The
Assistant
Chairman:—This
is
an
appeal
by
Estate
Henri-Charles
Tétreault
against
the
assessment
of
tax
on
property
passing
on
the
death
of
Henri-Charles
Tétreualt.
Mr
Henri-Charles
Tétreault
died
on
November
25,
1968,
leaving
in
effect
a
will
signed
on
July
30,
1947,
the
relevant
clauses
of
which
read
as
follows:
(Translation)
3.
I
give
and
bequeath
to
my
wife,
Bernadette
Leduc,
all
my
movable
and
immovable
property
of
any
kind,
which
I
shall
leave
on
my
decease,
constituting
her
my
universal
legatee
with
full
power
to
use
and
dispose
of
all
my
property
as
she
sees
fit,
subject
notwithstanding
to
the
conditions
hereinafter
stipulated.
4.
On
my
decease
my
wife
shall
undertake
the
instruction,
education
and
care
of
my
children
as
was
done
by
us
both
in
my
lifetime,
instructing
them
as
their
circumstances
may
require
and
according
to
their
inclination,
even
after
they
have
attained
the
age
of
twenty-one.
5.
On
the
decease
of
my
wife
all
the
property
I
have
left
her,
which
she
has
not
disposed
of,
and
all
money
which
she
has
not
used
for
her
own
support
and
to
provide
for
all
the
needs
of
my
children,
as
heretofore
mentioned,
shall
revert
to
my
children
in
equal
shares.
The
Minister
refused
to
deduct
the
value
of
the
property
which
the
testator
bequeathed
to
his
wife
from
the
aggregate
net
value
of
the
property
transferred.
Counsel
for
the
appellant
maintains
that
the
latter
should
have
benefited
from
the
deduction
allowed
in
paragraph
7(1
)(a)
of
the
Estate
Tax
Act.
In
support
of
this
argument
counsel
for
the
appellant
contends
that
all
the
property
comprised
in
the
estate
of
Henri-Charles
Tétreault,
which
passed
to
his
wife,
was
vested
indefeasibly
in
the
wife
for
her
benefit,
and
that
the
property
of
the
deceased
so
transferred
to
his
wife
does
not
constitute
a
gift
made
by
the
creation
of
a
settlement.
Alternatively,
counsel
contends
that
if
the
Board
concluded
that
the
property
transferred
to
the
wife
of
the
testator
constituted
a
gift
made
by
the
creation
of
a
settlement,
then
the
gift
made
to
the
wife
would
meet
the
requirements
of
paragraph
7(1
)(b)
of
the
Act,
and
the
deduction
allowed
by
this
section
should
accordingly
be
granted.
Counsel
for
the
respondent
admits
that
appellant’s
property
was
vested
absolutely
and
indefeasibly
in
the
wife
by
virtue
of
the
will
of
the
deceased,
but
he
contends
the
wife
became
a
universal
legatee
by
the
creation
of
a
settlement
within
the
meaning
of
subsection
62(1)
of
the
Estate
Tax
Act,
and
consequently
no
deduction
can
be
made
from
the
aggregate
net
value
of
this
property
under
paragraph
7(1
)(a)
of
that
Act.
The
said
subsection
62(1)
(Revised
Statutes
of
Canada,
1970)
reads
as
follows:
62.
(1)
In
this
Act
“settlement”
includes
(a)
any
trust,
whether
expressed
in
writing
or
otherwise,
in
favour
of
any
person,
and,
if
contained
in
a
deed
or
other
instrument
effecting
the
settlement,
whether
or
not
such
deed
or
other
instrument
was
made
for
valuable
consideration
as
between
the
settlor
and
any
other
person,
and
(b)
any
deed
or
other
instrument
under
or
by
virtue
of
which
a
usufruct
or
substitution
is
created
or
any
real
property
or
estate
or
interest
therein
stands
limited
to
any
persons
by
way
of
succession;
In
view
of
that
section,
clauses
3
and
5
of
the
will
of
the
deceased
in
my
opinion
constitute
a
universal
legacy
to
the
wife,
a
legacy
which
is
however
subject
to
a
residual
substitution
in
favour
of
the
children,
and
will
take
effect
on
the
wife’s
death,
which
prevents
her
from
bequeathing
the
residue
of
the
property
she
has-
received
from
her
husband
otherwise
than
to
their
children.
This
potential
substitution
prevents
the
Minister
from
granting
the
deductions
allowed
under
paragraph
7(1)(a).
Subparagraph
7(1)(b)(ii)
(Revised
Statutes
of
Canada,
1970)
reads
as
follows.
7.
(1)
For
the
purpose
of
computing
the
aggregate
taxable
value
of
the
property
passing
on
the
death
of
a
person,
there
may
be
deducted
from
the
aggregate
net
value
of
that
property
computed
in
accordance
with
Division
B
such
of
the
following
amounts
as
are
applicable:
(b)
the
value
of
any
gift
made
by
the
deceased
whether
during
his
lifetime
or
by
his
will
that
can,
within
six
months
after
the
death
of
the
deceased
or
such
longer
period
as
may
be
reasonable
in
the
circumstances,
be
established
to
be
absolute
and
indefeasible
and
that
was
made
by
him
by
the
creation
of
a
settlement
under
which
(ii)
no
person
except
such
spouse
may
receive
or
otherwise
obtain,
after
the
death
of
the
deceased
and
before
the
death
of
such
spouse,
any
of
the
capital
of
the
settlement
or
any
use
thereof,
or
any
of
the
income
of
the
settlement
to
which
such
spouse
is
entitled
or
any
use
thereof,
The
conditions
contained
in
clause
4
of
the
will,
under
which
the
wife
is
required
by
express
provisions
in
the
will
to
undertake
the
instruction,
education
and
care
of
the
children,
are
not
merely
a
reminder
to
the
wife
to
look
after
the
care
and
education
of
the
children,
but
are
in
fact,
in
my
view,
an
express
condition
of
the
legacy
to
the
wife.
Although
the
conditionns
cover
the
same
subject
matter
as
Article
165
of
the
Civil
Code,
they
are
nonetheless
distinct
and
operative
in
themselves,
and
do
not
meet
the
requirements
of
subparagraph
7(1)(b)(ii),
so
that
the
deductions
allowed
in
that
section
of
the
Act
are
not
applicable
in
the
case
at
bar.
For
these
reasons,
I
conclude
that
the
appeal
has
no
legal
foundation
and
should
be
dismissed.
Appeal
dismissed.
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