Randy Mann v. Her Majesty the Queen (Informal Procedure), [1995] 2 CTC 2049

Kempo J.T.C.C.:-This informal procedure appeal concerns Mr. Mann’s 1992 taxation year and is from the disallowance by the Minister of National Revenue of a claimed moving expense deduction in the amount of $7,532.26 representing an expenditure incurred by Mr. Mann for the Goods and Services Tax ("G.S.T.") in respect of his purchase of a newly constructed home.

The issue raised is whether this expenditure is deductible under paragraph 62(3)(f) of the Income Tax Act, R.S.C. 1952, c. 148 (am. S.C. 1970-71-72, c. 63) (the ’’Act”) which reads as follows:

62(3) In subsection (1), "moving expenses" includes any expense incurred as or on account of

(f) where his old residence is being or has been sold by the taxpayer or his spouse as a result of the move, the cost to him of legal services in respect of the purchase of his new residence and of any taxes imposed on the transfer or registration of title to his new residence,

but for greater certainty, does not include costs (other than costs referred to in paragraph (f)) incurred by the taxpayer in respect of the acquisition of his new residence.

[Emphasis added. }

The essential facts were informally agreed upon and were not in issue; rather, what is to be decided is the meaning of the highlighted words in the Statutory provision earlier set out. The move and home purchase was employment driven, and the subject expense was incurred and paid. The pleadings as filed, apart from the argumentative portions, accurately reflect the facts concerning the appeal.

The position taken by counsel for the respondent as I understand it was that paragraph 62(3)(f) was essentially not ambiguous and that the G.S.T. was merely a tax on the acquisition or sale itself, that it was not a tax on the transfer of title and that it is not a tax imposed on registration of title. Additionally he urged that the G.S.T. being a recent phenomenon precludes it from being within Parliament’s contemplation when paragraph 62(3)(f) of the Income Tax Act was enacted by S.C. 1976-77, c. 4, s. 20(1) applicable with respect to moving costs incurred after May 25, 1976.

Analysis

At the outset I disagree with respondent-counsel’s submission that paragraph 62(3)(f) is without ambiguity. This position presupposes that the phrases "transfer of title" and "registration of title" are essentially the same thing. To accede to this approach calls for a conclusion that one of these phrases is superfluous and therefore ought to be ignored. With this I cannot agree because effect must be given to every word used by Parliament.

The phrases under review, especially in view of the use of the disjunctive "or", attracts at least three possible different meanings. The provision may be speaking in respect of taxes imposed

1. on the transfer of title; or

2. on the registration of title; or

3. simply on the transfer of the property.

This in itself signifies ambiguity.

I would draw on the following aids to construction respecting the mat- ter.

The Interpretation Act, R.S.C. c. I-23, s. 1 certainly is applicable. Section 10 is headed as ’’law always speaking’’ and it reads:

10. The law shall be considered as always speaking, and where a matter or thing is expressed in the present tense, it shall be applied to the circumstances as they arise, so that effect may be given to the enactment according to its true spirit, intent and meaning.

Section 12 thereof is also apt. It reads:

12. Every enactment is deemed remedial, and shall be given such fair, large and liberal construction and interpretation as best ensures the attainment of its objects.

Further, the resolution of the ambiguity inherent within paragraph 62(3)(f) ought to arise out of application of the general principles of statutory interpretation. The subject provision should be reflected upon as a whole having regard to its intent, object and spirit, and to what it is that it actually accomplishes, see Stubart Investments Ltd. v. The Queen, [1984] I S.C.R. 536, [1984] C.T.C. 294, 84 D.T.C. 6035. The approach to be employed ought to be functional, purposeful or teleological, see Corporation Notre-Dame de Bon-Secours v. Communauté urbaine de Québec, [1994] S.C.R. 78, [1995] 1 C.T.C. 241, 95 D.T.C. 5017; ought not to be results oriented, see Tennant v. Canada, [1994] 2 C.T.C. 113, 94 D.T.C. 6505 (F.C.A.); and ought not to be purely mechanical, see Swantje v. Canada, [1994] 2 C.T.C. 381, 94 D.T.C. 6633 (F.C.A.).

A very recent review of interpretative principles applicable to tax legislation was addressed by the Federal Court of Appeal in a yet unreported decision in the case of The Queen v. United Equities Ltd., [1995] 1 C.T.C. 164, 95 D.T.C. 5042. At page 173 (C.T.C.) of the reasons for judgment, in reviewing the Corp. Notre-Dame de Bon-Secours decision of the Supreme Court of Canada, it was observed:

Gonthier J. went on to summarize the principles of interpretation applicable to tax legislation. At page 16 he stated:

The rules formulated in the preceding pages, some of which were relied on recently in Symes v. Canada, [1993] 4 S.C.R. 695, [1994] 1 C.T.C. 40, 94 D.T.C. 6001, may be summarized as follows:

-The interpretation of tax legislation should follow the ordinary rules of interpretation;

-A legislative provision should be given a strict or liberal interpretation depending on the purpose underlying it, and that purpose must be identified in light of the context of the statute, its objective and the legislative intent: this is the teleological approach;

-The teleological approach will favour the taxpayer or the tax department depending solely on the legislative provision in question, and not on the existence of predetermined presumptions;

-Substance should be given precedence over form to the extent that this is consistent with the wording and objective of the statute;

-Only a reasonable doubt, not resolved by the ordinary rules of interpretation, will be settled by recourse to the residual presumption in favour of the taxpayer.

Returning to the case at hand, the G.S.T. is imposed on the recipient of a taxable supply according to subsection 165(1) of the Excise Tax Act. It reads:

Subject to this Part, every recipient of a taxable supply made in Canada shall pay to Her Majesty in right of Canada a tax in respect of the supply equal to seven per cent of the value of the consideration for the supply.

The terms ’’taxable supply", "sale" and "commercial activity" are defined in subsection 123(1) as follows:

’’taxable supply" means a supply that is made in the course of a commercial activity;

"supply" means, subject to sections 133 and 134, the provision of property or a service in any manner, including sale, transfer, barter, exchange, license, rental, lease, gift or disposition;

"sale, in respect of property, includes any transfer of the ownership of the property and a transfer of the possession of the property under an agreement to transfer ownership of the property;

“commercial activity" of a person means

(c) the making of a supply (other than an exempt supply) by the person of real property of the person, including anything done by the person in the course of or in connection with the making of the supply;

Accordingly, G.S.T. is imposed on the provision of property in any manner, including sale, transfer, barter, etc.

The term "transfer" was discussed in Fasken Estate v. M.N.R., [1948] C.T.C. 265, 49 D.T.C. 491 (Ex. Ct.). This case was not cited by either party to this appeal. Mr. Mann rested his case on the meanings attributable to the phrases in question from dictionary sources alone. To my mind the judicial pronouncements made in Fasken, supra are particularly apt and are fully applicable to the issues raised in this appeal. The Court stated at pages ??? (D.T.C. 496-97):

The word "transfer" is another term of wide meaning. The New English Dictionary gives this meaning of it:

2. Law. To convey or make over (title, right or property) by deed or legal process.

And Webster’s New International Dictionary, Second Edition, says:

2. To make over the possession or control of, to make transfer of; to pass, to convey, as a right, from one person to another, as, title to land is transferred by deed.

The word "transfer" is not a term of art and has not a technical meaning. It is not necessary to a transfer of property from a husband to his wife that it should be made in any particular form or that it should be made directly. All that is required is that the husband should so deal with the property as to divest himself of it and vest it in his wife, that is to say, pass the property from himself to her.

A transfer of real property may occur without registration of title because title is merely evidence of the formal right of ownership. As noted in Black’s Law Dictionary, 6th edition, at page 1486, the term "title documents" signifies those instruments that are necessary for establishing or for conveying good title and gives a "deed" as an example. The Dictionary of Canadian Law by Dukelow and Nuse, at page 1081, provides that "title" is a way in which a landowner justly possesses property, and on page 259 notes that the word "deed" is a document signed, sealed and delivered through which an interest, property or right passes.

In light of the above it is my view that the G.S.T. is imposed on an act of transfer of ownership of property (i.e., transfer of one’s title to another) by any means whatsoever, and that registration of title is the formal conveyance signifying what had already occurred. Expressed another way a "transfer of title" is a transfer by an act as between the parties of the right of ownership in property; the deed of conveyance and its registration being the evidence thereof. As the transfer of ownership of land is G.S.T. taxed in the hands of the recipient of the property (the purchaser), this G.S.T. is a tax imposed on the "transfer of title" in its broadest sense as defined in Fasken, supra.

The end result is that paragraph 62(3)(f) of the Income Tax Act does encompass two separate things, that is, any tax imposed on a transfer of land and any tax imposed on registration of the title related thereto. Simply put for this case, it covers both G.S.T. and Ontario’s land transfer tax, the latter being Ontario’s tax leviable pursuant to its Land Transfer Tax Act.

One final observation ought to be made. The words employed in paragraph 62(3)(f) do not state that moving expenses include taxes imposed "for" the transfer of title but rather include taxes imposed "on" the transfer of title. That the G.S.T. is imposed on the transaction is sufficient to bring it within the wording of paragraph 63(2)(f).

I wish to address respondent-counsel’s concern that Parliament could not have contemplated the inclusion of G.S.T. in paragraph 62(3)(f) when that provision was enacted in 1976-77 because the G.S.T. regime arose many years later. In other words, the passage of time ought to be considered in an interpretative approach so as to preclude integration of these two enactments. In my opinion the answer to this lies within sections 10 and 12 of Canada’s Interpretation Act, supra, as well as the assumption that Parliament must have at all times been aware of the existence of these provisions and paragraph 62(3)(f) of the Income Tax Act when it enacted the G.S.T. regime. In any event paragraph 62(3)(f) was and remains phrased broadly enough to contemplate subsequent events as they arise.

Further, the underlying object and purpose of section 62 is to alleviate against financial deterrents to employment mobility and in this context I can think of no logical reason as to why an expense such as the G.S.T. imposed on a transfer of title ought to be excluded.

Conclusion

The appeal for the 1992 taxation year is to be allowed, with costs, and the matter referred back to the Minister of National Revenue for reconsideration and reassessment on the basis that the appellant’s expenditure of $7,532.26 represents a moving expense incurred by him within the meaning of paragraph 62(3)(f) of the Income Tax Act.

Appeal allowed.