Investissement Boeckh Inc. v. Agence du revenu du Québec, 2023 QCCA 633

The ARQ reassessed the taxpayer (“Boeckh”) for its 2007 to 2015 taxation years, on the basis that net gains realized in those years were income account gains rather than capital gains. Boeckh was a closely-held investment company whose portfolio (of over $100 million for many of the years) was focused on junior Canadian public companies in the resource and high tech sectors. The Court of Quebec had found that an election which Boeckh had made pursuant to TA s. 250.1 (equivalent to ITA s. 39(4)) was ineffective by virtue of the exclusion under TA s. 250.3(a) (equivalent to ITA s. 39(5)(a)) for a "trader or dealer in securities".

In rejecting a submission of Boeckh that the interpretation of “trader or dealer” in Vancouver Metal Arts should not be adopted for purposes of s. 250.3(a), the Court of Appeal stated (at paras. 46, 48, TaxInterpretations translation):

In sum, the words "a trader or dealer in securities" in TA section 250.3 must be interpreted to mean, at a minimum, a person whose profession or business is the purchase and sale of securities. This interpretation is compatible with the ordinary meaning that it is appropriate to accord to the words employed in the text of the provision, as well as being coherent with the object of the TA and the intention of the legislature, which clearly wished to favour a harmonization in this regard between the Quebec and federal tax regimes. An interpretation of TA section 250.3 that differed from that of its federal equivalent in ITA subsection 39(5) would derogate from this legislative objective. …

[I]n tax matters, where the federal and provincial provisions are appreciably in the same form, a presumption of coherence between the two provisions should prevail.

The Court further found that the Court below had not erred in applying Vancouver Metal Arts to find that Boeckh was a trader or dealer in light of the following findings:

• A qualified investment professional (an experienced CFA) devoted himself full-time to managing Boeckh’s portfolio;
• The portfolio had what was considered to be a high turnover (of around 30%) and there was a high absolute number of transactions.
• Boeckh’s objective was to generate gains rather than dividends, and focused on companies with a high potential for appreciation.

In finding that it was appropriate to apply, in interpreting a Quebec Taxation Act provision, the interpretation that had been accorded in Vancouver Metal Arts to the similar federal provision on which the Quebec provision had been modelled, the Court stated (at paras. 46, 48, TaxInterpretations translation):

[T]he legislature … clearly wished to favour a harmonization in this regard between the Quebec and federal tax regimes. An interpretation of TA section 250.3 that differed from that of its federal equivalent in ITA subsection 39(5) would derogate from this legislative objective. …

[I]n tax matters, where the federal and provincial provisions are appreciably in the same form, a presumption of coherence between the two provisions should prevail.