Citation: 2012 TCC 357
Date: 20121015
Docket: 2009‑3121(IT)G
BETWEEN:
SPRUCE CREDIT UNION,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Boyle J.
[1]
The Appellant in this
case is a British Columbia (“BC”) credit union. There are forty other BC credit
unions with appeals or with outstanding objections which have agreed to be
bound by the result of this lead case. In the year in question there were
54 credit unions in BC.
I. The Issues to be Addressed
[2]
There are two issues to
be decided in this case. The first is whether a dividend received by the
Appellant from a BC deposit insurance corporation is deductible under the
section 112 inter‑corporate dividend deduction in the Income Tax
Act (“the Act”). It is the Respondent’s position that,
notwithstanding that the amount was declared and paid as a dividend, it is not
deductible under section 112 by virtue of section 137.1 of the Act.
The Respondent’s position is that (i) the dividend amounts were paid to the
credit unions as allocations in proportion to assessments received by the
deposit insurance corporation from the credit unions, and required to be
included in the credit unions’ incomes under paragraph 137.1(10)(a);
and (ii) section 137.1 is a complete code with respect to such amounts and does
not permit them to then be deducted.
[3]
The second, alternative
issue is whether the section 245 General Anti‑Avoidance Rule (the
“GAAR”) applies to the transactions giving rise to the receipt of the dividend.
It is the Respondent’s position that, to the extent the amount of the dividend
was also an amount described in paragraph 137.1(10)(a), the GAAR
applies and the dividend amounts should be re‑characterized pursuant to
the GAAR as a refund of premiums required to be included in the Appellant’s
income by virtue of subsection 137.1(10) of the Act, not to be a
dividend, and not thereafter deductible.
II. The Regulation of BC Credit Unions
[4]
In the years in question,
the regulation of BC credit unions was governed principally by the BC Financial
Institutions Act (the “FI Act”) and the principal regulator was
the Financial Institutions Commission (the “FI Commission”), an agency of
the BC government.
[5]
Since 1989, the
regulation of credit unions in BC involved two distinct deposit insurance
corporations, the Credit Union Deposit Insurance Corporation (“CUDIC”) and
Stabilization Central Credit Union of British Columbia (“STAB”). It is not
disputed that both CUDIC and STAB were deposit insurance corporations for
purposes of the Act.
A. CUDIC
[6]
CUDIC is a taxable
Canadian corporation controlled and operated by the FI Commission. It is
an arm of the BC government. It is responsible for protecting consumers against
losses on their deposits and non‑equity shares. The FI Act
requires that CUDIC maintain a deposit insurance fund guaranteeing deposits and
non‑equity shares up to prescribed limits. Pursuant to the FI Act,
each member of the FI Commission was also a director of CUDIC, and the
only members of CUDIC were its directors.
[7]
CUDIC has been funded
primarily by assessments paid to it by BC credit unions. Assessment payments to
CUDIC were deductible by the credit unions pursuant to section 9 and
subsection 137.1(11) of the Act. The amounts were not taxable to CUDIC
by virtue of subsection 137.1(2). CUDIC assessments were levied from time
to time based on the size of the deposit accounts maintained and non‑equity
shares issued by each credit union. As at December 31, 2003, CUDIC
had accumulated a deposit insurance fund of approximately 44 basis points
(0.44%) of the aggregate of credit unions’ deposit accounts and non-equity
shares.
B. STAB
[8]
STAB is a taxable
Canadian corporation. It is a central credit union under the Credit Union
Incorporation Act of BC. Under the FI Act, STAB is the designated
stabilization authority and required to supervise credit unions as delegated by
the FI Commission. Each BC credit union is required to be a member of STAB
and to hold Class A shares as determined by STAB’s board of directors. In
2005, 54 BC credit unions, including the Appellant, were members and
shareholders of STAB.
[9]
STAB was also funded by
assessments paid to it by BC credit unions. Assessments were levied based on
the size of the assets of each credit union. These premium payments were also
deductible by the credit unions under section 9 and
subsection 137.1(11) and excluded from STAB’s income pursuant to
subsection 137.1(2). From its establishment in 1989 to the end of 2002, STAB
had assessed cumulative premiums of $82,900,000 against BC credit unions,
including $205,000 paid by the Appellant, Spruce Credit Union. Individual
credit unions’ pro rata share of STAB’s annual assessments changed each year as
a result of relative performance and industry consolidation.
[10]
In 2003, STAB’s deposit
protection fund was approximately $108,000,000.
[11]
From time to time STAB
would rebalance its members’ shareholdings to reflect the current relative size
of members.
C. Shared Custody of the Deposit Insurance and
Protection Funds
[12]
Under the FI Act,
the responsibility for maintaining the deposit insurance fund rested solely
with CUDIC. The deposit insurance fund was to be used to guarantee the amount
of deposits and non‑equity shares up to prescribed limits in the event of
default or failure of the credit union.
[13]
STAB’s statutory
responsibility was to maintain the stability of BC credit unions, that is,
to prevent runs on the credit unions, failure or default. Stabilization may
take the form of financial injections to a troubled credit union. Obviously,
successful stabilization of a credit union obviates the needs to pay out on
insured deposits. For this reason, STAB often described its responsibility and
activities as deposit protection and not deposit insurance.
[14]
In the period up to
2005, there had been limited need for stabilization interventions by STAB. Since
STAB was established there had been no credit union defaults in BC and thus no
payouts to insured depositors.
[15]
At the end of each
fiscal year, STAB’s assessment income and investment income, less the total of
its operating expenses, the financial support it advanced to credit unions and
its taxes went into its retained earnings. As a practical matter STAB’s deposit
protection fund was reflected in its retained earnings.
[16]
With full knowledge and
blessing of the FI Commission, from 1989 until 2005 the statutory deposit
insurance fund was levied and maintained in part by CUDIC and in part by STAB. A
1991 agreement set the target aggregate fund at 55 basis points of credit
union deposits and non-equity shares, and specified that one half of the fund
should be held by each of CUDIC and STAB. The STAB and CUDIC annual assessments
were discussed and coordinated between the two. In some years, only CUDIC assessed
and STAB did not. In other years both CUDIC and STAB assessed the BC credit unions.
STAB never made any unnecessary assessments.
[17]
Throughout this time a
deposit protection agreement (secured at times by a general security agreement
or letter of credit) was in place pursuant to which STAB committed to make a
portion of its deposit protection fund available to CUDIC in the event CUDIC
needed to replenish its deposit insurance fund.
III. Regulatory Review of Size and
Ownership of the Deposit Insurance Fund
[18]
This shared
custody/holding/ownership of the deposit insurance and protection funds
continued without concern until 2000. At that time, following a change in
senior personnel at the FI Commission, discussions were held between the FI Commission,
CUDIC and STAB with respect to the appropriate amount of the aggregate deposit
insurance fund and the need for the whole deposit insurance fund to be held directly
by CUDIC. A joint committee was established to address the concerns in 2000
among Credit Union Central of BC, CUDIC and STAB. (Credit Union Central
functioned as a central banker and clearing house etc.. It was a member of
STAB. It did not pay STAB or CUDIC assessments.)
[19]
The FI Commission,
following the usual consultations, consulting reports and its own review,
determined in 2003 that CUDIC required exclusive control of a fund of 85 basis
points (0.85%) in order to satisfy its statutory deposit protection
obligations. This was communicated to STAB by CUDIC.
[20]
In order to fund the
FI Commission mandated 85 basis point CUDIC deposit insurance fund,
almost double the amount of CUDIC’s then existing fund, it was recognized that as
a practical matter it was required and necessary for the balance to somehow come
from some form of transfer of the deposit protection funds hitherto held by
STAB and pledged to CUDIC to support its statutory deposit insurance
obligations if and when needed. There was no other readily available source for
the funds to increase the size of CUDIC’s deposit insurance fund to the new
level mandated by the FI Commission. Given the pledge and historical
understandings and reasons for the STAB assessments and the STAB deposit protection
fund, STAB had no other available or needed use for that portion of its funds
once CUDIC increased its deposit insurance fund by a like amount.
[21]
Funds had to be
transferred directly or indirectly out of STAB and into CUDIC. CUDIC did not
control STAB in any way and had no legal claim apart from the pledge to any of
STAB’s assets. CUDIC was not a shareholder or member of STAB and STAB had no
obligation or ability to transfer its assets to CUDIC apart from the pledge or
for value. CUDIC had no power to assess premiums against STAB, although it had
the power to assess STAB’s members − the BC credit unions −
directly.
[22]
Within this context,
alternatives were considered by the FI Commission, CUDIC, STAB and the
joint committee, to achieve the government mandated result. A direct transfer
of funds from STAB to CUDIC was considered. There was no ability to justify
such a payment, there being no shareholdings and no obligations between them.
The release of the pledge obligation could not support a transfer of 100% of
the amount pledged given the low historically‑based probability that it
would ever be called upon. There was no control by CUDIC of STAB to require STAB
to transfer the funds to it. CUDIC had no statutory power to assess STAB.
[23]
Presumably, a direct
transfer might have been done by agreement of all interested parties including
CUDIC and its members and STAB and its members. Presumably, legislation could have
been introduced by the BC government to accomplish this as well.
[24]
The tax result of a
direct transfer would be most unclear or unsatisfactory. The amount transferred
would not be expected to be deductible by STAB. However, it would seemingly be
income to CUDIC and this was confirmed at the time by the Canada Revenue Agency
(the “CRA”) and supported implicitly by the fact that the Department of Finance
proposed amendments to the Act (which have never been enacted) to permit
certain direct transfers between deposit insurance corporations to be
accomplished tax‑free.
[25]
CUDIC had the statutory
power, and arguably the obligation, to make further assessments of the BC
credit unions. In order to help credit unions fund additional and further CUDIC
assessments, STAB could decide to, or perhaps be required by its members to,
make a distribution from STAB to its member credit unions. STAB had the power
and ability to make such distributions by way of dividends or by way of refunds
of premiums to its members. Different considerations limited the amount of
dividends that could be distributed to a member credit union and the amount
that could be returned as a refund of premiums. It is unclear and doubtful that
STAB had any other means to distribute money to the members.
[26]
These were the two
principal alternative methods considered.
IV. Regulatory Change Mandated by the BC
Regulator
[27]
It is clear from the
evidence that STAB, whose member shareholders were the credit unions, did not
agree with or support CUDIC’s position that it needed to have sole custody and
control of an 85 basis point deposit insurance fund. Relations between CUDIC
and STAB deteriorated after 2001 and the joint committee was entirely unable to
deliver a final report that was accepted or endorsed by the three parties.
[28]
STAB was not at any
time a supporter of CUDIC’s proposal and strongly resisted it. One of the
obvious results of CUDIC’s proposal was that it would effectively move tens of
millions of dollars out of STAB, which was owned by the credit unions, and
these monies would thereafter belong to the provincial government over which the
credit unions had no claim, control or financial interest.
[29]
In the end STAB capitulated
to the reality that CUDIC would exercise its statutory authority to assess the
credit unions for the amount CUDIC sought. The credit unions would be required
by law to pay these assessments. As a practical matter, if nothing else was
done, the aggregate deposit insurance and protection funds would be greatly in
excess of what everyone agreed was reasonably required, and this excess would
come out of the credit unions’ operating funds. Hence, STAB began considering
how to reduce its deposit protection fund by the appropriate and corresponding
amount and to advance those funds to the credit unions to best help them pay
the new pending CUDIC assessments. CUDIC was willing to delay issuing its
assessments somewhat until STAB could resolve how best to accomplish this.
[30]
There was clearly no
other reason for a direct or indirect transfer of a portion of the deposit
insurance funds from STAB to CUDIC other than the requirements of BC law as
applied and interpreted by the FI Commission.
V. The Transactions Undertaken to
Comply with the Regulatory Change Mandated by the BC Government
[31]
By 2005, CUDIC had a
deposit insurance fund of approximately $110 million. STAB’s assets
comprising its deposit protection fund in 2005 was approximately $110 million.
In the end, CUDIC resolved to increase its deposit insurance fund by assessing
the credit unions. Obviously CUDIC knew that the credit unions would need to somehow
fund the new assessment with amounts to be received from STAB. Otherwise the
combined funds would exceed what was needed at considerable unnecessary cost to
the credit unions, and this might be expected to place some in a degree of
financial difficulty.
[32]
The board of directors
of CUDIC passed a resolution on September 8, 2005 to assess deposit
insurance premiums against its members in the amount of 28 to 29 basis
points of total deposits. The Appellant was assessed $198,859. The aggregate
assessment was $83,131,608.
[33]
The board of directors
of STAB declared two dividends to its shareholders on September 21, 2005.
This was done by STAB entirely independently from CUDIC and the FI Commission
and without consultation with them. The first dividend was in the amount of
$1,047.43 per share payable on October 31, 2005. The second dividend
was in the amount of $1,526.21 per share payable on November 7, 2005.
The Appellant’s share of the first dividend was $78,557 and its share of the
second dividend was $114,466, for a total of $193,023. The aggregate amount of
the dividends paid by STAB to its shareholders was $83,131,145, comprised of
$33,833,036 in respect of the first dividend (known as the A dividend), and
$49,298,109 in respect of the second dividend (known as the B dividend).
[34]
The reason for the
dividend amount being split into the A dividend and the B dividend arose from
the fact that the Rulings Directorate and GAAR Committee of CRA had indicated
they would have no technical or GAAR concern with respect to a dividend that
reflected STAB’s aggregate accumulated investment income. Thus, STAB decided to
split the dividend distribution amount into the A and B dividends based upon
the ratio of its aggregate cumulative investment income and its aggregate cumulative
assessment income. The former became the A dividend and the latter the B
dividend. This approach was followed by STAB to provide greater certainty to
the tax consequences of the A dividend, and to permit its individual members to
decide how to report their B dividend income for tax purposes.
[35]
The Appellant included
the amount of dividends received from STAB in its 2005 income. The Appellant
deducted the amount of dividends received by it in computing its 2005 taxable
income pursuant to section 112 of the Act.
VI. The Witnesses
[36]
The principal material
witness was Mr. Corsbie, a chartered accountant. He was very knowledgeable
about the regulation of BC credit unions. He was in private practice for a
decade through the mid-1980s and was involved in the audits of credit unions,
Credit Union Central and the Credit Union Reserve Board. He also worked with
financially-troubled credit unions. He was a supervisory officer at CUDIC from
1986 until it was put under the FI Commission in 1990. At CUDIC he was
responsible for a portfolio of credit unions under regulatory supervision,
usually because of financial difficulty. From 1990 to 1998, he was the FI Commission’s
Deputy Superintendent of Credit Unions. In 1998, Mr. Corsbie
became Chief Executive Officer of STAB, a position he held until 2006.
Mr. Corsbie was a thoroughly knowledgeable and credible witness whose
testimony I accept without question.
[37]
The only other witness
was the General Manager of the Appellant, Spruce Credit Union. General Manager
is the most senior staff position at Spruce Credit Union. He first joined
Spruce Credit Union as General Manager in March 2005 and only first became
aware of the STAB dividends in October of 2005. The evidence of this witness
was also entirely clear, credible and unshaken.
VII. Law and Analysis
A. The Merits:
Sections 112 and 137.1 of the Act
[38]
The relevant portions
of subsection 112(1) of the Act provide:
|
(1) Where a corporation in a taxation year has received a
taxable dividend from
(a) a taxable Canadian
corporation,
…
an amount equal to the dividend may be
deducted from the income of the receiving corporation for the year for the
purpose of computing its taxable income.
|
(1) Lorsqu’une société a reçu, au cours d’une
année d’imposition, un dividende imposable :
a) soit d’une société canadienne
imposable;
…
une somme égale au dividende
peut être déduite du revenu pour l’année de la société qui le reçoit, dans le
calcul de son revenu imposable.
|
[39]
“Taxable dividend” is
defined in subsection 89(1) as follows:
|
“taxable dividend”
« dividende imposable »
“taxable
dividend” means a dividend other than
(a) [not applicable]
(b) [not applicable]
|
« dividende
imposable »
“taxable
dividend”
« dividende imposable » Dividende
autre :
a) [non
admissible]
b) [non
admissible]
|
[40]
Division F of the Act
is headed “Special Rules Applicable in Certain Circumstances” and
includes section 137.1. Sections 137 and 137.1 have the subheading “Credit
Unions, Savings and Credit Unions and Deposit Insurance Corporations”. The
relevant portions of section 137.1 provide as follows:
|
137.1 (1) For the purpose of
computing the income for a taxation year of a taxpayer that is a deposit
insurance corporation, the following rules apply:
(a) the
corporation’s income shall, except as otherwise provided in this section, be
computed in accordance with the rules applicable in computing income for the
purposes of this Part [1]; and
. . .
(2) The
amount of any premiums or assessments received or receivable by a taxpayer
that is a deposit insurance corporation from its member institutions in a
taxation year shall not be included in computing its income.
. . .
(4) No
deduction shall be made in computing the income for a taxation year of a
taxpayer that is a deposit insurance corporation in respect of
. . .
(c) any amounts paid to its member
institutions as allocations in proportion to any amounts described in
subsection 137.1(2); or
. . .
(10) Where
in a taxation year a taxpayer is a member institution, there shall be
included in computing its income for the year the total of all amounts each
of which is
(a) an amount received by the taxpayer
in the year from a deposit insurance corporation that is an amount described
in any of paragraphs 137.1(4)(a) to 137.1(4)(c), to the extent
that the taxpayer has not repaid the amount to the deposit insurance
corporation in the year,
. . .
|
137.1 (1) Pour le calcul du revenu d’un
contribuable qui est une compagnie d’assurance-dépôts, pour une année
d’imposition, les règles suivantes s’appliquent :
a) le revenu de la compagnie est calculé, sauf
disposition contraire du présent article, conformément aux règles applicables
au calcul du revenu dans le cadre de la présente partie [1];
. . .
(2) Le montant de
toute prime ou cotisation reçue ou à recevoir de ses institutions membres, au
cours d’une année d’imposition, par un contribuable qui est une compagnie
d’assurance-dépôts n’est pas inclus dans le calcul de son revenu.
. . .
(4) Aucune déduction ne
peut être faite, dans le calcul du revenu, pour une année d’imposition, d’un
contribuable qui est une compagnie d’assurance-dépôts, à l’égard :
. . .
(c) de tout montant versé à ses
institutions membres à titre d’allocations proportionnelles aux montants visés au paragraphe (2);
. . .
(10) Le contribuable
qui est une institution membre au cours d’une année d’imposition doit inclure
dans le calcul de son revenu pour cette année le total des montants suivants
:
a) tout montant visé à l’un desalinéas (4)a) à c) et qu’il a reçu au cours de l’année d’une
compagnie d’assurance-dépôts, dans la mesure où il n’a pas remboursé ce
montant à la compagnie au cours de l’année;
. . .
|
[41]
Clearly, all of the
requirements of the inter-corporate dividend deduction in section 112 of
the Act appear to be met with respect to the dividends received by the Appellant,
Spruce Credit Union. Section 112 does not require that the amount of the
dividend received by a taxpayer have been included in its income under
subsection 82(1), although in the typical case, that subsection is what
would bring the amount of taxable dividends into income. There does not appear
to be any basis in section 112 to treat the B dividends any different from
the A dividends in this regard.
[42]
The A and B dividends
were clearly in fact and in law dividends. This is not disputed by the Respondent.
Indeed, this is set out in the Partial Agreed Statement of Facts.
[43]
This would appear to be
an appropriate result. The Appellant received both dividends as taxable
dividends. The amount of taxable dividends received is required to be included
in a taxpayer’s income under subsection 82(1) of the Act. The
purpose of the section 112 inter-corporate dividends received deduction is
to avoid double taxation of the after-tax profits of a corporation as they are
paid by way of dividends to shareholder corporations. This forms part of the Act’s
approach to achieving a degree of integration of corporate and personal
taxation of income earned through a corporation.
[44]
It is the Respondent’s
position that the amount of the B dividend is nonetheless not deductible under
subsection 112(1) because:
(i)
the B dividend was an
amount described in, and required to be included in the Appellant’s income
under, paragraph 137.1(10)(a), being an amount received by the member
credit union from a deposit insurance corporation paid as an allocation to its
member credit unions in proportion to the amount of assessments received from
its member credit unions; and
(ii)
section 137.1 is a
complete code with respect to the tax treatment of such amounts.
[45]
The evidence in this
case does not support the Respondent’s position that the amount of the B
dividend was an amount paid by STAB to the Appellant and its other members as
an allocation in proportion to assessments received from them.
[46]
The paragraph uses the
word “as”. It does not use the broader phrase “in respect of” or “as, on
account, or in lieu of”, or similar more expansive language. It does not speak
of amounts that could reasonably be considered to relate to, or directly or
indirectly be funded by, assessments previously received. The form or nature of
the amount of the payment is specifically described given the use of the word
“as” in English and the words “à titre de” in French.
[47]
It does appear possible
that an amount paid as a dividend could also be an amount described in paragraph
137.1(10)(a). In this case, the dividend was paid to each of STAB’s
shareholders, as one would expect, in proportion to that shareholder’s shareholdings.
Shareholdings in STAB were a function of each member credit union’s current
asset size (and had been recently rebalanced to reflect current asset size).
[48]
The dividends in
question in this case were not also paid by STAB in proportion to the assessments
received from its members, either in 2005, nor in the years 1989 through 2005
being the term of STAB’s existence, nor in the years in which particular member
credit unions were shareholders. Relative current asset size differed from relative
cumulative aggregate assessments paid for a number of reasons, most obviously
because of differing annual assessment rates, differing annual relative
performance, as well as consolidation and other changes in the sector.
[49]
The meaning of the term
“in proportion to” is neither unclear nor ambiguous. A proportion is a
comparative ratio that is a part considered in comparative relation to a whole.
For two things to be in proportion to one another there must be an equality of
ratios. For an amount to be paid to persons in proportion to their assessments,
it is a requirement that the person receive that portion of the aggregate
amount paid that assessments received from them is of the total of all
assessments received. That is, there must be an equality of ratios. That the
amount paid to them was arguably funded by the payer in whole or in part directly
or indirectly, with assessments received, or income earned on such assessments,
is clearly not sufficient. That position would require that the meaning of the
words “in proportion to” be ignored. Similarly, the fact that a member received
a portion of the pool paid out does not lead in any way to the conclusion it
was paid proportionate to their assessments. For the Respondent’s position to
be correct on the facts of this case, I would have to read “shareholdings” for
the word “assessments” used in the legislation.
[50]
This plain meaning of
proportionate allocation is consistent with the statutory definition of
“allocation in proportion to borrowing” in subsection 137(6) applicable to
cooperative corporations.
[51]
This meaning is not
inconsistent with the decision of this Court in Civil Service Co-operative
Credit Society Ltd. v. The Queen, 2001 DTC 790 (“CS Coop”).
I do not have to decide whether, overall, that case was properly argued or
properly decided. The issues put to and decided by the Court in CS Coop
were whether the amounts collected were “assessments” and whether the amounts
paid were “allocations” and the argument focused on the particular Ontario statutory regime. The Court was not asked to, and did not address the issue of proportionate
allocations. The judge makes only a fleeting reference in the last sentence of
paragraph 53 to proportionality which, at best, suggests that, in the case of
an allocation to less than all members, proportionality might best be tested
against a hypothetical distribution to all members. That paragraph is clearly
only addressing the meaning of allocation, and the Court had to deal with the
issues as framed by the parties. In contrast, in this case there is no issue of
whether STAB owned the money collected as assessments and later paid to its
members.
[52]
On the facts of this
case, the B dividend amounts were not amounts described in paragraph 137.1(10)(a).
They were not paid in proportion to assessments received. I do not need to
decide whether they were or were not “allocations”. The Respondent’s position
cannot succeed.
[53]
In the circumstances I
do not need to deal with the question of whether section 137.1 is a complete
code with respect to amounts paid as allocations in proportion to assessments
received.
[54]
Therefore, but for the
possible application of GAAR, the Appellant is entitled to deduct under
subsection 112(1) the amount of the B dividend received by it and included
in its income.
B. The General Anti‑Avoidance
Rule (GAAR)
Generally
[55]
The analytical framework
applicable to the GAAR has been clearly and consistently set out by the Supreme
Court of Canada in Canada Trustco Mortgage Co. v. Canada,
2005 SCC 54, [2005] 2 S.C.R. 601, 2005 DTC 5523 and in Lipson v.
Canada, 2009 SCC 1, [2009] 1 S.C.R. 3,
2009 DTC 5015, and most recently reaffirmed in Copthorne
Holdings Ltd. v. Canada, 2011 SCC 63, 2012 DTC 5006. A
court must conduct an objective and thorough analysis following the Supreme
Court’s step‑by‑step framework and explain the reasons for its GAAR
conclusion.
[56]
But for the possible application
of the GAAR, taxpayers are entitled to select courses of action or to enter
into transactions that will minimize their tax liability relying upon the Duke
of Westminster principle.
Taxpayers are entitled to know with a degree of certainty that the provisions
of the Act apply to transactions with real economic substance.
[57]
The GAAR is an exceptional
provision of last resort that may be invoked by the Minister of National
Revenue (the “Minister”) if he believes that the taxpayer’s chosen
transactions, notwithstanding that they comply with the literal requirements of
the provisions in question, are not in accord with the object, spirit, rationale
or purpose of the provisions and indeed frustrate and abuse them. The GAAR creates an unavoidable
degree of uncertainty for taxpayers and, for this reason, a court must
undertake its analysis cautiously.
It is the obligation of the Minister to demonstrate clearly the abuse he
alleges.
Any residual doubt is resolved in favour of the taxpayer.
C. The
GAAR Legislative Provisions
[58]
The relevant subsections of the
GAAR in section 245 of the Act provide as follows:
|
245(1) In this section,
“tax benefit” means a reduction, avoidance or
deferral of tax or other amount payable under this Act or an increase in a
refund of tax or other amount under this Act, and includes a reduction,
avoidance or deferral of tax or other amount that would be payable under this
Act but for a tax treaty or an increase in a refund of tax or other amount
under this Act as a result of a tax treaty;
“tax consequences” to a person means the amount of
income, taxable income, or taxable income earned in Canada of, tax or other
amount payable by or refundable to the person under this Act, or any other
amount that is relevant for the purposes of computing that amount;
“transaction” includes an arrangement or event.
(2) Where a
transaction is an avoidance transaction, the tax consequences to a person shall
be determined as is reasonable in the circumstances in order to deny a tax
benefit that, but for this section, would result, directly or indirectly,
from that transaction or from a series of transactions that includes that
transaction.
(3) An avoidance
transaction means any transaction
(a) that,
but for this section, would result, directly or indirectly, in a tax benefit,
unless the transaction may reasonably be considered to have been undertaken
or arranged primarily for bona fide purposes other than to obtain the tax
benefit; or
(b) that
is part of a series of transactions, which series, but for this section,
would result, directly or indirectly, in a tax benefit, unless the
transaction may reasonably be considered to have been undertaken or arranged
primarily for bona fide
purposes other than to obtain the tax benefit.
(4) Subsection (2)
applies to a transaction only if it may reasonably be considered that the
transaction
(a) would,
if this Act were read without reference to this section, result directly
or indirectly in a misuse of the provisions of any one or more of
(i) this Act,
(ii) the Income Tax Regulations,
(iii) the Income Tax Application Rules,
(iv) a tax treaty, or
(v) any other enactment that is
relevant in computing tax or any other amount payable by or refundable to a
person under this Act or in determining any amount that is relevant for the
purposes of that computation; or
(b) would
result directly or indirectly in an abuse having regard to those provisions,
other than this section, read as a whole.
. . .
|
245(1) Les
définitions qui suivent s’appliquent au présent article.
« attribut fiscal » S’agissant des attributs fiscaux
d’une personne, revenu, revenu imposable ou revenu imposable gagné au Canada
de cette personne, impôt ou autre montant payable par cette personne, ou
montant qui lui est remboursable, en application de la présente loi, ainsi
que tout montant à prendre en compte pour calculer, en application de la
présente loi, le revenu, le revenu imposable, le revenu imposable gagné au
Canada de cette personne ou l’impôt ou l’autre montant payable par cette
personne ou le montant qui lui est remboursable.
« avantage fiscal » Réduction, évitement ou report
d’impôt ou d’un autre montant exigible en application de la présente loi ou
augmentation d’un remboursement d’impôt ou d’un autre montant visé par la
présente loi. Y sont assimilés la réduction, l’évitement ou le report d’impôt
ou d’un autre montant qui serait exigible en application de la présente loi
en l’absence d’un traité fiscal ainsi que l’augmentation d’un remboursement
d’impôt ou d’un autre montant visé par la présente loi qui découle d’un
traité fiscal.
« opération » Sont assimilés à une opération une
convention, un mécanisme ou un événement.
(2) En
cas d’opération d’évitement, les attributs fiscaux d’une personne doivent
être déterminés de façon raisonnable dans les circonstances de façon à
supprimer un avantage fiscal qui, sans le présent article, découlerait,
directement ou indirectement, de cette opération ou d’une série d’opérations
dont cette opération fait partie.
(3) L’opération
d’évitement s’entend :
a) soit de l’opération dont, sans
le présent article, découlerait, directement ou indirectement, un avantage
fiscal, sauf s’il est raisonnable de considérer que l’opération est
principalement effectuée pour des objets véritables — l’obtention de
l’avantage fiscal n’étant pas considérée comme un objet véritable;
b) soit de l’opération qui fait
partie d’une série d’opérations dont, sans le présent article, découlerait,
directement ou indirectement, un avantage fiscal, sauf s’il est raisonnable
de considérer que l’opération est principalement effectuée pour des objets
véritables — l’obtention de l’avantage fiscal n’étant pas considérée comme un
objet véritable.
(4) Le
paragraphe (2) ne s’applique qu’à l’opération dont il est raisonnable de
considérer, selon le cas :
a) qu’elle entraînerait,
directement ou indirectement, s’il n’était pas tenu compte du présent
article, un abus dans l’application des dispositions d’un ou de plusieurs des
textes suivants :
(i) la
présente loi,
(ii) le Règlement de l’impôt sur le revenu,
(iii) les
Règles concernant
l’application de l’impôt sur le revenu,
(iv) un
traité fiscal,
(v) tout
autre texte législatif qui est utile soit pour le calcul d’un impôt ou de
toute autre somme exigible ou remboursable sous le régime de la présente loi,
soit pour la détermination de toute somme à prendre en compte dans ce calcul;
b) qu’elle entraînerait,
directement ou indirectement, un abus dans l’application de ces dispositions
compte non tenu du présent article lues dans leur ensemble.
. . .
|
[59]
The Supreme Court of Canada in Trustco,
Lipson and Copthorne observed that, upon a plain reading of the GAAR
provision, a proper GAAR analysis requires a court to answer three questions:
1)
Was there a tax benefit?
2)
Was the transaction giving rise to
the tax benefit an avoidance transaction? and
3)
Was the avoidance transaction
giving rise to the tax benefit abusive?
D. Tax
Benefit
[60]
The analysis begins by identifying
and isolating the tax benefit from the non‑tax purposes of the taxpayer’s
chosen transactions.
[61]
If a deduction against taxable
income is claimed in the impugned transaction or series of transactions, the
existence of a tax benefit is clear since a deduction results in a reduction of
tax.
[62]
Alternatively, the existence of a
tax benefit can be established by comparing the taxpayer’s chosen transactions
with an alternative transaction that might reasonably have been carried out but
for the existence of the tax benefit.
[63]
The burden is on the taxpayer to
refute the Minister’s assumption of the existence of a tax benefit.
[64]
Whether or not there is a tax
benefit is a question of fact, subject to review on the basis of palpable and
overriding error.
E. Avoidance
Transaction
[65]
Before the GAAR may be applied in
any circumstance, there must be an “avoidance transaction” which gives rise to
the tax benefit.
[66]
A transaction giving rise to a tax
benefit will be an avoidance transaction unless it is undertaken primarily for bona
fide non‑tax purposes. If there is a series of transactions that
results directly or indirectly in a tax benefit, any transaction or step in the
series will be an avoidance transaction if that step is not undertaken
primarily for a bona fide non‑tax purpose.
[67]
The determination of whether a
transaction is undertaken primarily for a non‑tax purpose is to be
objectively considered and based on all of the evidence available to the Court. The burden is on
the taxpayer to prove the existence of a bona fide non‑tax purpose. It is also a question of
fact to be determined by the trial judge and generally entitled to deference
subject to palpable and overriding error.
[68]
The courts must at this stage examine
the relationship between the parties and the actual transactions that were
executed between them. A transaction cannot be an avoidance transaction because
some alternative transaction that might have achieved an equivalent result
would have resulted in more tax. That will not suffice to establish an avoidance
transaction,
though, as summarized above, it may suffice to establish a tax benefit.
[69]
Consistent with its decision in Trustco,
the Supreme Court of Canada in Copthorne does not suggest that it is
appropriate at the avoidance transaction stage of the analysis to compare the
taxpayer’s chosen transaction or series to other available structures to see if
the taxpayer chose among the alternatives primarily based on tax considerations
or consequences. This makes sense. If it were otherwise, taxpayers would be
obliged to choose a more taxable alternative and the Duke of Westminster
principle would be completely for naught. It appears to be at least to this
extent that the Supreme Court of Canada repeatedly sets out that the Duke of
Westminster principle co-exists with the GAAR.
[70]
A transaction may have a tax
purpose, and the taxpayer will likely be aware of the tax implications of a
transaction, but neither of these necessarily means that the tax purpose is the
primary reason for the transaction. If the transaction actually undertaken (or each
step in the series) takes place primarily for a non‑tax purpose, there
will be no avoidance transaction and the GAAR cannot apply, even though there
may be a secondary tax benefit purpose.
[71]
Similarly, it follows that tax
considerations may play a primary role in a taxpayer’s choice of available
structuring options to implement a transaction or series of transactions
without necessarily making the transaction itself primarily tax motivated.
F. Series
of Transactions
[72]
Given the inclusive nature of the
meaning to be given to series of transactions in subsection 248(10), the
Supreme Court of Canada mandates an expansive approach to the issue of series.
The starting point is the common law series in which each transaction in the
series is preordained to produce a final result. Then, subsection 248(10)
deems any related transaction completed in contemplation of a series to be part
of that series.
[73]
The factual question to be decided
under subsection 248(10) is whether the decision to undertake the related
transaction was done in relation to or because of the series. This is less than
a strong nexus but more than a mere possibility or a connection with an extreme
degree of remoteness. Each case will be decided on its own facts; the length of
time between steps and any intervening events may be relevant considerations.
[74]
The phrase “in contemplation of”
in subsection 248(10) allows either prospective or retrospective connection
of a related transaction to a common law series. The phrase can be applied to
events either before or after the basic avoidance transaction. Series of
transactions includes both related transactions completed in contemplation of a
subsequent series of transactions, as well as related transactions which the
taxpayer completed while contemplating a prior series of transactions. The
phrase “in contemplation of” is not read in the sense of actual knowledge of
the series but in the broader sense of because of or in relation to the series.
[75]
In deciding if a step or transaction
in a series of transactions constitutes an avoidance transaction, i.e. whether
it has a bona fide non‑tax purpose, the Supreme Court of Canada, in
Copthorne, compares the series with that step or transaction to the
series without that step or transaction.
This is significantly different to comparing the chosen series with alternative
transactions or series of transactions available to the taxpayer.
[76]
The determination of the existence
of a series and its constituent transactions is a question of fact to be determined
on a balance of probabilities and the taxpayer has the onus of refuting the
Minister’s assumptions regarding the series of transactions.
G. Abuse
or Misuse.
[77]
There is no difference
between the two terms “abuse” and “misuse”. The GAAR will apply if an avoidance
transaction is abusive. Given the significance of the Duke of Westminster
principle in Canadian tax law, the GAAR does not authorize or require a search
for reproachably or disgracefully obtained tax savings, and the term abusive is
not used in the sense of implying any other moral opprobrium. Canadians are
free to be creative in their pursuit of tax savings.
(1) Identify the Object, Spirit or
Purpose of the Provisions:
[78]
The Supreme Court of
Canada mandates a two‑part analysis for abuse. First, the Court must
determine the object, spirit or purpose of the provisions that are relied on by
the taxpayer to obtain the tax benefit.
This is to be done having regard to the scheme of the Act, the relevant
provisions and permissible extrinsic aids.
[79]
The object, spirit or
purpose, or legislative rationale underlying the specific and/or interrelated
provisions of the Act, is to be identified by the Court applying the
unified textual, contextual and purposive interpretive approach used in statutory
interpretation generally.There
is a difference however between statutory interpretation which is aimed at
discerning the meaning of statutory language and the textual, contextual and
purposive GAAR analysis aimed at discerning the object, spirit or purpose of a
provision. In a GAAR analysis the words of the statute may be clear but the
rationale that underlies the wording of a provision may not be captured by the
bare meaning of the chosen words themselves. It is not however open to a judge
to be Humpty Dumpty‑like in causing words to mean whatever he or she wants,
in order to achieve what he or she perceives to be the right or appropriate
result.
[80]
The text of the
provision is to be considered to see if it sheds light on what the provision
was intended to do, even though it is a given in a GAAR analysis that the
wording of the provision does not disallow the tax benefit.
[81]
The consideration of
the context of a provision involves examination of other sections of the Act,
as well as permissible extrinsic aids.
The other provisions of the Act that should be considered are those that
are grouped together or that work together to give effect to a plausible and
coherent plan.
[82]
The policy or rationale
or purpose for the provisions must be grounded in a textual, contextual and
purposive interpretation of the specific provisions in issue. A court is not to
undertake a tax policy review nor to look for an overarching purpose, policy or
rationale that is not anchored in, or attached to, a textual, contextual and
purposive analysis of the specific provisions of the Act.
A provision can have a variety of independent and interlocking purposes. Determining
the rationale of the relevant provisions should not be conflated with a value
judgment of what is right or wrong, nor with what tax law ought to be or ought
to do.
(2) Determine if the
Avoidance Transaction Undertaken by the Taxpayer Frustrates or Defeats the
Identified Purpose:
[83]
The second step is for
the Court to consider whether the avoidance transaction undertaken by the
taxpayer falls within the identified purpose of the provision or provisions
that the taxpayer relies on, or frustrates or defeats it.
[84]
The avoidance
transaction will fall outside the identified purpose, will defeat or frustrate
that purpose, and will be abusive if: 1) the transaction achieves an
outcome the statutory provision was intended to prevent, 2) the
transaction defeats the underlying rationale of the provision; or 3) the
transaction circumvents the provision in a manner that frustrates or defeats
its object, spirit or purpose.
[85]
This step is avoidance transaction‑specific
and, in the case of a series of transactions, it is specific to the avoidance
transaction step. However, that transaction or step should be considered in the
context of the overall series and the overall result obtained.
[86]
This step in the
analysis is to be completed by focussing on the specific avoidance transaction
and considering its tax results.
The Supreme Court does not suggest this can be accomplished by considering
other transactions potentially available to the taxpayer.
[87]
At this stage, the
abusive nature of the transaction must be clear to the Court. The GAAR will not
apply where it may reasonably be considered that the transaction or series of
transactions was carried out in a manner consistent with the object, spirit or
purpose of the provisions relied on.
[88]
The onus to satisfy the
Court that an avoidance transaction is clearly abusive is on the Minister. The taxpayer
does not have to prove that, in complying with the provisions of the Act
as worded, he or she has not violated the object, spirit or purpose of the
provisions. The Minister should identify the object, spirit or purpose of the
provisions which are alleged to have been abused, set out the policy with
reference to those provisions, and identify the extrinsic aids relied upon.
VIII. The Application of the GAAR to the Facts in
this Case
A. Tax Benefit
[89]
The Appellant concedes
that a tax benefit resulted from obtaining the inter‑corporate dividend
under section 112 of the Act.
B. Avoidance Transaction
[90]
An avoidance
transaction requires that the transaction, or one step or transaction in a
series of transactions, not have been undertaken primarily for bona fide
non-tax purposes. Rephrased in the positive or affirmative, a transaction, or a
step or transaction in a series of transactions, will be an avoidance
transaction if it is undertaken or inserted primarily for tax purposes.
[91]
In this case, the
overall transaction of STAB paying dividend amounts to its member credit unions
was clearly done for the purpose of putting the member credit unions in funds
to pay the CUDIC assessments and reducing STAB’s deposit protection and stabilization
funds to the lesser required level following CUDIC’s extraordinary assessment.
That is clearly a bona fide non-tax purpose An “overall
non-tax objective of transferring funds from STAB to CUDIC” is admitted by the
Respondent.
[92]
Unlike in Copthorne,
in this case no step was inserted or undertaken primarily for the purpose of being
able to obtain a desired or preferred tax result.
[93]
The act of choosing or
deciding between or among alternative available transactions or structures to
accomplish a non-tax purpose, based in whole or in part upon the differing tax
results of each, is not a transaction. Making a decision can not be an
avoidance transaction.
[94]
In this case, STAB, of
which the Appellant was a member, set out to put its members in funds to pay
the CUDIC extraordinary assessment. It considered alternative available methods
of doing that and chose the one which was the most tax effective – the one that
involved the member credit unions potentially paying the least amount of tax.
That is making a decision that is consistent with the Duke of Westminster
principle. Making such a decision can not be considered a transaction for GAAR
purposes.
[95]
This is an example of a
case where a taxpayer:
(i)
decides to do something
for entirely business or other non-tax purposes – (that is, put money in its
shareholders’ hands to allow them to pay their business obligations and to
recalibrate the level of the deposit insurance and stabilisation fund
maintained for their benefit to the level now needed);
(ii)
considers the
alternatives available to them to accomplish what is needed to be done, including
a consideration of the tax consequences and costs of each; and
(iii)
chooses an available
option that is not the one with the greatest tax cost and may be the one with
the least tax cost or no tax cost at all.
[96]
Provided no steps or
transactions were inserted into the commercial transactions implementing the
chosen structure primarily to obtain the tax benefit, neither the taxpayer’s
choice nor its implementation can meet the statutory definition of “avoidance
transaction” as interpreted by the Supreme Court of Canada.
[97]
A comparable example (uncluttered
by the fact that in this case it was STAB who chose and implemented the
decision to pay dividends to its members including the Appellant, and that the
decision arose as a result of a government assessed obligation imposed
unilaterally upon the credit unions including the Appellant) would be as
follows: a company has two distinct operating divisions, Division A and Division
B. It decides to sell Division A to an arm’s-length party for fair market
value. It intends to keep Division B and continue to operate it. In order to
implement and complete such a sale, the shareholders of the company have at
least three obvious alternatives. The company can sell the Division A assets to
the buyer. The company can transfer Division A to a new sister company to be
offered for sale and keep the Division B assets. The company can transfer the Division
B assets to a new sister company owned by the shareholders and have the
shareholders of that company offer to sell their shares of that company to the
buyer whose assets now would only include the Division A assets. One of Division
A or Division B has to be transferred out of the company in order for the business
of Division A to be sold. Asset sales invariably have different tax consequences
than share sales. If the buyer wants to buy shares, the shareholders of the
company can not be faulted for choosing a more tax efficient option available
to them. Provided the structure of the transactions used to implement their
choice does not include any step the primary purpose of which is to position
themselves to obtain the desired tax benefit, or is otherwise primarily tax
driven, their tax benefit can not result from an avoidance transaction and the
GAAR by its terms can not apply. See, for example, former Chief Justice
Bowman’s decision in Geransky v. Canada, 2001 DTC 243.
[98]
The Respondent regards
the tax benefit resulting to the Appellant credit unions as an abuse or misuse of
the provisions relied upon. This may arguably be the case. However, the
Respondent has throughout been unable to identify an avoidance transaction as
defined by the GAAR and interpreted by the Supreme Court of Canada. Identifying
an avoidance transaction is a prerequisite to the application of the GAAR. The
Supreme Court stresses that the GAAR does not allow one to jump from resulting
tax benefit to abusive tax results. The Supreme Court explains why that would
not be consistent with the text of the GAAR nor would it be otherwise
appropriate.
[99]
In the reply, the Respondent’s
position is that the following are avoidance transactions:
1.
The decision by STAB to
return premiums in the form of a dividends;
2.
The decision by STAB to
pay the A and B dividend;
3.
CUDIC’s assessment of
the extraordinary premiums;
4.
The payment by STAB of
the dividends declared; and
5.
The payment by the
credit unions of the CUDIC assessments.
In argument, the Respondent’s GAAR position that
STAB’s decision to distribute funds by way of dividends was refined to: STAB’s choice, from the options it in fact did consider, of a structure for implementing the
overall transaction because it provided a tax benefit, resulted in it
being an avoidance transaction.
[100]
I do not accept these
positions of the Respondent on avoidance transactions:
1.
A decision to choose
between options is not a transaction. Similarly, a decision to choose to do
something or not is not a transaction. A decision is not considered a
transaction as that term is commonly understood nor is it within the extended,
inclusive definition of transaction in subsection 245(1).
2.
Whether STAB had paid a
single dividend or split the dividend into the two A and B dividends did not
affect the tax consequences of the B dividend received by the Appellant in this
case. The tax results and analysis would have been the same.
3.
CUDIC’s assessment of
the extraordinary premium was entirely non-tax motivated and was considered
adverse and contrary to the wishes and interests of the BC credit unions. It is
clear on the facts of this case that the assessment was made entirely for
non-tax purposes.
4.
The payment of the dividends
by STAB had a primary non-tax purpose – the distribution of funds to its
members. That it was decided to make the distribution as a dividend because of
tax considerations does not make tax the primary purpose of the dividends.
5.
The payment by the
credit unions of the CUDIC assessments were the payment by them of legal
obligations owed to the provincial government in order to allow them to
continue to operate. One does not pay an entirely non-discretionary business
expense primarily to get the tax deduction.
[101]
Overall, I am unable to
identify any step or transaction undertaken other than for a primarily non-tax
purpose. This is in contrast with, for example Copthorne, where the
Appellant had to convert its pre-existing parent subsidiary structure to a
sister company structure as a preliminary or intervening separate step in order
to position itself to obtain the tax benefit sought. In this case there was no
such step or transaction done primarily for such a purpose.
[102]
Separating the dividend
into two tranches, the A dividend and the B
dividend, did not change the tax results of the B dividend. As discussed above,
it simply gave the individual member credit unions the opportunity to choose to
avoid the dispute with CRA that the Appellant was prepared to take on.
Similarly, the rebalancing of members’ shareholdings in 2005 did not affect the
Appellant’s entitlement to the tax benefit of deducting the full amount of the
dividends received by it from STAB. As discussed above, rebalancing needed to
be and was done periodically to ensure credit unions’ shareholdings aligned
with their current relative asset sizes. It could only affect the amount of the
dividends paid to the Appellant and other individual credit unions, not the tax
consequences thereof.
[103]
Following the release
by the Supreme Court of Canada of its decision in Copthorne, the parties
made further written submissions in this case. Notwithstanding the clear
comments of the Supreme Court of Canada on the prerequisite of an avoidance
transaction before GAAR can apply and before conducting an abuse analysis, the
Respondent did not specifically address the issue of avoidance transaction but wanted
to jump from tax benefit to abuse.
[104]
The GAAR can not be applied
in this case because the overall transaction and each transaction undertaken to
complete it were done for primarily bona fide non‑tax purposes. In
the words of the Supreme Court of Canada:
. . . However, before the GAAR may be applied in any circumstance,
there must be an avoidance transaction which results in a tax benefit. . . .
. .
. However, where a transaction takes place primarily for a non-tax purpose,
there will be no avoidance transaction. In the absence of an avoidance
transaction, the fact that a transaction may have a secondary tax benefit
purpose will not trigger the GAAR.
. . .
The second requirement for application of the
GAAR is that the transaction giving rise to the tax benefit be an avoidance
transaction within s. 245(3). The function of this requirement is to remove
from the ambit of the GAAR transactions or series of transactions that may
reasonably be considered to have been undertaken or arranged primarily for a
non-tax purpose. The majority of tax benefits claimed by taxpayers on their
annual returns will be immune from the GAAR as a result of s. 245(3). The GAAR
was enacted as a provision of last resort in order to address abusive tax
avoidance, it was not intended to introduce uncertainty in tax planning.
. . . Conversely, if
each transaction in a series was carried out primarily for bona fide
non-tax purposes, the GAAR can not be applied to deny a tax benefit.
C. Abuse or Misuse
[105]
In the absence of a
finding that there was an avoidance transaction, and following the rigorous
analytic approach mandated by the Supreme Court of Canada, it is unnecessary to
go on and consider the issue of abuse or misuse in this case.
IX. Conclusion
[106] As a general rule, it is not the Court’s
role to read things in to or out of the Act or any provision thereof,
including GAAR. This case is not one of the extraordinary situations in which
the proper interpretation of a provision of the Act would allow or
require that.
[107]
The provisions of the Act
are clear in this case. The Appellant qualifies for the section 112 dividend
deduction. The B dividend is not an amount described in paragraph 137(10.1)(a)
because it was not distributed proportionate to assessments paid.
[108]
It is the function of
this Court to only apply the GAAR by following the rigorous analytic approach
to it mandated by the Supreme Court of Canada. It is not open to this Court to
depart from that approach.
[109]
The requirements of the
GAAR require there to be an avoidance transaction, regardless of an arguably
abusive result. In this case, I can find no avoidance transaction. The overall
transaction and each constituent step or transaction can reasonably be
considered to have been undertaken primarily for bona fide non-tax
purposes.
[110]
It does not matter
whether or not the tax result of the chosen transaction appears appropriate to
me or not. As a judge, I can no more add to the Act as written by Parliament
when I think something is missing and needed to obtain what I might consider
the appropriate result from a policy point of view, than I can overlook any
provision Parliament has written because I disagree with it from a policy point
of view.
[111]
The appeal is allowed,
with costs.
Signed at Ottawa, Canada, this 15th day of October
2012.
"Patrick Boyle"
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