Hugessen
J.A.:
—
We
have
not
been
persuaded
that
the
learned
Tax
Court
judge
erred
in
any
material
respect.
The
appellant
failed
to
deduct
and
remit
tax
on
an
interest
payment
to
the
non-resident
holder
of
a
debt
instrument
that
it
had
issued.
It
was
required
to
make
such
deduction
by
subsection
215(f)
:
215(1)
Deduction
and
payment
of
tax
(1)
When
a
person
pays
or
credits
or
is
deemed
to
have
paid
or
credited
an
amount
on
which
an
income
tax
is
payable
under
this
Part,
he
shall,
notwithstanding
any
agreement
or
any
law
to
the
contrary,
deduct
or
withhold
therefrom
the
amount
of
the
tax
and
forthwith
remit
that
amount
to
the
Receiver
General
on
behalf
of
the
non-resident
person
on
account
of
the
tax
and
shall
submit
therewith
a
statement
in
prescribed
form.
As
a
consequence,
pursuant
to
subsection
215(6),
the
appellant
itself
had
to
pay
such
tax
and
became
entitled
to
recover
the
amount
thereof
from
the
non-resident:
215(6)
Liability
for
tax
(6)
Where
a
person
has
failed
to
deduct
or
withhold
any
amount
as
required
by
this
section
from
an
amount
paid
or
credited
or
deemed
to
have
been
paid
or
credited
to
a
non-resident
person,
that
person
is
liable
to
pay
as
tax
under
this
Part
on
behalf
of
the
non-resident
person
the
whole
of
the
amount
that
should
have
been
deducted
or
withheld,
and
is
entitled
to
deduct
or
withhold
from
any
amount
paid
or
credited
by
him
to
the
non-resident
person
or
otherwise
recover
from
the
non-resident
person
any
amount
paid
by
him
as
tax
under
this
Part
on
behalf
thereof.
The
appellant
was
unsuccessful
in
its
recovery
attempts.
It
also
failed,
not
surprisingly,
to
convince
the
subsequent
holder
of
the
debt
instrument
to
accept
liability
for
the
payment
made
on
behalf
of
its
predecessor
in
title.
The
appellant
now
attempts
to
deduct
this
amount
for
income
tax
purposes.
It
cannot
do
so.
Being
a
payment
of
tax
for
which
the
appellant
was
liable
under
the
Act,
it
is
not
an
outlay
made
for
the
purpose
of
producing
income.
It
is
not
a
borrowing
expense
since
it
is
over
and
above
what
was
due
under
the
debt
instrument.
It
is
not
a
deductible
bad
debt
since,
if
the
amount
had
been
recovered,
it
would
not
have
had
the
character
of
income.
The
fact
that
the
appellant
was
successful
in
recovering
a
small
part
of
the
tax
from
the
new
holder
of
the
debt
instrument
(such
part
being
calculated
by
specific
reference
to
the
period
starting
only
when
the
latter
acquired
it)
and
accepted
responsibility
for
the
balance
“to
retain
a
solid
business
relationship”
(A.B.
Vol.
II,
page
323)
does
not
change
the
character
of
the
payment
made.
For
these
reasons,
and
for
those
given
by
the
Tax
Court
judge,
the
appeal
will
be
dismissed
with
costs.
Appeal
dismissed.
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