Wilson,
J.:—The
issue
in
this
appeal
is
whether
or
not
the
income
earned
by
the
appellant
during
the
1973
to
1976
taxation
years
from
short-term
securities
is
“income
of
the
corporation
for
the
year
from
an
active
business”
for
the
purpose
of
computing
the
appellant’s
“Canadian
manufacturing
and
processing
profits”
under
subsection
125.1(1)
of
the
Income
Tax
Act,
R.S.C.
1952,
c.
148
(as
amended
in
the
relevant
years
by
s.
1
of
S.C.
1970-71-72,
c.
63,
s.
1
of
S.C.
1973-74,
c.
29,
s.
82
of
S.C.
1974-75-76,
c.
26
and
s.
50
of
S.C.
1976-77,
c.
4).
The
Crown
has
conceded
that
if
the
income
was
from
business,
then
it
was
income
from
an
active
business.
The
issue
in
this
appeal
therefore
resolves
itself
into
the
question
whether
the
income
earned
by
the
appellant
is
income
from
business
or
income
from
another
source
—
in
this
case,
property.
1.
The
Facts
Prior
to
1973,
the
appellant,
Canadian
Marconi
Company
(“CMC”),
a
manufacturer
of
electronic
equipment,
owned
a
broadcasting
division.
In
September
1968,
the
Canadian
Radio-Television
Commission
was
directed
by
the
Governor-General
in
Council
not
to
grant
renewal
licences
after
a
certain
date
to
non-Canadian
citizens
or
ineligible
Canadian
corporations.
This
directive
was
implemented
on
January
12,
1971.
As
a
result
of
this
new
policy,
CMC,
being
foreign
controlled,
was
denied
a
licence
renewal
for
its
broadcasting
division
by
the
C.R.T.C.
and
was
compelled
to
sell
it.
In
July
1972,
CMC
sold
its
broadcasting
division
for
$18
million
in
cash.
CMC’s
plan
was
that
the
funds
from
the
forced
sale
would
be
used
to
purchase
a
business
similar
to
or
complementary
with
its
electronic
equipment
manufacturing
business.
Until
it
could
find
such
a
business
to
purchase
it
invested
the
funds
in
short-term
securities.
These
particular
investments
were
chosen
in
order
to
earn
interest
income
while
maintaining
a
degree
of
liquidity
in
case
the
opportunity
to
buy
a
suitable
business
suddenly
arose.
Throughout
the
1973
to
1976
period,
the
funds
remained
invested
in
short-term
interest-bearing
securities
but
considerable
energy
and
effort
was
expended
by
CMC
in
order
to
obtain
a
maximum
return.
About
20
per
cent
of
the
working
hours
of
the
senior
company
officer
placed
in
charge
of
the
investments
was
taken
up
in
the
day-to-day
management
of
these
investments.
Every
Friday,
this
officer
carefully
reviewed
all
transactions
made
during
the
week
and
decided
on
the
investment
strategy
for
the
following
week.
At
any
one
time
there
were
as
many
as
12
employees
involved
in
the
management
of
the
investments.
The
extent
of
the
activity
of
this
staff
in
managing
the
investments
and
their
vigilance
in
earning
a
maximum
return
from
the
funds
is
evident
from
the
numerous
purchases
completed
each
year
(201
in
1973,
218
in
1974,
241
in
1975
and
381
in
1976),
the
variation
in
the
lengths
of
terms
of
deposits
made
and
securities
purchased
according
to
the
trend
of
market
interest
rates
and
the
fact
that
seldom
would
the
staff
reinvest
the
funds
realized
from
a
sale
in
the
same
instrument.
Finally,
the
funds
available
for
investment
and
actually
invested
represented
roughly
one-half
of
CMC’s
total
assets
during
the
1973
to
1976
period
and
the
income
earned
from
the
investments
constituted
a
significant
percentage
of
the
total
income
earned
by
CMC
in
each
of
the
years
in
question
—
21.4
per
cent
in
1973,
52.7
per
cent
in
1974,
35.4
per
cent
in
1975
and
31.2
per
cent
in
1976.
For
each
of
the
taxation
years
in
issue
CMC,
relying
on
subsection
125.1(1)
of
the
Income
Tax
Act,
R.S.C.
1952,
c.
148,
as
amended,
claimed
a
tax
credit
in
respect
of
a
portion
of
the
interest
earned
on
its
investments.
It
was
of
the
view
that
this
interest
was
part
of
its
“Canadian
manufacturing
and
processing
profits”,
a
portion
of
which
is
eligible
for
the
deduction
under
that
section.
“Canadian
manufacturing
and
processing
profits”
are
defined
in
paragraph
125.1
(3)(a)
as
such
portion
of
the
aggregate
of
‘all
amounts
each
of
which
is
the
income
of
the
corporation
for
the
year
from
an
active
business
carried
on
in
Canada
as
is
determined
under
rules
prescribed
for
that
purpose
by
regulation".
CMC
was
of
the
view
that
the
interest
received
from
short-term
investments
entered
into
the
computation
of
its
“manufacturing
and
processing
profits"
because
the
interest
was
income
from
an
active
business.
The
Minister,
in
his
reassessments,
was
of
the
view
that
the
interest
income
was
income
from
property,
not
income
from
an
active
business.
2.
The
Courts
Below
CMC
appealed
the
Minister's
reassessments
to
the
Federal
Court
Trial
Division.
Décary,
J.
dismissed
the
appeal
([1982]
C.T.C.
277;
82
D.T.C.
6236)
and
held
that
the
income
received
by
the
plaintiff
was
income
from
property.
Even
if
it
were
income
from
an
active
business
he
still
would
have
dismissed
CMC's
appeal
on
the
ground
that
in
order
to
constitute
“Canadian
manufacturing
and
processing
profits"
under
paragraph
125.1
(3)(a)
the
business
must
be
a
manufacturing
and
processing
business.
CMC’s
further
appeal
to
the
Federal
Court
of
Appeal
([1984]
C.T.C.
319;
84
D.T.C.
6267)
was
also
dismissed.
Ryan,
J.
for
the
Court
held
that
the
interest
income
could
not
be
considered
to
be
income
from
an
investment
business
because
of
what,
in
his
view,
were
“overriding
considerations".
I
shall
deal
in
detail
with
these
considerations
later
in
these
reasons.
Leave
to
appeal
to
this
Court
was
granted
on
December
17,
1984.
3.
The
Issue
The
distinction
between
income
from
a
business
and
income
from
property
is
a
difficult
one
to
draw
but
it
is
one
which
the
Act
compels
us
to
make.
There
are
two
reasons
for
the
difficulty.
First,
the
terms
“business"
and
“property"
are
broadly
and
loosely
defined
in
subsection
248(1)
of
the
Income
Tax
Act.
As
a
consequence
the
definitions
on
a
fair
reading
can
be
construed
in
such
a
way
as
to
overlap.
Second,
persons
or
corporations
generally
engaged
in
trading-type
activity
often
use
property
as
a
means
of
earning
income.
On
first
reflection
this
sort
of
income
could
realistically
be
considered
either
business
income
or
property
income.
The
observation
of
Thurlow,
J.
(as
he
then
was)
in
Wertman
v.
M.N.R.,
[1964]
C.T.C.
252
at
266;
64
D.T.C.
5158
at
5167
(Ex.
Ct.),
that
cases
are
“readily
conceivable
where
particular
income
may
be
accurately
described
as
income
from
property
and
just
as
accurately
regarded
as
income
from
a
business"
is
frequently
apposite.
The
courts
have
handled
the
difficult
task
of
deciding
whether
a
particular
receipt
is
business
income
or
property
income
by
applying
certain
set
criteria
or
indicia
of
trading
activity
and,
in
the
case
of
a
corporate
taxpayer,
by
applying
a
presumption
in
favour
of
the
characterization
of
its
income
as
income
from
a
business.
I
shall
examine
these
in
reverse
order.
It
is
frequently
stated
in
both
the
English
and
Canadian
case
law
that
there
is
in
the
case
of
a
corporate
taxpayer
a
rebuttable
presumption
that
income
received
from
or
generated
by
an
activity
done
in
pursuit
of
an
object
set
out
in
the
corporation's
constating
documents
is
income
from
a
business.
This
presumption
appears
to
have
originated
in
a
comment
made
by
Jessel,
M.R.
in
Smith
v.
Anderson
(1880),
15
Ch.
D.
247.
There,
the
Master
of
the
Rolls
said
at
260-61;
You
cannot
acquire
gain
by
means
of
a
company
except
by
carrying
on
some
business
or
other,
and
I
have
no
doubt
if
any
one
formed
a
company
or
association
for
the
purpose
of
acquiring
gain,
he
must
form
it
for
the
purpose
of
carrying
on
a
business
by
which
gain
is
to
be
obtained.
When
you
come
to
an
association
or
company
formed
for
a
purpose,
you
say
at
once
that
it
is
a
business,
because
there
you
have
that
from
which
you
would
infer
continuity;
it
is
formed
to
do
that
and
nothing
else,
and,
therefore,
at
once
you
would
say
that
the
company
carried
on
a
business.
So
in
the
ordinary
case
of
investments,
a
man
who
has
money
to
invest,
invests
his
money
and
he
may
occasionally
sell
the
investments
and
buy
others,
but
he
is
not
carrying
on
a
business.
But
when
you
have
an
association
formed,
or
where
an
individual
makes
it
his
continuous
occupation
—
the
business
of
his
life
to
buy
and
sell
securities
—
he
is
called
a
stock-jobber
or
share-jobber,
and
nobody
doubts
for
a
moment
that
he
is
carrying
on
business.
So,
if
a
company
is
formed
for
doing
the
very
same
thing,
that
is
for
investing
money
belonging
to
persons
in
the
purchase
of
stocks
and
shares,
and
changing
them
from
time
to
time,
either
with
limited
or
unlimited
powers,
I
should
say
there
can
be
no
question
that
they
are
carrying
on
a
business,
whether
you
call
it
a
business
of
investment
or
a
business
of
dealing
in
securities,
or,
as
in
the
case
before
me,
both
the
business
of
investment
and
the
business
of
dealing
in
securities.
The
presumption
was
applied
again
for
the
purpose
of
distinguishing
between
business
and
other
income
in
C.I.R.
v.
Korean
Syndicate,
Ltd.,
[1921]
3
K.B.
258;
12
T.C.
181
(C.A.).
The
Court
of
Appeal
considered
that
the
fact
that
the
taxpayer
was
a
company
in
existence
for
some
particular
purpose
"is
a
matter
to
be
considered
when
you
come
to
decide
whether
doing
that
is
carrying
on
a
business
or
not”
(p.
273;
202).
Most
recently,
in
England,
the
presumption
appears
to
have
been
extended
to
corporations
with
a
profitmaking
purpose
and
not
just
corporations
whose
precise
objects
are
set
out
in
their
constating
documents.
In
American
Leaf
Blending
Co.
v.
Director-
General
of
Inland
Revenue,
[1979]
A.C.
676;
[1978]
3
All
E.R.
1185
(P.C.),
Lord
Diplock
stated
that
“in
the
case
of
a
company
incorporated
for
the
purpose
of
making
profits
for
its
shareholders
any
gainful
use
to
which
it
puts
any
of
its
assets
prima
facie
amounts
to
the
carrying
on
of
a
business”
(p.
684;
1189).
In
Canada,
the
presumption
was
employed
by
Duff,
J.
(as
he
then
was)
in
the
case
of
Anderson
Logging
Co.
v.
The
King,
[1925]
S.C.R.
45;
[1917-27]
C.T.C.
198;
Duff,
J.,
in
a
passage
often
cited
by
subsequent
authority,
said
at
56
(C.T.C.
207):
The
sole
raison
d'être
of
a
public
company
is
to
have
a
business
and
to
carry
it
on.
If
the
transaction
in
question
belongs
to
a
class
of
profit-making
operations
contemplated
by
the
memorandum
of
association,
prima
facie,
at
all
events,
the
profit
derived
from
it
is
a
profit
derived
from
the
business
of
the
company.
The
existence
of
the
presumption
was
also
noted
by
Locke,
J.
in
Western
Leaseholds
Ltd.
v.
M.N.R.,
[1960]
S.C.R.
10;
[1959]
C.T.C.
531
and
it
has
been
applied
in
many
subsequent
cases:
see,
for
example,
Queen
&
Metcalfe
Carpark
Ltd.
v.
M.N.R.,
[1973]
C.T.C.
810;
74
D.T.C.
6007
(F.C.T.D.),
aff’d
[1976]
C.T.C.
xvi
(F.C.A.);
Fontaine
Watch
Co.
Ltd.
v.
M.N.R.,
25
Tax
A.B.C.
146;
60
D.T.C.
535
(T.A.B.);
M.R.T.
Investments
Ltd.
v.
The
Queen,
[1976]
1
F.C.
126;
[1975]
C.T.C.
354;
75
D.T.C.
5224
(T.D.),
aff’d.
[1976]
C.T.C.
294;
76
D.T.C.
6158
(F.C.A.).
Indeed,
although
strictly
speaking
not
relevant
to
the
disposition
of
this
appeal,
it
is
interesting
to
note
that
Revenue
Canada
itself
affirms
the
existence
of
the
rebuttable
presumption:
see
Interpretation
Bulletin
IT-73R3,
paragraph
2.
The
case
law
thus
provides
ample
support
for
the
existence
of
the
presumption
and,
in
my
view,
rightly
so.
An
inference
that
income
is
from
a
business
seems
to
be
an
eminently
logical
one
to
draw
when
a
company
derives
income
from
a
business
activity
in
which
it
is
expressly
empowered
to
engage.
The
traditional
expression
of
the
presumption
restricts
its
application
to
corporations
whose
corporate
objects
are
expressly
set
out
in
their
constat-
ing
documents.
Corporations
formed
under
the
Canada
Business
Corporations
Act,
S.C.
1974-75-76,
c.
33,
the
Ontario
Business
Corporations
Act,
1982,
S.O.
1982,
c.
4,
and
similar
legislation
do
not
need
to
list
their
corporate
objects.
These
statutes
have
simply
provided
that
corporations
have
the
Capacity
and
the
rights,
powers
and
privileges
of
a
natural
person
(Canadian
Act,
s.
15;
Ontario
Act,
s.
15).
Accordingly,
an
issue
may
be
raised
some
day
as
to
whether
the
presumption
applies
to
such
corporations
(or,
more
particularly,
whether
the
scope
of
the
presumption
should
be
extended
as
Lord
Diplock
has
done
in
the
American
Leaf
Blending
Co.
case,
supra)
but
this
issue
does
not
arise
for
consideration
in
this
appeal
since
CMC,
being
incorporated
in
1902
under
The
Ontario
Companies
Act,
R.S.O.
1897,
c.
191,
and
continued
in
1903
under
a
special
federal
statute
(An
Act
to
incorporate
the
Marconi
Wireless
Telegraph
Company
of
Canada,
Limited,
S.C.
1903,
c.
149)
was
required
to
state
its
objects.
Section
21
of
this
federal
statute
was
amended
(by
An
Act
respecting
Canadian
Marconi
Company,
S.C.
1935,
c.
70,
s.
3)
to
provide
that
CMC:
.
.
.
may
take
or
otherwise
acquire
and
hold
shares,
debentures
or
other
securities
of
any
other
company
having
objects
altogether
or
in
part
similar
to
those
of
the
Company,
or
carrying
on
any
business
capable
of
being
conducted
so
as,
directly
or
indirectly,
to
benefit
the
Company,
and
to
sell
or
otherwise
deal
with
the
same.
Thus,
CMC
had
a
specific
“investment
business”
object
and
the
traditional
rebuttable
presumption,
in
my
view,
applies
in
favour
of
its
investment
income
being
characterized
as
income
from
a
business.
Indeed,
even
if
CMC’s
investment
objects
were
not
expressed,
I
believe
that
a
broader
form
of
the
presumption
should
apply.
In
a
general
sense
CMC
was
incorporated
to
earn
income
by
doing
business.
There
is
no
reason
why
any
income
earned
by
it
should
not
be
considered
as
prima
facie
income
from
a
business
so
long
as
it
is
recognized
that
the
presumption
is
a
rebuttable
one.
This
approach
has
commended
itself
to
courts
even
where
no
express
object
was
contained
in
the
constating
documents:
see,
for
example,
Supreme
Theatres
Ltd.
v.
The
Queen,
[1981]
C.T.C.
190;
81
D.T.C.
5136
(F.C.T.D.)
and
Fontaine
Watch
Co.
v.
M.N.R.,
supra.
As
I
have
indicated,
the
presumption
that
income
earned
by
a
corporate
taxpayer
in
the
exercise
of
its
duly
authorized
objects
is
income
from
a
business
is
rebuttable.
For
example,
in
Sutton
Lumber
and
Trading
Co.
v.
M.N.R.,
[1953]
2
S.C.R.
77;
[1953]
C.T.C.
237
the
appellant
successfully
rebutted
the
presumption
and
in
Burri
v.
The
Queen,
[1985]
2
C.T.C.
42;
85
D.T.C.
5287
(F.C.T.D.),
Strayer,
J.,
although
questioning
the
existence
of
the
presumption
(pages
46-47;
D.T.C.;
5289-90),
held
that
if
such
existed
it
was
rebutted
on
the
facts
before
him.
The
question
whether
particular
income
is
income
from
business
or
property
remains
a
question
of
fact
in
every
case.
However,
the
fact
that
a
particular
taxpayer
is
a
corporation
is
a
very
relevant
matter
to
be
considered
because
of
the
existence
of
the
presumption
and
its
implications
in
terms
of
the
evidentiary
burden
resting
on
the
appellant.
The
Federal
Court
of
Appeal
does
not
appear
to
me
to
have
given
adequate
consideration
to
this
aspect
of
the
case,
namely
that
CMC
was
a
company
with
an
investment
object
in
its
constating
document.
The
evidence
at
trial
was
far
from
offsetting
the
effect
of
the
presumption;
indeed,
if
anything,
it
tended
to
support
it.
It
is
trite
law
that
the
characterization
of
income
as
income
from
a
business
or
income
from
property
must
be
made
from
an
examination
of
the
taxpayer's
whole
course
of
conduct
viewed
in
the
light
of
surrounding
circumstances:
see
Cragg
v.
M.N.R.,
[1952]
Ex.
C.R.
40;
[1951]
C.T.C.
322
per
Thorson,
P.
at
46
(C.T.C.
327).
In
following
this
method
courts
have
examined
the
number
of
transac-
tions,
their
volume,
their
frequency,
the
turnover
of
the
investments
and
the
nature
of
the
investments
themselves.
In
this
case
the
Federal
Court
of
Appeal
noted
the
extensive
activities
of
CMC’s
employees
in
purchasing
short-term
investments,
the
large
number
and
high
value
of
those
transactions,
the
high
proportion
which
the
interest
earned
bore
to
the
total
income
of
the
company
and
the
high
proportion
which
the
total
value
of
the
investments
bore
to
the
total
value
of
CMC’s
assets.
But
it
perceived
a
number
of
considerations
which
it
thought
were
"overriding”,
namely:
(1)
the
funds
were
derived
from
the
sale
of
the
broadcasting
division
and
were
set
aside
for
the
purchase
of
new
capital
assets;
(2)
the
considerable
activity
involved
in
purchasing
the
investments
were
“a
necessary
consequence
of
the
need
to
hold
investments
in
liquid
form,
in
the
form
of
paper
that
could
be
quickly
converted
into
cash”;
and
(3)
few
employees
were
involved
and
not
a
great
deal
of
staff
time
was
expended.
I
shall
deal
with
the
first
two
together
since
they
are
both
premised
on
the
relevance
of
the
taxpayer’s
business
strategy.
The
assertion
is,
as
I
understand
it,
that
the
taxpayer’s
business
strategy
was
to
hold
these
funds
as
a
temporary
investment
and
that
any
investment
activity
was
necessarily
a
result
of
that
business
strategy.
But
is
the
taxpayer’s
business
strategy
relevant
to
the
issue
before
us?
It
seems
to
me
that
it
is
not.
The
commercial
reality
in
this
case
is
that
the
taxpayer,
perhaps
unwillingly
and
contrary
to
its
business
strategy,
has
been
compelled
to
enter
the
investment
business
rather
than
the
electronic
manufacturing
or
broadcasting
business.
The
fact
that
the
taxpayer
might
prefer
or
hope
to
be
in
the
manufacturing
business
and
not
the
investment
business
does
not,
however,
appear
to
me
to
be
relevant.
The
relevant
inquiry
is
whether
in
fact
he
is
in
the
investment
business.
In
Western
Leaseholds
Ltd.
v.
M.N.R.,
supra,
the
issue
was
whether
the
proceeds
from
sales
of
mineral
rights
by
the
taxpaying
corporation
were
business
income.
The
Crown
argued
that
the
proceeds
were
not
business
income
and
in
support
of
its
position
cited
the
fact
that
the
corporation
intended
at
the
outset
that
its
main
business
should
be
in
the
production
and
sale
of
oil,
not
transactions
in
mineral
rights.
The
plan
was
to
use
the
proceeds
of
the
transactions
in
mineral
rights
to
finance
the
production
of
oil.
Locke,
J.
for
the
Court
held
that
this
intention
was
an
“irrelevant
circumstance
in
determining
whether
what
was
done
was
in
truth
the
carrying
on
of
a
business
for
the
prupose
of
making
profit”
(page
24;
C.T.C.
549).
Similarly,
the
fact
that
the
taxpayer
here
wanted
his
investments
to
be
kept
as
liquid
as
possible
so
that,
if
the
right
opportunity
arose,
it
could
wind
up
its
investment
business
and
put
its
funds
into
that
new
business
opportunity,
does
not
alter
the
fact
that
the
extent
of
the
taxpayer’s
investment
activity
in
the
meantime
was
such
as
to
constitute
the
earnings
from
it
income
from
a
business.
In
Gunnar
Mining
Ltd.
v.
M.N.R.,
[1968]
S.C.R.
226;
[1968]
C.T.C.
22
where
the
characterization
of
interest
receipts
from
short-term
investments
was
in
issue,
Spence,
J.
clearly
thought
that
the
taxpayer’s
objective
of
maintaining
liquidity
was
irrelevant.
At
233
(C.T.C.
27)
he
stated:
..
.
during
the
tax
exempt
period
the
appellant
was
operating
two
businesses
—
firstly,
a
mining
business,
and
secondly,
an
investment
business,
and
the
fact
that
its
purpose
in
operating
the
second
business
was
so
that
it
might
accumulate
funds
in
a
readily
realizable
form
with
which
it
could
pay
off
the
5
per
cent
sinking
fund
debentures
if
they
became
due
makes
it
nonetheless
the
operation
of
a
second
business.
I
would
respectfully
adopt
the
reasoning
of
Locke,
J.
and
Spence,
J.
in
these
two
cases.
The
Federal
Court
of
Appeal
was
also
influenced
by
its
finding
that
few
employees
were
involved
in
the
company's
investment
activity
and
not
a
great
deal
of
staff
time
was
expended.
While
these
are
undoubtedly
relevant
considerations,
it
is
important
not
to
give
them
inordinate
weight.
In
M.R.T.
Investments
Ltd.
v.
The
Queen,
supra,
two
of
the
three
corporate
taxpayers
who
were
engaged
in
lending
money
by
way
of
mortgages
on
real
estate
were
held
to
be
earning
income
from
a
business,
despite
the
fact
that
the
three
companies
were
not
paying
salaries
or
rent
for
office
space
and
despite
the
fact
that
they
did
not
even
have
employees
working
for
them.
The
presumption
which
I
have
discussed
above
and
the
day-to-day
intervention
of
the
officers
and
directors
of
the
company
in
the
company's
business
were
enough
to
characterize
the
income
as
business
income.
It
has
also
been
repeatedly
stressed
that
a
large
organization
is
not
required
for
an
“adventure
or
concern
in
the
nature
of
trade":
see,
for
example,
M.N.R.
v.
Taylor,
[1956-60]
Ex.
C.R.
3;
[1956]
C.T.C.
189.
It
seems
to
me,
therefore,
that
two
of
the
“over-riding
considerations"
cited
by
the
Court
of
Appeal
are
not
relevant
considerations
in
law.
The
third,
while
relevant,
is
not
of
sufficient
weight
to
offset
the
effect
of
the
presumption
and
the
large
scale
investment
activity
of
CMC
during
the
years
in
question.
Counsel
for
the
Crown
submitted
that
the
effect
of
allowing
CMC's
appeal
would
be
that
a
tax
credit
intended
to
reduce
the
tax
imposed
on
manufacturing
and
processing
profits
would
be
granted
on
income
earned
by
means
which
in
no
way
involved
manufacturing
or
processing.
But,
as
I
read
the
Act,
this
is
clearly
permitted.
Under
subsection
125.1(3)
“Canadian
manufacturing
and
processing
profits"
are
defined
as
including
a
portion
of
“all
amounts,
each
of
which
is
the
income
of
the
corporation
for
the
year
from
an
active
business
.
.
.”
as
is
determined
by
rules
prescribed
by
regulation.
The
regulation
(section
5200
of
the
Income
Tax
Regulations,
S.O.R.
Cons.
1955,
1872,
as
amended
by
S.O.R./73-495)
defines
that
portion
as
being
a
portion
of
the
corporation's
“adjusted
business
income",
defined
in
section
5202
of
the
regulations
as
the
amount
by
which
income
from
an
active
business
carried
on
in
Canada
exceeds
the
loss
from
an
active
business
carried
on
in
Canada.
“Active
business”
is
nowhere
restricted
to
a
manufacturing
or
processing
business.
If
Parliament
intended
such
a
restriction,
it
must
express
itself
clearly
to
that
effect.
In
Morguard
Properties
Ltd.
v.
City
of
Winnipeg,
[1983]
2
S.C.R.
493;
3
D.L.R.
(4th)
1
Estey
J.,
for
the
Court,
stated
at
509
(D.L.R.
13):
.
.
.
the
courts
require
that,
in
order
to
adversely
affect
a
citizen’s
right,
whether
as
a
taxpayer
or
otherwise,
the
Legislature
must
do
so
expressly.
Truncation
of
such
rights
may
be
legislatively
unintended
or
even
accidental,
but
the
courts
must
look
for
express
language
in
the
statute
before
concluding
that
these
rights
have
been
reduced.
I
would
adopt
and
apply
this
same
principle
of
construction
to
this
case.
4.
Disposition:
For
these
reasons
I
would
allow
the
appeal
and
refer
the
matter
back
to
the
Minister
of
National
Revenue
for
the
appropriate
reassessments
for
the
1973,
1974,
1975
and
1976
taxation
years.
I
would
allow
the
appellant
its
costs
throughout.
Appeal
allowed.