Garon J.T.C.C.:—This motion made by the respondent is for an order:
(a) striking out the reasons stated in paragraphs 35 to 38 of the notice of appeal;
(b) extending the time in which the respondent may file and serve the reply, pursuant to subsection 44(3) of the Tax Court of Canada Rules (General Procedure);
(c) the costs of this motion; and
(d) any further relief that this Honourable Court deems just.
The grounds for the motion as stated in the notice of motion and are as follows:
(a) the reasons stated in paragraphs 35 to 38: may prejudice or delay the fair hearing of the action; are frivolous or vexatious; and are an abuse of the process of the Court;
(b) seek relief on grounds that this Honourable Court has no jurisdiction to grant pursuant to section 171 of the Income Tax Act, R.S.C. 1952, c. 148 (am. S.C. 1970-71-72, c. 63) (the ’’Act”).
Paragraphs 35 to 38 of the notice of appeal, which the moving party seeks to have struck out, read thus:
35. Public statements of Revenue Canada and the Department of Fiance support the position that the interest is deductible under Canadian income tax law and under the established administrative and assessing policies applicable to the 1990 taxation year.
36. The stated administrative and assessing policy of Revenue Canada as set out in Interpretation Bulletin IT-445 supports the deductibility of the interest. The interest meets all of the tests set out in that bulletin for deductibility.
37. On December 21, 1991, the Department of Finance released draft legislation (the "draft legislation"). Under the draft legislation, the borrowed money would expressly be deemed to be used for the purpose of earning income from property, and accordingly, the interest would be deductible.
38. The draft legislation is to be retroactive to 1972. It is submitted that this extraordinary retroactivity is due to the fact that the draft legislation does not change, but merely clarifies existing law.
In considering the merits of this motion, it is appropriate to bear in mind that the question in issue in this appeal from the Minister’s reassessment for the 1990 taxation year is whether a large amount of interest paid or payable by the appellant in respect of the above mentioned year is deductible in computing the appellant’s income for the 1990 taxation year.
I believe that it is beyond dispute that the administrative and assessing policy followed by the Minister of National Revenue and in particular the Minister’s own interpretation of the law set out in interpretation bulletins can be relied on by a taxpayer where the legislation is ambiguous or its meaning is doubtful as an aid to the construction and interpretation of the applicable provisions of the Income Tax Act to any given case. In this connection, I would like to refer to an excerpt from the judgment of Justice Décary speaking for the Federal Court of Appeal in the case of Vaillancourt v. The Queen, [1991] 2 C.T.C. 42, 91 D.T.C. 5408 (F.C.A.), where at page 48 (D.T.C. 5412), he said:
It is well settled that interpretation bulletins only represent the opinion of the Department of National Revenue, do not bind either the Minister, the taxpayer or the courts and are only an important factor in interpreting the Act in the event of doubt as to the meaning of the legislation. Having said that, I note that the courts are having increasing recourse to such bulletins and they appear quite willing to see an ambiguity in the statute-as a reason for using them-when the interpretation given in a bulletin squarely contradicts the interpretation suggested by the Department in a given case or allows the interpretation put forward by the taxpayer. When a taxpayer engages in business activity in response to an express inducement by the Government and the legality of that activity is confirmed in an interpretation bulletin, it is only fair to seek the meaning of the legislation in question in that bulletin also. As Prof. Côté points out in The Interpretation of Legislation in Canada. "The administration’s presumed authority and expertise is never more persuasive than when the judge succeeds in turning it against its author, demonstrating a contradiction between the administration’s interpretation and its contentions before the Court."
In the present case, the appellant in the part of his notice of appeal dealing with his reasons makes reference to public statements of Revenue Canada and the Department of Finance and to the policy of Revenue Canada set out in Interpretation Bulletin IT- 445 in support of his position that the amount of interest is deductible under the appropriate provisions of the Income Tax Act. In my view, the appellant is entitled to refer to the material mentioned in paragraphs 35 and 36 of the notice of appeal for the purpose of upholding his contention that the subject interest can be deducted pursuant to paragraph 20(1 )(c) of the Income Tax Act. These comments dispose of this motion as far as it relates to paragraphs 35 and 36 of the notice of appeal.
I shall now deal with the respondent’s contention that paragraphs 37 and 38 of the notice of appeal should be struck out. In paragraphs 37 and 38 of the notice of appeal, the appellant invokes in support of his appeal draft legislation concerning the income tax treatment of interest on borrowed money. This draft legislation was made public in December 1991 for public review and comment. These proposals never became law. While this draft legislation together with the Department of Finance release in December 1991 and the commentary accompanying this material may be of some general interest respecting the matter of the deductibility of interest under the Income Tax Act. I do not believe that it could be useful and relied on in the interpretation and application of the relevant provisions of the income tax law. This draft legislation represented the tentative views of the Government of Canada in December 1991 and nothing more. It is akin to a discussion paper. The link or connection with the assessing policy of the Minister of National Revenue is just too remote. I do not think that the material to which I have just referred come within the purview of the administrative practice and policy relied on by the Supreme Court of Canada in the case Hard v. D.M.R. (Quebec), [1978] 1 S.C.R. 851, [1977] C.T.C. 441,77 D.T.C. 5438.
For these reasons, the motion to strike out is granted in part with respect to paragraphs 37 and 38 of the notice of appeal. The motion is dismissed to the extent that it has to do with paragraphs 35 and 36 of the notice of appeal.
The respondent is granted 60 days from the date of this judgment to file and serve the reply to the notice of appeal.
In view of the divided success, there shall be no costs on this motion.
Motion granted.
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