Prince Albert Pulp Co. Ltd. v. The Queen, 92 DTC 6189, [1992] 1 CTC 262 (FCA)

Citations
92 DTC 6189, [1992] 1 CTC 262

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Text of decision

Hugessen, J.A.:— We are all of the view that the learned trial judge reached the correct result. The appellant would have us read subsection 13(7.1) [1] of the Income Tax Act, R.S.C. 1952, c. 148 (am. S.C. 1970-71-72, c. 63) (the "Act"), as it read at the relevant time (1980), as though the words "has deducted” and ''deducted" referred to the moment at which the computation was actually made, that is to say after the end of the taxation year in respect of which it was made. Such an interpretation would not only be contrary to the whole scheme of the Act, but would also be irreconcilable with other parts of the Act, as for example paragraph 12(1)(t) [2] . On their ordinary meaning the words "has deducted" and '^deducted" in subsection 13(7.1) refer to operations effected in respect of the taxation year to which those deductions were applied, notwithstanding that the actual mathematical operations themselves may have taken place at a subsequent time.

The appeal will be dismissed with costs.

Appeal dismissed.

13. (7.1) For the purposes of this Act, where a taxpayer has deducted an amount under subsection 127(5) or (6) in respect of a depreciable property or has received or is entitled to receive assistance from a government, municipality or other public authority in respect of, or for the acquisition of, depreciable property, whether as a grant, subsidy, forgiveable loan, deduction from tax, investment allowance or as any other form of assistance other than

(a) an amount authorized to be paid under an Appropriation Act and on terms and conditions approved by the Treasury Board in respect of scientific research expenditure incurred for the purpose of advancing or sustaining the techno logical capability of Canadian manufacturing or other industry,

(b) an amount deducted as an allowance under section 65, or

(b.1) an amount included in income by virtue of paragraph 12(1)(u) or 56(1)(s).

The capital cost of the property to the taxpayer shall be deemed to be the amount by which the aggregate of

(d) such part, if any, of the assistance as has been repaid by the taxpayer, pursuant to an obligation to repay all or any part of that assistance, in respect of that property before the disposition thereof by him

exceeds the aggregate of

(e) all amounts deducted under subsection 127(5) or (6), and

(f) the amount of the assistance the taxpayer has received or is entitled to receive

in respect of that property before the disposition thereof by the taxpayer.

[Emphasis added.]

12. (1) There shall be included in computing the income of a taxpayer for a taxation year as income from a business or property such of the following amounts as are applicable:

(t) the amount deducted under subsection 127(5) or (6) in computing the taxpayer's tax payable for the year to the extent that it is not included in an amount determined under paragraph 13(7.1)(e) or subsections 37(1) or (3) or subparagraph 13(21)(f)(vii) ;

Summaries

Summary Under

Tax Topics - Income Tax Act - Section 13 - Subsection 13(7.1)

In finding that the reduction of capital cost pursuant to s. 13(7.1) occurs in the year in respect of which the investment tax credit was utilized, rather than the subsequent year in which the return was filed claiming that credit, Hugessen J.A. stated (p. 6190):

"On their ordinary meaning the words 'has deducted' and 'deducted' in subsection 13(7.1) refer to operations effected in respect of the taxation year to which those deductions were applied, notwithstanding that the actual mathematical operations themselves may have taken place at a subsequent time."

Words and Phrases

deducted

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Prince Albert Pulp Co. Ltd. v. The Queen, 92 DTC 6189, [1992] 1 CTC 262 (FCA)

Citations92 DTC 6189, [1992] 1 CTC 262

Case tabs

Citations
92 DTC 6189, [1992] 1 CTC 262