal, but not allowing the deduction of participating interest for those years.
The Court rejected the taxpayer's submission that s. 152(4.3) required the Minister, when determining the "balance", to go behind the dollar amount of the adjustment and to also give effect to the reason for the change in the income, namely, the deductibility of the participating interest payments made in those years. Evans J.A. stated (at p. 5087) that
"The 'balance of a taxpayer for a taxation year' suggests a sum: a numerical calculation ... To refer to the taxpayer's balance' would surely be an odd way for Parliament to express an intention that the Minister must look beyond the computation and consider the principles on which it is based."