A-711-94
QUÉBEC, QUEBEC, THE 13th DAY OF FEBRUARY, 1997
| CORAM: THE HONOURABLE MR. JUSTICE MARCEAU |
| THE HONOURABLE MR. JUSTICE HUGESSEN |
| THE HONOURABLE MADAM JUSTICE DESJARDINS |
| BETWEEN: SUPERMARCHÉ STE-CROIX INC., |
Appellant
Respondent
J U D G M E N T
The appeal is dismissed with costs.
Certified true translation
Christiane Delon, LL.L.
A-711-94
BETWEEN:
SUPERMARCHÉ STE-CROIX INC.,
Appellant,
- and -
HER MAJESTY THE QUEEN,
Respondent.
Hearing held in Québec, Quebec, Thursday, February 13, 1997.
Judgment rendered at the hearing, Thursday, February 13, 1997.
REASONS FOR JUDGMENT OF THE COURT BY: MARCEAU J.A.
A-711-94
BETWEEN:
SUPERMARCHÉ STE-CROIX INC.,
Appellant,
- and -
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT OF THE COURT
(Pronounced at the hearing in Québec, Quebec,
Thursday, February 13, 1997)
MARCEAU, J.A.
We are all of the opinion that this appeal cannot succeed.
The Minister"s reassessment, upheld by the Tax Court of Canada decision, is based on subparagraph 12(1)(x )(viii) of the Income Tax Act, the purpose of which is to supply the tests for distinguishing between the inducement payment that must be taxed in full as income, and the inducement payment that may be treated as proceeds of disposition of an eligible capital property, and hence taxable only in part. One need only read the provision to see immediately that it raises an awkward problem of construction.1
We think that Lamarre-Proulx, T.C.J. resolved this problem in a convincing way and we have nothing substantial to add to the grounds on which she based her decision.
We believe, like her, that the expression "acquisition...of an interest in [the taxpayer"s] ...business" (in the French version, "acquisition...d"un droit...sur son entreprise") must be understood as a direct interest in the actual activities of the business and not only what may still be described as an interest, but a personal one resulting from a promise by the business to act in a particular way in its future business relations. Here, the interest or "droit" the payor has acquired in the business is the worth to him of the obligation assumed by the appellant, which operates a grocery store, first, to draw its supplies from him, a wholesaler, in the future, to the amount of certain quotas, and second, to give him a first option to purchase shares issued from its capital stock if any transaction in relation to those shares was planned.
No right or direct interest in the business is involved, no property right or pecuniary interest whatsoever in its profits is transferred, no participation in its management, operations or administration is assigned. To give the word "interest" or "droit" in the business, as used in the provision, the broad meaning more or less suggested by the appellant, i.e. that of an advantage to be derived from the business"s activities, would be inconsistent with the current meaning attributed in legal language to the words "interest" and "droit" when used in regard to a property, as is indicated in the definitions provided by the legal dictionaries.2 And it would also mean depriving the provision of any possibility of actually playing the role assigned to it, namely, that of distinguishing between two types of inducement payments, since such a payment can hardly help but have in return some interest connected with the business"s activities.
The appeal will therefore be dismissed.
Certified true translation
Christiane Delon, LL.L.
IN THE FEDERAL COURT OF APPEAL
A-711-94
BETWEEN:
SUPERMARCHÉ STE-CROIX INC.,
Appellant,
- and -
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
OF THE COURT
FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND SOLICITORS OF RECORD
| STYLE: Supermarché Ste-Croix Inc. |
| PLACE OF HEARING: Québec, Quebec |
| DATE OF HEARING: February 13, 1997 |
| REASONS FOR JUDGMENT OF THE COURT (Marceau, Hugessen and |
| PRONOUNCED AT THE HEARING BY: Marceau, J.A. |
APPEARANCES:
| André Lareau for the appellant |
| Marie Bélanger for the respondent |
SOLICITORS OF RECORD:
Joli-Coeur, Lacasse, Lemieux
Simard, St-Pierre
| Sainte-Foy, Quebec for the appellant |
Deputy Attorney General of Canada
| Ottawa, Ontario for the respondent |
__________________
1 The relevant parts of the provision read as follow:
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: ...
( x) any amount (other than a prescribed amount) received by the taxpayer in the year, in the course of earning income from a business or property, from (i) a person who pays the amount (in this paragraph referred to as the "payor") in the course of earning income from a business or property or in order to achieve a benefit or advantage for himself or for persons with whom he does not deal at arm"s length, ...
where the amount can reasonably be considered to have been received (iii) as an inducement, ... to the extent that the amount ... (viii) may not reasonably be considered to be a payment made in respect of the acquisition by the payor or the public authority of an interest in the taxpayer, his business or his property; ...
2 Canada Tax Words, Phrases & Rules, Dictionnaire Fiscal Canadien, Carswell Thomson Professional Publishing, June 1996, pp. D-21 to D-25; Marc Jolin, Canada Tax Words, Phrases & Rules, Dictionnaire Fiscal Canadien, 11th cumulative supplement, Institut de Recherche en Fiscalité de l"Université de Sherbrooke, September 1993, pp. I-32 to I-37; Harrap"s Standard French and English Dictionary, Part Two, pp. 640-41; Words & Phrases, Volume 4, F-1, Carswell, pp. 4-1169 to 4-1187.
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