Sarchuk,
T.C.CJ.:—The
appeal
of
598606
Ontario
Ltd.
is
from
an
assessment
for
its
1986
taxation
year
by
which
the
Minister
of
National
Revenue
assessed
the
appellant
in
the
amount
of
$99,380.51,
being
the
Part
VII
tax
owing
together
with
interest
thereon
and
denying
the
Part
VII
tax
refund
claimed
by
the
appellant.
The
Minister’s
assessment
was
made
on
the
basis
that
Omnibus
Computer
Graphics
Inc.
(Omnibus)
failed
to
designate
a
share-purchase
tax
credit
(SPTC)
in
the
amount
of
$80,000
in
favour
of
the
appellant
by
filing
prescribed
Form
T-2110
with
the
Minister
as
and
when
required
and
accordingly
the
appellant's
Part
VII
refund
is
"nil"
within
the
meaning
of
subsection
192(2)
of
the
Income
Tax
Act,
R.S.C.
1952,
c.
148
(am.
S.C.
1970-71-72,
c.
63)
(the
"Act").
At
the
commencement
of
the
hearing
counsel
for
the
appellant
tendered
in
evidence
an
application
record
filed
with
the
Ontario
Court
(General
Division)
in
an
action
taken
by
the
appellant
against
Omnibus
(Exhibit
A-1).
Specific
reference
was
made
to
the
affidavit
of
James
Donald
Wiley
(“Wiley”)
which
formed
part
of
the
record
and
to
the
documents
appended
thereto
as
exhibits.
Both
counsel
advised
the
Court
that
the
facts
set
out
in
the
affidavit,
excepting
those
contained
in
paragraph
17,
were
not
in
dispute.
Counsel
for
the
appellant
also
adduced
evidence
from
Wiley
and
from
Mark
F.
Jefferson
("Jefferson"),
a
member
of
the
firm
of
accountants
retained
by
the
appellant.
On
the
basis
of
this
document,
the
admissions
made
by
the
Minister
in
his
reply
to
notice
of
appeal
and
the
testimony
of
Wiley
and
Jefferson
the
facts
which
gave
rise
to
these
proceedings
can
be
briefly
stated.
The
appellant
is
a
taxable
Canadian
corporation,
as
that
term
is
defined
in
the
Act.
It
was
a
single
purpose
company
incorporated
to
make
a
substantial
investment
in
Omnibus
structured
so
as
to
take
advantage
of
certain
provisions
in
Part
VII
of
the
Act.
These
provisions
create
a
share-purchase
tax
credit
system
the
mechanism
of
which
was
summarized
thus
in
paragraph
6
of
Wiley's
affidavit:
(i)
Where
a
taxable
Canadian
corporation
is
entitled
to
investment
tax
credits
which
it
cannot
or
does
not
choose
to
use,
it
may
issue
"qualified
shares"
(most
commonly
fully
participating
common
shares)
to
purchasers
who
are
the
first
registered
holders
of
such
shares
and
are
not
brokers
or
dealers
in
securities.
Under
these
circumstances
the
issuing
corporation
may
designate
an
amount
in
respect
of
the
shares
up
to
25
per
cent
of
the
entire
consideration
for
which
the
shares
were
issued
as
a
share-purchase
tax
credit.
(ii)
The
designation
is
made
by
filing
with
Revenue
Canada,
Taxation
a
prescribed
Form
T-2110
setting
out
the
shares
in
respect
of
which
the
designation
is
made
and
the
amount
of
the
tax
credit.
(iii)
The
corporation
delivers
to
the
shareholder
a
prescribed
Form
T-2111
which
evidences
the
shareholder's
entitlement
to
the
share-purchase
tax
credit.
(iv)
The
corporation
files
a
Part
VII
tax
return
for
its
taxation
year
in
which
the
designated
flow-through
tax
credit
is
shown
as
a
tax
liability,
offset
by
the
investment
tax
credit
to
which
the
corporation
is
entitled.
(v)
A
corporate
shareholder
which
receives
a
share-purchase
tax
credit
may,
in
turn,
designate
qualified
shares
issued
to
its
own
shareholders
as
entitled
to
flow-
through
of
the
credit.
In
this
case,
the
corporate
shareholder
would
file
a
Part
VII
tax
return
showing
a
tax
liability
for
the
tax
credit
flow-through
to
its
shareholders,
off-set
by
the
tax
credit
that
had
been
flowed-through
to
the
corporation.
It
was
understood
that
this
step-by-step
process
would
be
followed
to
the
point
where
the
appellant's
shareholders
would
ultimately
benefit
from
the
flow-out
of
tax
credits.
The
evidence
indicates
that
certain
steps
were
taken
while
others
were
not.
As
at
March
29,
1985
the
appellant
was
a
shareholder
in
Omnibus
and
held
a
debenture
issued
by
it
(the
Omnibus
debenture)
securing
the
principal
amount
of
$600,000
convertible
prior
to
March
29,
1987
into
444,444
common
shares
of
Omnibus.
Under
the
terms
of
this
debenture,
if
it
was
converted
on
or
before
December
31,
1986,
Omnibus
was
obligated
to
issue
the
“
qualifying
shares"
and
in
compliance
with
subsection
192(4)
of
the
Act
designate
an
amount
in
respect
of
those
shares
not
exceeding
25
per
cent
of
the
consideration
upon
which
they
were
issued
to
a
maximum
of
$80,000
as
the
SPTC.
It
was
further
required
to
deliver
to
the
appellant
the
prescribed
designation
Form
T-2110
and
the
executed
Form
T-2111
evidencing
the
appellant's
entitlement
to
such
SPTC
(Exhibit
A-1,
Tab
5,
pages
9-10).
In
similar
fashion
the
shareholders
of
the
appellant,
as
at
March
29,
1985,
held
debentures
(the
"Omnivest
debentures")
issued
by
the
appellant
securing
the
total
principal
amount
of
$600,000
convertible
at
any
time
prior
to
March
29,
1987
into
444,000
common
shares
of
the
appellant
(the
"Omnivest
shares").
These
debentures
provided
that
if
they
were
converted
on
or
before
December
31,
1986
the
appellant
was
to
issue
the
qualifying
shares
and
to
designate
an
amount
pursuant
to
the
provisions
of
subsection
192(4)
of
the
Act.
On
or
about
June
27,
1986
the
appellant
converted
the
full
amount
of
the
Omnibus
debenture.
Thus,
according
to
the
terms
of
the
debenture,
Omnibus
was
obligated
to
designate
the
amount
of
$80,000
as
an
SPTC
to
be
flowed
out
to
the
appellant.
There
is,
however,
no
evidence
that
the
requisite
designation
was
ever
made
or
filed
with
the
Minister
by
Omnibus.
On
or
about
July
29,
1986
the
shareholders
of
the
appellant
converted
their
Omnivest
debentures,
thus
entitling
the
shareholders
by
the
terms
of
the
Omnivest
debenture,
to
SPTC
to
be
flowed
out
from
the
appellant
in
the
aggregate
amount
of
$80,000.
In
August
1986,
on
the
instructions
of
the
appellant's
Board
of
Directors,
Jefferson
prepared
the
share-purchase
tax
credit
designation
Form
T-2110
in
respect
of
that
amount.
On
August
29,
1986,
the
appellant
filed
the
form
with
the
Minister
as
required.
Subsequent
to
that
filing
Jefferson
prepared
Form
T-2111
supplementary
slips
for
distribution
to
the
appellant’s
shareholders.
In
April
1987
when
Jefferson
began
to
prepare
the
appellant's
Part
VII
tax
return
he
discovered
that
the
Omnibus
designation
and
the
appropriate
supplementary
slips
were
not
at
hand.
He
contacted
Omnibus’
solicitor
and
accountants
and
learned
that
nothing
was
available
to
indicate
whether
it
had
filed
the
necessary
designation.
Notwithstanding
the
absence
of
these
documents
Jefferson
prepared
the
appellant's
return.
It
was
filed
on
June
30,
1987
and
reported
Part
VII
tax
payable
of
$80,000
in
respect
of
the
Omnivest
shares
for
which
the
designation
had
been
filed
and
claimed
an
offsetting
Part
VII
refund
of
$80,000
in
respect
of
the
Omnibus
shares
purchased.
He
says
he
acted
on
the
assumption
that
it
was
necessary
to
do
so
since
the
appellant
had
itself
taken
the
next
step
in
the
process,
i.e.,
flowing
out
an
SPTC
to
its
shareholders.
By
notice
of
assessment
dated
January
31,
1989
the
Minister
assessed
the
appellant
for
its
1986
taxation
year
on
the
grounds
that
the
Minister
had
not
received
a
designation
in
respect
of
the
Omnibus
shares
and
denied
to
the
appellant
the
SPTC
which
would
have
offset
the
appellant's
Part
VII
tax
liability.
Mr.
Wiley
was
the
president
and
a
director
of
the
appellant.
He
was
also,
at
the
relevant
time,
a
director
of
Omnibus.
Since
the
position
of
the
appellant
is
premised
to
some
extent
on
the
conduct
of
others
beyond
its
control,
reference
should
be
made
to
Wiley’s
testimony
as
to
the
state
of
Omnibus’
business
in
1987
and
to
the
circumstances
which
he
believes
led
to
the
failure
of
Omnibus
to
file
the
required
designation.
Wiley
said
Omnibus
was
a
successful
computer
graphics
firm
which
by
the
end
of
1986
had
improved
the
value
of
its
stock
and
was
a
good
investment.
However
this
changed
in
February
1987
when
it
became
involved
in
the
acquisition
of
several
companies
and
required
more
cash
flow
than
expected.
Suddenly
the
business
"turned
around",
the
bank
began
making
demands
and
the
managerial
situation
became
chaotic.
A
majority
shareholder
stepped
in,
became
involved
in
the
day-to-day
operations
and
ultimately
took
over.
In
Wiley's
view
the
directors
lost
control
at
that
point
of
time,
were
no
longer
listened
to
and
this
led
to
his
resignation
in
March
or
April
of
1987.
From
that
point
of
time
he
received
little
information
regarding
Omnibus’
affairs
although
he
was
aware
that
a
short
time
after
the
bank
"foreclosed
on
it"
and
that
as
of
the
summer
of
1987
Omnibus
was,
for
all
practical
purposes,
not
functioning.
He
believed
there
were
insufficient
assets
to
warrant
bankruptcy
proceedings
and
what
there
was,
was
sold.
Wiley
who
signed
the
designation
with
respect
to
the
Omnivest
shares
said
he
was
not
aware
at
the
time
that
the
appellant
had
not
received
the
requisite
forms
from
Omnibus.
Indeed
he
had
no
knowledge
whether
Omnibus
had
prepared
the
necessary
forms
and
designations
nor
did
he
make
any
effort
to
ensure
that
they
were
obtained
prior
to
the
appellant
proceeding
to
designate
its
shares.
He
said
only
that
he
believed
that
the
appellant's
accountant,
Jefferson,
may
have
done
so.
It
was
not
until
receipt
of
the
assessment
that
Wiley
made
calls
to
Omnibus’
attorneys
inquiring
about
the
documentation
and
was
given
to
understand
that
they
would
search
for
it.
These
inquiries
produced
no
results.
Appellant's
position
Counsel
for
the
appellant
submits
that
the
SPTC
mechanism
under
Part
VII
is
a
product
of
government
economic
policy
designed
to
encourage
or
induce
a
taxpayer
to
undertake
a
specific
activity
which
would
not
otherwise
be
undertaken
but
for
the
inducement.
In
this
case
the
legislation
was
directed
towards
assisting
small
or
medium
size
businesses
to
raise
equity
to
finance
new
investment
projects
with
the
concurrent
objective
of
increasing
production
and
employment.
To
encourage
investment
the
government
held
out
inducements
by
way
of
tax
credits
to
make
such
an
investment
more
attractive.
This
objective,
counsel
noted,
was
clearly
stated
in
the
budget
speech
delivered
by
the
Minister
of
Finance
on
April
19,
1983
and
in
the
Budget
Papers—
Supplementary
Information
dated
April
19,
1983.
Counsel
argues
that
the
appellant
did
exactly
what
the
government
intended.
The
appellant
complied
with
every
requirement
imposed
upon
it
by
the
Act
both
as
a
precondition
to
obtaining
the
SPTC
and
in
turn
flowing
it
out
to
its
shareholders.
Relying
upon
Stubart
Investments
Ltd.
v.
The
Queen,
[1984]
1
S.C.R.
536,
[1984]
C.T.C.
294,
84
D.T.C.
6305
and
O'Brien
Estate
v.
M.N.R.,
[1991]
2
C.T.C.
2747,
91
D.T.C.
1349
(T.C.C.),
he
submits
that
the
statute
should
not
be
interpreted
in
a
manner
which
would
defeat
“the
object
and
spirit"
of
the
relevant
provisions
by
reason
of
technical
filing
deficiencies
not
of
the
appellant's
doing
nor
in
its
control.
To
do
otherwise
would
create
an
unjust
enrichment
for
the
Minister
since
it
is
apparent
that
had
the
appropriate
designations
been
filed
by
Omnibus
no
tax
would
have
been
required
of
any
of
the
parties.
Minister's
position
The
Minister
relies
on
subsections
192(2),
192(4)
and
192(8)
of
the
Act
and
contends
that
failure
by
Omnibus
to
designate
an
SPTC
by
filing
the
prescribed
Form
1-2110
leads
automatically
to
the
failure
of
the
appellant's
case.
Counsel
referred
to
the
decision
of
the
Tax
Court
of
Canada
in
United
Equities
Ltd.
v.
M.N.R.,
[1989]
2
C.T.C.
2171,
89
D.T.C.
391
which,
he
argues,
supports
the
Minister's
position.
(Reversed
in
the
Federal
Court-Trial
Division
by
MacKay,
J.
in
[1992]
2
C.T.C.
213,
92
D.T.C.
6572.)
He
also
contends
that
there
was
an
obligation
on
the
appellant,
beyond
the
mere
acquisition
of
the
shares
of
Omnibus,
to
exercise
due
diligence
to
be
in
the
position
to
believe
that
Omnibus
would
not
evade
its
obligations
under
Part
VII.
That
was
not
done.
He
noted
that
there
were
common
directors
and
that
Mr.
Wiley
as
president
of
the
appellant
and
a
director
of
Omnibus
could
have
taken
timely
action
prior
to
the
failure
of
Omnibus
in
1987,
which
occurred
well
after
the
date
of
the
conversion
of
the
Omnibus
debenture
and
the
time
specifically
set
out
in
that
agreement
for
both
the
filing
of
the
designation
with
the
Minister
and
the
production
of
the
designation
to
the
appellant.
Conclusions
Two
preliminary
comments.
First
as
to
the
appellants
contention
that
the
object
and
spirit
of
the
relevant
provisions
should
not
be
defeated
by
technical
filing
deficiencies
not
within
its
control.
I
do
not
believe
that
the
plea
of
due
diligence
or
impossibility
is
tenable
on
the
facts
established
before
me.
The
terms
and
conditions
of
the
Omnibus
debenture
provided
that
if
the
debenture
was
converted
into
shares
on
or
before
December
31,
1986
Omnibus
was
obliged
to
comply
with
the
provisions
of
subsection
192(4).
The
appellant
converted
the
Omnibus
debenture
on
June
27,1986.
That
triggered
Omnibus’
contractual
obligations
to
the
appellant
including
the
issuing
of
the
shares,
the
delivery
of
a
duly
completed
and
executed
Form
T-2110
and,
most
importantly,
the
filing
of
the
prescribed
designation
form
with
the
Minister
on
or
before
the
last
day
of
the
month
immediately
following
the
month
in
which
the
qualifying
shares
were
issued.
Wiley
was
a
director
at
the
time
the
Omnibus
debenture
was
executed
and
had
reviewed
its
terms.
I
am
satisfied
that
he,
and
the
appellant
were
aware,
albeit
in
general
terms,
that
in
order
for
the
appellant
to
obtain
the
tax
benefit
it
was
first
necessary
for
Omnibus
to
make
and
file
the
requisite
designation.
It
was
open
to
the
appellant
to
have
taken
the
simple
step
of
inquiring
of
Omnibus
or
of
the
Minister
to
determine
whether
that
had
been
done
and
upon
discovering
that
fact
to
have
enforced
its
right
to
the
production
of
the
designation.
That
was
not
done.
Second,
regarding
the
reference
made
by
counsel
for
the
respondent
to
the
decision
of
the
Tax
Court
of
Canada
in
United
Equities.
That
judgment
no
longer
stands
and
in
any
event
the
issue
determined
therein
is
substantially
distinguishable.
The
plaintiff
in
that
case
had
appealed
from
reassessment
of
income
tax
made
by
the
Minister
of
National
Revenue
who
had
disallowed
a
scientific
research
tax
credit
(SRTC)
claimed
for
its
1984
taxation
year.
MacKay,
J.
described
the
circumstances
as
follows:
The
essential
facts
are
not
in
dispute.
On
May
31,
1984,
Acadia
Saw
Mills
Ltd.
("the
company”),
in
consideration
of
the
payment
of
$200,000.
by
United
Equities,
issued
a
debenture
in
the
amount
of
$114,000.
to
the
plaintiff
in
accord
with
an
agreement
dated
May
28,
1984.
Under
the
agreement
between
the
company
and
the
plaintiff,
the
Company
was
to
designate
the
purchase
price,
$200,000.,
for
the
purposes
of
a
scientific
research
and
experimental
development
tax
credit
(SRTC)
pursuant
to
section
127.3
and
Part
VIII
of
the
Act.
.
.
.
By
inadvertence,
the
solicitor
of
the
company,
who
had
completed
the
documents
required
to
be
filed
to
permit
the
designation
of
the
SRTC,
did
not
file
those
documents
within
the
prescribed
times.
[Emphasis
added.]
The
solicitor
for
the
company,
who
had
neglected
to
file
the
designation
form
and
the
information
forms,
first
realized
his
mistake
when,
following
an
enquiry
from
a
local
officer
of
Revenue
Canada
on
October
17,
1985,
he
discovered
the
Original
forms
still
in
his
file.
After
finding
the
original
forms
the
solicitor
wrote
that
same
day
to
Revenue
Canada
at
its
Halifax
office
forwarding
the
original
forms
72113,
T2114
summary
and
form
12114
supplementary,
noting
that
"Due
to
an
oversight
on
my
part,
these
documents
were
not
forwarded
to
Revenue
Canada
as
required”.
Then
on
December
23,
1985
the
solicitor
received
from
the
company
a
letter
dated
November
18,
1985
addressed
to
Acadia
Saw
Mills
from
Revenue
Canada
Taxation
in
Ottawa,
signed
on
behalf
of
D.
Dexter
of
the
Part
VII,
VIII
Tax
Group.
By
that
letter,
form
T2113,
the
SRTC
designation
form,
was
returned
to
the
company
with
the
statement
that
it
should
have
been
filed
under
subsection
194(4)
of
the
Act
not
later
than
June
30,
1984.
That
letter
also
noted
that
subsection
194(7)
provided
for
late
filing
of
the
designation
if
the
prescribed
information
return
T2114
summary
is
filed
by
the
end
of
February
in
the
year
following
the
issue
of
the
debt
obligation
and
the
penalty
provided
in
subsection
194(8)
is
both
calculated
and
remitted.
The
letter
also
noted
that
no
remittance
of
the
penalty
“appears
to
have
been
made"
with
the
designation
forwarded
on
October
17
and
“
consequently,
the
designation
in
question
cannot
be
considered
to
be
filed
as
a
valid
designation
in
accordance
with
subsection
194(7)
as
the
applicable
penalty
of
$8,000
has
not
been
remitted”.
Finally,
the
letter
stated:
The
enclosed
T2113,
will
be
accepted
as
filed
on
the
original
filing
date
if
it
is
resubmitted
with
the
applicable
penalty
payment
within
30
days
of
the
mailing
of
this
letter.
Failure
to
submit
the
requested
penalty
payment
with
the
enclosed
T2113
will
result
in
an
invalid
designation
and
the
disallowance
of
the
tax
credits
claimed
by
investors.
Discussions
and
correspondence
between
the
plaintiff,
the
solicitor
and
officials
of
Revenue
Canada
followed.
On
January
27,
1986
the
solicitor
wrote
resubmitting
the
original
Form
T-2113
and
enclosing
a
cheque
in
the
amount
of
the
penalty.
The
cheque
was
cashed
by
Revenue
Canada
and
receipt
of
the
Form
T-2113
was
acknowledged
by
letter
dated
February
10,
1986
which
noted
that
the
letter
and
an
enclosed
stamped
copy
of
the
form
were
an
acknowledgement
of
receipt
of
the
designation
form
and
should
not
be
regarded
as
confirmation
that
the
designation
was
valid.
The
issue
in
United
Equities
was
stated
by
MacKay,
J.
as
follows:
While
the
parties
state
the
issue
in
this
case
in
different
terms,
those
terms
relate
to
their
differing
perceptions
of
the
construction
or
interpretation
of
subsection
194(7)
in
this
case.
For
the
plaintiff
it
is
argued
that
timely
filing
of
information
returns
is
not
a
condition
precedent
to
late
filing
of
a
designation
where
the
Minister
has
given
notice
that
a
designation
has
not
been
made
under
subsection
194(4)
and
the
designation
and
payment
of
the
penalty
prescribed
is
made
on
or
before
90
days
after
mailing
of
the
notice.
Further,
the
letter
of
November
18,
1985
constitutes
notice
and
the
company
having
filed
the
designation
and
paid
the
penalty
within
90
days
of
the
date
of
that
letter
has
met
the
requirements
of
the
exception
clause
in
subsection
194(7).
For
the
defendant
it
is
argued
that
timely
filing
of
information
returns
is
a
condition
precedent
to
any
late
filing
of
the
designation,
but
if
the
Court
concludes
otherwise,
the
letter
of
November
18
does
not
constitute
a
notice
by
the
Minister
within
subsection
194(7).
MacKay,
J.
concluded
that:
Since,
following
notice
mailed
on
behalf
of
the
Minister,
the
company
filed
its
designation
and
paid
a
penalty,
previously
estimated
by
Revenue
Canada
in
the
letter
of
November
18
and
not
disputed
as
being
an
appropriate
penalty
at
trial,
all
before
90
days
from
November
18,
1985,
that
designation
qualifies
as
valid,
though
filed
late,
by
reason
of
subsection
194(7).
and
allowed
the
plaintiff's
action.
The
issue
before
me
is
markedly
different.
I
must
determine
the
effect
upon
the
appellant
of
the
failure
on
the
part
of
Omnibus
to
make
and
file
the
requisite
designation.
For
the
following
reasons
I
have
concluded
that
such
failure
deprives
the
appellant
of
its
entitlement
to
the
SPTC.
Part
VII
and
section
127.2
of
the
Act
provide
a
mechanism
by
which
a
corporation
unable
to
use
investment
tax
credits
earned
is
permitted
to
attract
investors
in
its
equity
capital
by
making
those
investment
tax
credits
available
to
the
investors.
In
this
manner
the
latter
are
able
to
secure
a
credit
against
tax
payable
as
provided
in
section
127.2
of
the
Act.
There
is
no
dispute
that
the
legislative
provisions
in
issue
have
a
substantial
economic
policy
element.
In
the
present
appeal
the
appellant
seeks
to
create
in
its
hands
a
sharepurchase
tax
credit
as
provided
in
section
127.2
of
the
Act.
Such
a
credit
is
deductible
in
computing
the
appellants
tax
otherwise
payable
under
Part
I
of
the
Act.
To
be
entitled
to
that
benefit
the
appellant
must
come
within
the
parameters
of
the
relevant
legislative
provisions.
These
provisions
can
only
be
read
to
mean
the
following:
an
investor
will
obtain
an
SPTC
only
where
an
amount
is
designated
by
the
issuer
in
respect
of
the
SPTC
instrument
acquired
pursuant
to
subsection
192(4)
of
the
Act.
A
designation
will
be
effective
only
if
the
issuer
files
the
prescribed
form
(T-2110)
within
the
time
prescribed
including
the
late
filing
period.
Such
filing
is
fundamental
to
the
investor's
entitlement
to
an
SPTC.
A
designation
is
not
made
for
the
purposes
of
Part
VII
and
section
127.2
of
the
Act
until
the
prescribed
form
is
filed.
Counsel
for
the
appellant
has
argued
that
the
relevant
provisions
should
be
interpreted
in
accordance
with
the
"object
and
spirit
of
the
enactment"
and
not
so
as
to
permit
an
administrative
requirement
to
thwart
the
substantive
purpose
of
the
legislation.
I
am
satisfied
that
the
making
and
the
filing
of
a
designation
is
more
than
a
mere
administrative
requirement.
The
submission
of
counsel
for
the
appellant
that
the
substantive
purpose
of
the
relevant
provisions
are
negated
by
requiring
issuer
to
provide
the
Minister
with
the
designation
does
not
withstand
close
scrutiny.
The
relevant
provisions
provide
for
the
creation
of
the
SPTC
and
impose
a
refundable
tax
on
the
corporation
which
creates
such
a
tax
credit.
The
designation
therefore
has
substantive
purposes:
to
put
the
Minister
on
notice
of
the
designating
corporation's
tax
liability
and
of
the
investor's
claim
to
an
SPTC;
to
ensure
there
exists
a
qualifying
share
as
described
in
subsection
192(4)
and,
to
enable
the
Minister
to
satisfy
himself
that
the
provisions
of
subsection
192(11)
are
complied
with.
In
my
view
the
designation
is
a
logical
as
well
as
statutory
precondition
to
the
acquisition
of
a
tax
credit.
In
Stubart
Investments,
supra,
the
Supreme
Court
modified
the
strict
interpretation
rule
for
the
construction
of
taxation
statutes.
It
is
important
to
note
the
precise
words
that
Estey,
J.
adopted
in
defining
the
appropriate
approach
at
page
578
(C.T.C.
316,
D.T.C.
6323):
While
not
directing
his
observations
exclusively
to
taxing
statutes,
the
learned
author
of
Construction
of
Statutes,
2nd
ed.,
(1983),
at
page
87,
E.A.
Dreidger,
put
the
modern
rule
succinctly:
Today
there
is
only
one
principle
or
approach,
namely,
the
words
of
an
Act
are
to
be
read
in
their
entire
context
and
in
their
grammatical
and
ordinary
sense
harmoniously
with
the
scheme
of
the
Act,
the
object
of
the
Act,
and
the
intention
of
Parliament.
The
conclusion
I
have
reached
does
not
offend
the
object
and
spirit
of
the
enactment.
The
appeal
is
dismissed.
Appeal
dismissed.