Hamlyn,
T.C.J.:—
Facts
The
appellant,
Mr.
King,
is
a
limited
partner
in
the
limited
partnership
known
as
1972
Great
Basins
Exploration
and
Development
Program
(
Great
Basins").
On
September
26,
1985,
Great
Basins
sold
resource
property
which
resulted
in
Canadian
business
income.
The
appellant
was
not
resident
in
Canada
during
the
1985
taxation
year.
Great
Basins
furnished
the
Minister
with
security
acceptable
by
the
Minister
in
respect
of
the
proposed
disposition
of
the
property,
on
behalf
of
the
appellant,
pursuant
to
paragraph
116(4)(b)
of
the
Income
Tax
Act,
R.S.C.
1952,
c.
148
(am.
S.C.
1970-71-72,
c.
63)
(the
"Act").
This
lead
the
Minister,
on
January
20,
1986,
to
issue
a
certificate
of
compliance
(T2068)
in
respect
of
the
disposition
of
the
resource
property.
The
appellant
did
not
file
his
1985
income
tax
return
until
July
21,
1986.
The
appellant
did
not
pay
to
the
Receiver
General
for
Canada
on
or
before
April
30,
1986,
his
amount
of
tax
payable
(from
the
disposition
of
the
resource
property).
The
payment
on
account
of
the
appellant's
tax
liability
($39,480)
with
respect
to
the
disposition
of
the
resource
property
was
made
by
Great
Basins
on
July
12,
1986.
When
payment
of
tax
owing
was
made
on
July
12,
1986,
the
security
given
on
January
20,
1986,
was
released.
The
Minister
assessed
the
appellant
with
a
late
filing
penalty
(subsection
162(1))
in
the
amount
of
$2,582.17
and
arrears
of
interest
(subsection
161(1))
of
$959.50.
Applicable
Provisions
of
the
Income
Tax
Act
Subsection
116(4)
116.
(4)
Certificate
in
rest
of
property
disposed
of.
Where
a
non-resident
person
who
has
sent
to
the
Minister
a
notice
under
subsection
(3)
in
respect
of
a
disposition
of
any
property
has
(a)
paid
to
the
Receiver
General,
as
or
on
account
of
tax
under
this
Part
payable
by
him
for
the
year,
25%
of
the
amount,
if
any,
by
which
the
proceeds
of
disposition
of
the
property
exceed
the
adjusted
cost
base
to
him
of
the
property
immediately
before
the
disposition,
or
(b)
furnished
to
the
Minister
security
acceptable
to
the
Minister
in
respect
of
the
disposition
of
the
property,
the
Minister
shall
forthwith
issue
to
the
non-resident
person
and
the
purchaser
a
certificate
in
prescribed
form
in
respect
of
the
disposition.
Paragraph
150(1)(d)
Under
paragraph
150(1)(d)
individuals
who
are
subject
to
tax
for
a
year,
are
required
to
file
returns
in
respect
of
that
year
on
or
before
April
30
of
the
next
year.
Section
151
Section
151
provides
that
every
person
required
to
file
a
return
under
Section
150
must,
in
that
return,
estimate
the
amount
of
tax
payable.
Subsection
156(1)
Subsection
156(1),
among
other
things,
provides
that
a
taxpayer's
final
instalment
is
payable
on
April
30
of
the
following
year
and
is
the
remainder
of
the
estimated
tax
for
the
year.
Subsection
161(1)
Subsection
161(1)
provides
for
the
imposition
of
interest
on
unpaid
tax
under
Part
I
of
the
Act
in
respect
of
a
taxation
year
from
the
time
the
remainder
of
tax
for
the
year
is
payable
to
the
time
of
payment.
Subsection
161(2)
Subsection
161(2)
imposes
interest
on
unpaid
instalments
of
taxes
at
a
prescribed
rate
per
annum
from
the
day
on
which
payment
should
have
been
made
until
the
date
of
payment
or
the
beginning
of
the
period
in
respect
of
which
the
taxpayer
was
required
to
pay
interest
under
subsection
(1),
whichever
is
earlier.
Subsection
162(1)
Subsection
162(1)
provides
a
penalty
for
failure
to
file
a
return
as
required
by
subsection
150(1).
Subsection
161(8)
161.
(8)
Certain
counts
deemed
to
be
paid
as
instalments.
For
the
purposes
of
subsection
(2),
where
in
a
taxation
year
an
amount
has
been
paid
by
a
non-resident
person
pursuant
to
subsection
116(2)
or
(4)
or
an
amount
has
been
paid
on
his
behalf
by
another
person
in
accordance
with
subsection
116(5),
the
amount
shall
be
deemed
to
have
been
paid
by
that
non-resident
person
in
the
year
as
an
instalment
of
tax
on
the
first
day
on
which
he
was
required
under
this
Act
to
pay
an
instalment
of
tax
for
that
year.
Issue
to
be
Decided
The
issue
to
be
decided
is
whether
furnishing
the
Minister
with
security
pursuant
to
paragraph
116(4)(b)
of
the
Act
constitutes
payment
of
tax
pursuant
to
subsection
161(8)
of
the
Act.
Appellant's
Position
We
contend
that
the
accepting
of
the
Section
116
certificate
by
the
Minister
of
Revenue
constitutes
a
deemed
instalment
payment
under
156(1)
of
the
Income
Tax
Act.
Also,
it
would
constitute
the
amount
of
tax
payable
as
estimated
under
section
151
of
the
Income
Tax
Act.
There
appears
to
be
authority
for
this
position
under
section
161(8)
of
the
Income
Tax
Act
which
provides
for
certain
amounts
deemed
to
be
paid
as
instalments
"
pursuant
to
subsection
116(2)
or
116(4),
or
an
amount
has
been
paid
.
.
the
amount
shall
be
deemed
to
have
been
paid
by
that
non-resident
person
in
the
year
as
an
instalment
of
tax
on
the
first
day
on
which
he
was
required
under
the
Act
to
pay
an
instalment
of
tax
for
that
year.”
Please
refer
to
the
editorial
comment
for
section
161(8)
by
Commerce
Clearing
House
Canadian
Ltd.
22,840
which
appears
to
reach
the
same
conclusion.
Minister's
Position
The
respondent
submits
that
subsection
116(4)
sets
out
the
circumstances
in
which
the
Minister
of
National
Revenue
must
issue
a
certificate
in
respect
of
the
disposition
of
property.
This
certificate
of
compliance
exonerates
the
purchaser
from
liability
for
the
tax
which
the
non-resident
vendor
must
pay
as
a
result
of
a
disposition.
The
subsection
sets
out
two
circumstances
in
which
the
Minister
is
to
issue
such
a
certificate,
namely:
(a)
when
there
is
a
payment
on
account
of
tax;
or
(b)
security
is
furnished.
The
respondent
submits
there
is
nothing
in
subsection
116(4)
which
stipulates
that
the
furnishing
of
security
constitutes
payment
of
tax.
It
is
further
submitted
that
furnishing
security
under
paragraph
116(4)(b)
cannot
be
properly
interpreted
to
mean
"
payment"
within
the
meaning
of
subsection
116(4).
The
respondent
submits
that
the
providing
of
security
will
not
constitute
payment
unless
there
is
another
provision
in
the
Act
deeming
it
to
be
treated
as
payment.
The
appellant
has
pointed
to
subsection
161(8)
as
such
a
deeming
provision.
Analysis
Does
the
“furnishing
of
security"
by
the
appellant
constitute
or
is
the
equivalent
of"payment
of
tax”.
The
Concise
Oxford
Dictionary
(Seventh
Edition)
""Raid"
“See
Ray
.
.
.”.
"Ray
v.
(paid)."
indicates:
1.
v.t.
give
(person)
what
is
due
in
discharge
of
debt
or
for
services
done
or
goods
received.
Black's
Law
Dictionary
(Sixth
Edition)
like
the
Concise
Oxford
does
not
define
the
word
"Raid".
However,
it
defines
the
verb
form
of
"Ray"
as:
To
dischargé
a
debt
by
tender
of
payment
due;
io
deliver
to
a
creditor
the
value
of
a
debt,
either
in
money
or
in
goods,
for
his
acceptance.
Black's
Law
Dictionary
(Sixth)
defines
"furnish":
To
supply,
provide,
or
equip,
for
accomplishment
of
a
particular
purpose.
It
further
defines
the
word
“
Security”:
Protection;
assurance;
indemnification.
The
term
is
usually
applied
to
an
obligation,
pledge,
mortgage,
deposit,
lien,
etc.,
given
by
a
debtor
in
order
to
assure
the
payment
or
performance
of
his
debt,
by
furnishing
the
creditor
with
a
resource
to
be
used
in
case
of
failure
in
the
principal
obligation.
Collateral
given
by
debtor
to
secure
loan.
Document
that
indicates
evidence
of
indebtedness.
The
name
is
also
sometimes
given
to
one
who
becomes
surety
or
guarantor
for
another.
In
Union
Gas
Ltd.
v.
M.N.R.,
[1987]
2
C.T.C.
32;
87
D.T.C.
5296
(F.C.T.D.);
rvd
[1991]
1
C.T.C.
1;
90
D.T.C.
6659,
during
the
course
of
the
1978
taxation
year
the
taxpayer
corporation
paid
instalments
of
tax
totalling
$8,916,000.
In
the
belief
that
this
amount
exceeded
its
tax
liability
for
the
year,
the
taxpayer
requested
the
Minister
to
apply
the
sum
of
$2,168,000
to
the
1979
taxation
year.
The
Minister
acceded
to
this
request
with
the
result
that
the
sum
of
$6,748,000
remained
standing
to
the
credit
of
the
1978
taxation
year.
The
taxpayer
then
filed
its
income
tax
return
for
the
year
and
following
an
assessment
and
reassessment
the
Minister
determined
that
the
taxpayer's
actual
tax
liability
for
the
year
was
approximately
$7,500,000.
The
Minister
charged
interest
on
the
deficiency.
The
taxpayer's
position
at
trial
was
that
interest
was
not
chargeable
against
the
defendant
under
either
subsection
161(1)
or
(2)
where
the
taxpayer
has
duly
remitted
sufficient
instalments
of
tax,
even
if
there
has
been
a
subsequent
“application”
to
another
taxation
year.
Justice
Rouleau
at
page
36
(D.T.C.
5299):
What
the
defendant
company
had
paid
was
$8,916,000
minus
$2,168,000
for
the
debt
owed
in
its
1978
taxation
year
and
a
further
sum
of
$2,168,000
towards
the
debt
owed
for
its
1979
taxation
year.
It
is
true
that
the
defendant
had
remitted"
a
total
amount
of
$8,916,000
but
that
in
itself
does
not
lead
to
a
finding
that
the
defendant
had
"paid",
as
that
word
is
used
in
subsections
161(1)
and
(2)
of
the
Act,
the
amount
owing
in
respect
of
its
1978
taxation
year.
In
the
case
at
bar,
although
the
appellant
had
security
“
remitted”
on
his
behalf
in
respect
of
his
tax
debt,
that
in
itself
does
not
lead
to
a
finding
that
the
appellant
had
"paid"
as
that
word
is
used
in
subsection
161(8),
and
satisfied
his
tax
debt.
The
phrase
“furnished
to
the
Minister
security
.
.
.”
does
not
provide
a
substitute
or
an
alternative
to
the
word
"paid"
in
subsections
116(4)
and
161(8).
Decision
By
having
security
furnished
on
his
behalf,
the
appellant
(debtor)
supplied
a
means
to
assure
the
payment
of
his
tax
debt.
He
did
not,
in
furnishing
security,
give
what
was
due
in
discharge
of
his
tax
debt.
His
tax
debt
was
not
"paid"
upon
the
furnishing
of
security.
He
only
secured
his
tax
debt
in
case
of
failure
to
discharge
to
pay
it.
Appeal
dismissed.
Appeal
dismissed.
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