KERWIN,
J.:
The
executors
of
the
will
of
the
Honourable
Patrick
Burns
and
other
parties
added
in
the
Exchequer
Court
appeal
from
a
judgment
of
that
Court
(ante,
p.
13)
dismissing
an
appeal
from
the
decision
of
the
Minister
of
National
Revenue
confirming
the
assessments
to
income
tax
made
upon
the
executors
in
respect
of
the
years
1938,
1939,
1940
and
1941,
under
the
provisions
of
the
Income
War
Tax
Act.
The
testator
died
February
24th,
1937,
having
made
his
last
will
and
testament
and
a
codicil
thereto,
probate
of
which
was
duly
granted.
It
is
unnecessary
to
refer
to
the
codicil
or
to
set
forth
all
the
provisions
of
the
will
or
the
agreements
made
with
the
widow
of
the
testator’s
son.
Suffice
it
to
say
that
taken
in
conjunction-
with
certain
orders
made
by
the
Courts
of
the
Province
of
Alberta
where
the
testator
was
domiciled,
the
Executors,
in
the
events
that
have
transpired,
were
directed
to
act
as
follows,
and
proceeded
accordingly
in
the
administration
of
the
large
estate
left
by
the
deceased.
After
payment
of
specific
legacies,
the
executors,
referred
to
as
"‘my
Trustees’’,
were
to
hold
the
balance
of
the
estate,
referred
to
as
“my
Trust
Estate’’,
in
trust
to
pay
certain
annuities
and
(paragraph
35)
“to
appropriate
sufficient
of
the
same
or
of
the
investments
thereof
to
insure
an’
annual
income
therefrom
sufficient
to
pay
and
discharge
the
Annuities
then
outstanding
and
hereinbefore
given
and
bequeathed
by
this
my
Will,
and
to
hold
‘my
Trust
Estate,’
including
the
accumulations
thereof
and
the
additions
thereto
by
reason
of
the
deaths
of
Annuitants
or
otherwise
until
the
death
of
the
last
of
the
Annuitants
to
whom
I
have
bequeathed
Annuities
by
this
my
Will
or
the
death
of
the
widow
of
my
said
son,
Patrick
Thomas
Michael
Burns,
whichever
shall
last
happen
and
upon
further
trust
to
pay”;—
named
nephews
and
nieces
a
total
of
60%
of
the
net
annual
income.
Upon
the
death
of
the
last
of
the
annuitants
or
of
the
son’s
widow,
the
trustees
were
(paragraph
36)
to
stand
possessed
of
‘‘
‘my
Trust
Estate’
with
all
accumulations
thereof
and
additions
thereto
and
the
whole
thereof
to
hold
upon
further
trust
to
distribute”
67%
thereof
among
named
nephews
and
nieces
“And
Upon
THE
Further
TRUST
to
pay
and
convey
the
rest,
residue
and
remainder
of
‘my
Trust
Estate’
unto
The
Royal
Trust
Co.
for
the
creation
and
establishment
of
a
trust
to
be
known
as
the
‘Burns
Memorial
Trust’,
to
be
administered
by
it
as
trustee
at
its
office
in
the
City
of
Calgary,
in
the
Provinee
of.
Alberta,
and
the
net
annual
income
thereof
to
pay
and
distribute
annually
in
equal
shares
thereof
among
the
following
:—
(1)
The
Father
Lacombe
Home
at
Midnapore
in
the
Province
of
Alberta.
(2)
The
Branch
of
the
Salvation
Army,
having
its
Headquarters
at
the
City
of
Calgary,
in
the
Province
of
Alberta.
(3)
The
Children’s
Shelter
carried
on
under
the
auspices
of
the
said
City
of
Calgary,
.
.
.
(4)
The
Fund
established
for
the
benefit
of
Widows
and
Orphans
of
Members
of
the
Police
Force
of
the
City
of
Calgary,
.
.
.
(5)
The
Fund
established
for
the
benefit
of
Widows
and
Orphans
of
Members
of
the
Fire
Brigade
of
the
City
of
Calgary,
.
.
.”?
The
residue
to
be
conveyed
to
the
Royal
Trust
Co.
for
the
purposes
mentioned
thus
represents
33%
of
40%
of
the
income
of
‘my
Trust
Estate”.
In
each
of
the
years
1938
to
1941
inclusive,
the
annuities
and
the
sums
due
the
widow
of
the
testator’s
son
under
the
agreements
with
her
were
paid
and
60%
of
the
total
net
income
of
the
estate
was
paid
to
the
nephews
and
nieces
entitled
thereto,
and
the
remaining
40%
of
the
net
income
was
transferred
by
book
entry
by
the
trustees
from
the
Estate
Income
Account
into
the
Estate
Capital
Account.
The
trustees
made
no
segrega-
tion
or
allocation
of
this
40%
of
the
net
income
as
between
the
individuals
entitled
ultimately
to
67%
thereof
under
paragraph
36
and
the
Royal
Trust
Co.
to
which
is
to
be
paid
and
conveyed
eventually
the
remaining
33%.
The
trustees
filed
income
tax
returns
for
each
of
the
years
1938
to
1941
inclusive
but
the
Department
disallowed
for
each
year
a
certain
sum
claimed
by
the
trustee
as
deductible
from
the
taxable
income.
Each
deduction
represents
33%
of
40%
of
the
net
income
of
the
estate
for
that
year.
These
amounts
are
claimed
as
proper
deductions
by
the
estate
and
by
the
added
parties,
who
are
the
Royal
Trust
Co.,
the
Lecombe
Home,
the
Governing
Council
of
the
Salvation
Army
Canada
West,
and
the
trustees
of
the
three
Calgary
funds.
The
basis
of
the
claim
is
that
even
if
these
amounts
are
taxable
under
certain
provisions
of
the
Income
War
Tax
Act
(which
is
denied),
they
have
accrued
to
the
credit
of
an
ascertained
beneficiary
or
ascertained
beneficiaries
which
are
charitable
institutions
and
are,
therefore,
exempt
under
section
4(e)
of
the
Act
:—
‘(e)
The
income
of
any
religious,
charitable,
agricultural
and
educational
institution,
board
of
trade
and
chamber
of
commerce,
no
part
of
the
income
of
which
inures
to
the
personal
profit
of,
or
is
paid
or
payable
to
any
proprietor
thereof
or
shareholder
therein
;’’
It
should
be
stated
that
by
an
order
of
the
Supreme
Court
of
Alberta,
dated
December
11th,
1939,
the
gifts
of
income
to
the
Lacombe
Home,
the
Salvation
Army,
the
Children’s
Shelter,
the
Fund
established
for
the
Benefit
of
Widows
and
Orphans
of
Members
of
the
Police
Force
of
the
City
of
Calgary,
and
the
Fund
established
for
the
Benefit
of
the
Widows
and
Orphans
of
Members
of
the
Fire
Brigade
of
the
City
of
Calgary
were
declared
to
be
good
and
valid
charitable
bequests.
By
the
same
order,
after
reciting
that
it
appeard
that
there
was
no
institution
existing
in
Calgary
known
and
administered
as
a
Children’s
Shelter
or
carried
on
under
the
auspices
of
the
City,
that
no
fund
had
been
established
for
the
benefit
of
widows
and
orphans
of
Members
of
the
Police
Force
of
the
said
City,
and
that
no
fund
had
been
established
for
the
benefit
of
the
widows
and
orphans
of
Members
of
the
Fire
Brigade
of
the
said
City,
schemes
were
approved
for
the
setting-up
and
administration
of
funds
for
‘‘The
Trustees
for
Poor,
Indigent
and
Neglected
Children
of
the
City
of
Calgary
’
’,
"‘The
Trustees
for
Widows
and
Orphans
of
the
Police
Force
of
the
City
of
Calgary’’
and
‘‘The
Trustees
for
Widows
and
Orphans
of
the
Fire
Brigade
of
the
City
of
Calgary’’,
and
provision
was
made
in
each
scheme
for
the
appointment
of
trustees
for
the
several
purposes.
According
to
the
evidence,
the
Lacombe
Home
is
conducted
as
part
of
the
charitable
work
carried
on
by
Les
Soeurs
de
Charite
de
la
Providence,
and
the
work
of
the
Salvation
Army
in
Calgary
falls
under
the
jurisdiction
of
the
Governing
Council
of
the
Salvation
Army
Canada
West.
They
are
religious
or
charitable
organizations
and,
for
the
purposes
of
this
present
discussion,
I
will
assume
that
the
other
three
funds
mentioned
in
the
will
and
for
which
trustees
were
set-up
by
the
schemes
approved
by
the
order
are
also
charitable
organizations
within
the
meaning
of
section
4(e)
of
the
Act
as
expounded
by
the
Privy
Council
in
the
Birtwhistle
case,
Minister
of
National
Revenue
v.
Trusts
and
Guarantee
Co:
[1940]
A.C.
138.
The
difficulty
in
the
appellants’
way
in
seeking
exemption
under
this
clause
is
that
the
income
in
question
is
not
the
income
of
any
of
these
bodies.
They
are
not
to
receive
it
at
any
time
from
any
one
but
only
the
income
on
the
capitalized
sums
from
the
Royal
Trust
Co.
It
is
not
income
to
them
at
all
within
the
scope
of
the
Act,
particularly
section
3,
and
is
not
"income
accruing
to
the
credit
of
the
taxpayer”
within
subsection
1
of
section
11
:—
"The
income,
for
any
taxation
period,
of
a
beneficiary
of
any
estate
or
trust
of
whatever
nature
shall
be
deemed
to
include
all
income
accruing
to
the
credit
of
the
taxpayer
whether
received
by
him
or
not
during
such
taxation
period.’’
Mr.
Steer
argued
that
as
by
paragraph
35
of
the
will
the
trustees
were
to
“appropriate”
sufficient
of
‘my
Trust
Estate”
to
insure
an
annual
income
sufficient
to
pay
the
annuities,
it
should
be
taken
in
equity
as
having
been
done,
leaving
the
balance
of
the
annual
income
to
be
divided
60%
and
40%
;
and
that,
therefore,
the
40%
was
vested,—as
to
67%
thereof
in
the
named
beneficiaries,
and
as
to
33%
in
the
five
bodies
mentioned
above
or,
in
the
alternative,
in
the
Burns
Memorial
Trust.
As
to
the
five
bodies,
the
mere
fact
of
charities
being
entitled
to
income
does
not
give
them
the
right
to
demand
payment
of
the
corpus,
Halifax
School
for
the
Blind
v.
Chipman
[1937]
S.C.R.
196.
As
to
the
Burns
Memorial
Trust,
I
agree
with
the
trial
judge
that
it
is
merely
a
name
for
a
fund
to
be
administered
by
the
Royal
Trust
Co.
and
that
Company
is
nothing
more
than
a
trustee
as
was
the
Council
of
Colne
in
the
Birtwhistle
case.
The
income
in
question
does
not
belong
to
it
beneficially
and
like
the
Council
of
Colne,
it
is
not
a
charitable
organization.
The
claim
for
exemption
therefore
fails
but
it
is
still
necessary
for
the
respondent
to
show
that
the
estate
is
taxable
in
respect
of
the
income
im
question.
He
seeks,
first
of
all,
to
hold
the
trustees
taxable
under
subsection
2
of
section
11
:—
°
Income
accumulating
in
trust
for
the
benefit
of
unascertained
persons,
or
of
persons
with
contingent
interests
shall
be
taxable
in
the
hands
of
the
trustee
or
other
like
person
acting
in
a
fiduciary
capacity,
as
if
such
income
were
the
income
of
a
person
other
than
a
corporation,
provided
that
he
shall
not
be
entitled
to
the
exemptions
provided
by
paragraphs
(c),
(d),
(e)
and
(i)
of
subsection
one
of
section
five
of
this
Act,
and
provided
further
that
should
more
than
one
such
trust
be
created,
substantially
all
the
assets
of
which
are
received
from
one
person
(whether
or
not
administered
by
the
same
or
different
trustees)
and
be
so
conditioned
as
to
fall
in
ultimately
in
favour
of
one
beneficiary,
class
or
group
of
bene-
ficiaries,
then
the
income
of
the
several
trusts
shall
be
taxed
as
one
trust
in
the
hands
of
such
one
of
the
trustees
as
the
Minister
may
determine,”
on
the
ground
that
the
income
is
"‘accumulating
in
trust
for
the
benefit
of
unascertained
persons’’.
In
the
Birt
whistle
case,
the
Privy
Council
held
"‘the
subsection
applies
in
every
case
where
income
is
being
accumulated
in
trust
for
the
benefit
of
unascertained
persons
whether
those
persons
will
or
will
not
ultimately
take
a
vested
interest
in
such
income,
and
whether
they
will
or
will
not
ever
become
entitled
to
specific
portions
of
it.
In
the
present
case
the
accumulated
interest
in
the
hands
of
the
respondents
as
trustees
will
in
the
year
1948
have
to
be
handed
over
to
the
Municipal
Couneil
of
Colne
as
trustees
in
trust
to
be
applied
for
the
benefit
of
the
aged
and
deserving
poor
of
that
town.
Such
aged
and
deserving
poor
are
without
any
question
persons,
and
equally
without
question
they
are
unascertained.
The
case,
therefore,
seems
to
fall
within
the
very
words
of
the
subsection.
‘
’
The
trial
judge
was
of
opinion
that
the
Lacombe
Home
and
the
Salvation
Army
were
‘‘unascertained
persons”
but
I
am
unable
to
agree.
Les
Soeurs
de
Charite
de
la
Providence
and
tlre
Salvation
Army
are
bodies
corporate
and
politic,
as
mentioned
in
section
1(h)
of
the
Act:—
“(h)
‘person’
includes
any
body
corporate
and
politic
and
any
association
or
other
body,
and
the
heirs,
executors,
administrators
and
curators
or
other
legal
representatives
of
such
person,
according
to
the
law
of
that
part
of
Canada
to
which
the
context
extends
;
‘
‘
*
and
they
are
ascertained.
I
quite
agree
that
the
interposition
of
trustees
between
executors
and
ultimate
beneficiaries
cannot
avoid
the
liability
to
taxation
under
subsection
2
of
section
11
as
this
was
distinctly
held
in
the
Birtwhistle
case
but
the
La-
combe
Home
and
the
Salvation
Army
are
not
trustees
in
any
sense.
Each
organization
uses
its
funds
generally
to
help
the
poor
and
afflicted
but
the
income
under
discussion
is
accumulating
in
trust
for
their
benefit
and
not
for
the
ones
under
their
care.
It
is
true
that
in
the
Birtwhistle
case
the
accumulated
income
was
to
be
handed
over
by
the
Trusts
and
Guarantee
Co.
to
the
Municipal
Council
to
be
used
by
the
latter
for
the
benefit
of
aged
and
deserving
poor
of
Colne,
while
here
the
Royal
Trust
Co.
is
to
hand
over
merely
a
share
of
the
income
on
the
income
in
dispute
to
the
two
bodies.
The
income
is
still
accumulated
in
trust
for
their
benefit
to
the
extent
of
their
shares.
I
agree,
however,
that
the
income
is
accumulating
in
trust
for
the
benefit
of
unascertained
persons
so
far
as
the
gifts
of
income
thereon
to
the
other
three
funds
are
concerned.
The
trustees
of
each
of
these
funds
are
merely
trustees
to
apply
the
gifts,
according
to
the
approved
schemes,
for
the
benefit
of
(a)
poor,
indigent
and
neglected
children,
(b)
widows
and
orphans
of
members
of
the
Calgary
Police
Force,
(c)
widows
and
orphans
of
members
of
the
Calgary
Fire
Brigade.
Such
trusts
fall
clearly
within
the
decision
in
the
Birtwhùtle
case
and
the
judgment
of
this
Court
in
Cosman’s
Trustees
v.
Minister
of
National
Revenue
[1940-41]
C.T.C.
330.
While
it
is
not
their
income,
it
is
income
accumulating
in
trust
for
their
benefit
since
they
are
entitled
to
a
share
of
the
income
thereon.
The
respondent
then
contends
that
subsection
4
of
section
11
applies
to
the
income
for
1940
and
1941.
From
1934
to
1940
this
subsection
read
:—
"‘Dividends
received
by
an
estate
or
trust
and
capitalized
shall
be
taxable
income
of
the
estate
or
trust.’’
Counsel
for
the
respondent,
before
the
trial
judge
and
before
this
Court,
did
not
attempt
to
succeed
on
this
point
for
the
years
1938
and
1939
under
this
wording
of
the
subsection
so
that
we
are
free
from
the
responsibility
of
construing
it
and
of
considering
whether,
to
the
extent
that
dividends
may
have
entered
into
the
income
of
“my
Trust
Estate’’,
part
of
the
33%
of
40%
of
the
income
for
the
years
1938
and
1939
are
taxable.
However,
by
chapter
34
of
the
1940
Statutes,
the
above
section
4
was
repealed
and
the
following
enacted
in
lieu
thereof
and
made
applicable
to
income
of
the
1940
taxation
period
and
fiscal
periods
ending
therein
and
to
all
subsequent
periods
:—
"
"
4.
(a)
Income
received
by
an
estate
or
trust
and
capitalized
shall
be
taxable
in
the
hands
of
the
executors
or
trustees,
or
other
persons
acting
in
a
fiduciary
capacity.
11:
(b)
Income
earned
during
the
life
of
any
person
shall,
('When
received
after
the
death
of
such
person
by
his
executors,
trustees
or
other
like
persons
acting
in
a
fiduciary
capacity,
be
taxable
in
the
hands
of
such
fiduciary.
‘
‘
Mr.
Steer
contended
that
this
was
not
a
true
charging
subsection
as
no
provision
was
made
as
to
the
appropriate
rates
of
taxation,
and
he
pointed
out
that
it
was
only
in
1941,
by
section
19
of
chapter
18,
that
paragraph
(c)
was
added:—
"(c)
Income
taxable
under
the
provisions
of
this
subsection
shall
be
taxed
as
if
such
income
were
the
income
of
a
person
other
than
a
corporation,
provided
that
no
deduction
shall
be
allowed
in
respect
of
the
exemptions
provided
by
paragraphs
(c),
(d),
(e),
(ee)
and
(i)
of
subsection
one
of
section
five
of
this
Act.’’
In
my
view
this
clause
was
added
ex
abundanti
cautela.
In
Holden
v.
Minister
of
National
Revenue
[1933]
A.C.
526,
the
Privy
Council
decided
that
subsection
2
of
section
11
as
it
then
stood
was
a
valid
charging
provision.
It
is
true
that
the
words
"‘as
if
such
income
were
the
income
of
an
unmarried
person”
appeared
therein
but
I
have
no
doubt
that
no
other
conclusion
would
be
arrived
at
under
the
present
wording
of
that
subsection,
"‘as
if
such
income
were
the
income
of
a
person
other
than
a
corporation’’,
since
their
Lordships
had
no
difficulty
in
deciding
as
they
did,
although
there
was
nothing
to
indicate
that
the
unmarried
person
was
to
be
a
person
who
was
not
a
householder
and
without
dependents.
Clause
(a)
of
section
4
being
a
true
charging
provision,
its
terms
are
too
clear
to
admit
of
any
doubt
that
where,
as
here,
income
is
received
by
an
estate
and
capitalized,
it
is
taxable
in
the
hands
of
the
trustees
It
is
contended
in
the
respondent
‘s
factum,
but
was
not
argued,
that
the
definition
of
‘‘person’’
in
section
2(h)
is
wide
enough
to
include
executors
and
trustees
and
that,
therefore,
income
accumulating
in
trust
in
the
hands
of
trustees
and
capitalized
can
be
taxed
under
section
9.
This
argument
misconceives
the
meaning
of
section
1(h)
and
the
whole
tenor
of
the
Act.
“‘
Person
‘
is
stated
to
include
the
heirs,
executors,
administrators’
and
curators
or
other
legal
representatives
of
such
person
but
this
has
no
bearing
upon
the
question
of
taxation
of
post
mortem
income
accumulated
in
trust
by
executors,
administrators,
or
other
legal
representatives
including
trustees.
If
such
income
is
not
caught
by
section
11,
it
is
not
covered.
The
income
for
the
years
1940
and
1941,
from
which
the
Lacombe
Home
and
the
Salvation
Army
would
receive
two-fifths
of
the
income
thereof
in
due
course
is,
therefore,
covered
by
sub-
section
4
of
section
11,
leaving
only
two-fifths
of
the
income
for
the
years
1938
and
1939
from
which
these
institutions
are
ultimately
to
receive
the
income,
free
from
taxation.
The
appellants
have
succeeded
in
part.
They
should
receive
one-half
of
their
costs
of
the
appeal
to
this
Court
and
there
should
be
no
costs
in
the
Exchequer
Court.
BAND,
J.:
The
controlling
fact
in
this
controversy
is
the
direction
to
accumulate
and
to
capitalize
until
the
death
of
the
annuitants
the
portion
of
the
net
income
intended
for
the
five
charities.
At
that
time,
the
whole
of
the
capital,
including
the
added
increments,
is
to
be
paid
over
to
the
trustee
of
the
Burns
Memorial
Fund
to
hold
in
perpetuity
and
to
distribute
the
annual
income
among
those
entitled.
Under
that.
provision,
the
accumulations
never
belong
to
nor
come
into
the
possession
of
the
charities:
they
represent
solely
the
growth
of
the
capital
which
ultimately
becomes
the
principal
from
which
the
income
benefits
to
the
charities
arise.
For
that
reason
I
think
it
impossible
to
say
that
the
accumulations
are
the
income
of
charitable
institutions,
and
they
are
not
then
within
the
exemption
of
section
4(e)
of
the
Income
War
Tax
Act.
Likewise,
they
are
not
income
“accruing
to
the
credit
of
the
taxpayer
whether
received
by
him
or
not
during
such
taxation
period’’
within
section
11(1).
In
support
of
this
view
of
‘
i
income
‘
‘
to
the
ultimate
beneficiary,
the
decision
of
Rowlatt,
J.
in
I.
R.
Com’rs
v.
Blackwell
[1924]
2
K.B.
351
was
cited;
but
Mr.
Steer
pointed
out
that
the
Court
of
Appeal,
in
dealing
with
this
case
in
[1926]
1
K.B.
392,
expressly
abstained
from
passing
on
the
rule
laid
down;
and
that
in
I.
R.
Com’rs
v.
Pakenham
[1927]
1
K.B.
594,
Rowlatt,
J.
expresses
doubts
that
his
former
view
was
sound.
But
there
is
an
essential
difference
between
the
factual
basis
of
the
Blackwell
decision
and
that
here.
There,
the
accumulated
income
would
go
ultimately
to
a
beneficiary
;
and
it
was
held
that
even
if
the
interest
of
the
son
was
vested,
a
postponement
during
minority
of
payment
over
would
prevent
the
accumulations
from
being
his
‘‘income’’.
Here,
as
I
have
stated,
the
beneficiaries
never
become
entitled
to
receive
the
annual
increments
in
any
form,
and
the
purpose
of
accumulation
is
to
capitalize
them
for
a
subsequent
enjoyment
of
income
from
them
only.
Are
they
‘‘income
accumulating
for
the
benefit
of’’
unascertained
persons
or
of
persons
with
contingent
interests
within
section
11(2)
?
The
plain
meaning
of
that
language
is,
I
think,
that
the
accumulation,
when
completed,
passes
in
its
entirety
to
the
persons
entitled:
and
that
transmission
is
the.
benefit
con-
templated.
Here
in
a
sense
the
accumulations
are
for
the
‘
‘
benefit
‘
‘
of
the
charities
in
the
future
increased
income
from
increased
capital.
But
the
word
cannot,
in
my
opinion,
be
extended
to
that
indirect.
and
remote
advantage.
If
it
were,
the
subsection
would
be
duplicated,
in
respect
of
capitalization
of
income
for
unascertained
persons
or
for
contingent
interests,
by
subsection
4
unless
it
is
said,
as
I
think
it
impossible
to
say,
that
subsection
4
does
not
apply
to
capitalization
when
such
persons
or
interests
are
involved.
It
would
seem,
moreover,
to
be
contradictory
to
say
that
these
annual
increments
are
not
income
either
under
4(e)
or
11(1)
because
they
never
reach
the
beneficiaries
and
yet
to
treat
their
accumulation
as
"income’’
of
the
same
beneficiaries
under
11(2).
To
do
that
would
be
to
distinguish
between
‘‘income
of’’
a
beneficiary
and
"‘income
accumulating
for
the
benefit
of’’
a
beneficiary.
They
are
not,
therefore,
"‘for
the
benefit
of’’
these
charities
whatever
may
be
the
latter’
S
interest
in
them.
There
remains
subsection
4,
and
this
seems
to
me
to
be
designed
to
meet
precisely
the
case
we
have
here,
that
of
capitalization
of
accumulating
income.
Subsections
1
and
2
of
the
section
distribute
the
cases
of
income
to
ascertained
or
unascertained
persons
with
vested
or
contingent
interests,
which
at
some
stage
passes
to
them
as
income
;
subsection
4
deals
with
the
capitalization
of
income
regardless
of
its
ultimate
destination.
The
difficulty,
however,
facing
the
respondent
is
that
of
the
adequacy
of
the
charging
language.
Paragraph
(a)
was
enacted
in
1940
and
paragraph
(c)
only
in
1941,
and
the
question
is
whether
under
(a)
alone
the
charge
is
sufficiently
provided.
The
paragraph
is
as
follows
:
"Income
received
by
an
estate
or
trust
and
capitalized
shall
be
taxable
in
the
hands
of
the
executors
or
trustees,
or
other
like
persons
acting
in
a
fiduciary
capacity.
’
‘
On
what
basis
is
that
taxation
to
be
calculated?
Is
an
‘‘estate
or
trust’’
to
be
a
person
or
a
corporation,
and
in
either
case
what,
if
any,
exemptions
are
to
be
allowed?
Subsection
2
cannot
be
resorted
to
because
it
deals
with
different
subject
matter
and.
conditions,
to,
which
it
is
limited,
and
there
is
no
other
section
that
can,
be
called
in
aid.
In
the
presence
in
the
Act
of
several
scales
of
taxation,
how
can
we
find
in
that
initial
provision
à
guide
to
the
measure
of
charge
which
the
legislation
intends?
think
the:
provision
incomplete,
it
is
casus
omissus,
and
;for
the
years
in
question
up
to
and
including
1940,1
inoperative.
For
the
year
1941,
however,
it
is
applicableitoisthe
income
in
question.
I
would,
therefore,
allow
the
appeal
and
C.T.C.
Burns’
Executors
v.
M.N.R.
265
reduce
the
assessments
of
income
for
1938,
1939
and
1940
by
the
amounts
so
accumulated
respectively.
The
1941
assessment
on
these
items
should
be
made
under
subsection
4
of
section
11.
The
appellant
should
recover
three-quarters
of
the
costs
in
both
courts.
Estey,
J.:
The
appellants
are
the
executors
of
the
will
of
the
Honourable
Patrick
Burns
who
died
February
24th,
1937.
Their
contention
is
that
the
Minister
of
National
Revenue
was
in
error
in
disallowing
certain
deductions
(on
the
basis
that
the
items
of
income
deducted
were
non-taxable)
made
by
them
in
the
income
tax
returns
filed
in
this
estate
for
the
years
1938,
1939,
1940
and
1941.
The
Minister’s
disallowance
was
upheld
in
the
Exchequer
Court
(ante,
p.
13).
After
directing
certain
specific
devises
and
bequests
the
will
provides
for
the
conversion
into
money
of
the
residue
from
which
funeral,
testamentary
and
other
specified
expenses
should
be
paid,
and
then
"‘my
Trustees
shall
stand
possessed
of
the
balance
of
the
said
rest,
residue
and
remainder,
.
.
.
with
the
income
and
accumulations
thereof
herein
referred
to
as
‘my
Trust
Estate’
upon
further
trust
to
invest
.
.
.
and
out
of
the
net
annual
income
therefrom
and
from
all
parts
of
‘my
Trust
Estate
’,
to
pay
annually
’
’
certain
annuities.
After
payment
of
these
annuities,
the
will
provides
"and
to
invest
the
surplus,
if
any,
of
such
annual
income
in
the
names
of
my
Trustees
as
part
of
the
capital
of
‘my
Trust
Estate’
at
compound
interest.”
The
will
then
directs
""my
Trustees
to
hold
'my
Trust
Estate’
and
to
appropriate
sufficient
of
the
same
or
of
the
investments
thereof
to
Insure
an
annual
income
therefrom
sufficient
to
pay
and
discharge
the
Annuities
.
.
.
and
to
hold
'my
Trust
Estate’,
including
the
accumulations
thereof
and
the
additions
thereto
by
reason
of
the
deaths
of
Annuitants
or
otherwise
until
the
death
of
the
last
of
the
Annuitants
to
whom
I
have
bequeathed
Annuities
by
this
my
Will
or
the
death
of
the
widow
of
my
said
son,
.
.
.
whichever
shall
last
happen’’,
and
during
that
period
to
pay
from
the
net
annual
income
to
specified
nephews
and
nieces
60%
of
that
income
and
‘‘to
invest
the
surplus,
if
any.
of
such
annual
income,
in
the
names
of
my
Trustees
as
part
of
the
capital
of
‘my
Trust
Estate’
at
compound
interest.’’
This
surplus
is
the
40%
‘‘of
the
net
income
of
the
estate’’
referred
to
in
para.
9
(hereinafter
quoted)
of
the
Agreed
Statement
of
Facts.
The
will
then
provides
that
the
residue
of
"my
Trust
Estate”
shall
be
distributed
‘‘upon
the
death
of
the
last
of
the
annuitants
to
whom
I
have
bequeathed
annuities
in
this
my
Will
or
the
death
of
the
widow
of
my
said
son,
whichever
last
shall
happen’’.
This
distribution
shall
be
upon
the
basis
of
67%
to
specified
beneficiaries,
and
33%
thereof
shall
be
paid
and
conveyed
"
"
unto
The
Royal
Trust
Co.
for
the
creation
and
establishment
of
a
Trust
to
be
known
as
the
‘Burns
Memorial
Trust’
to
be
administered
by
it
as
Trustee
at
is
office
in
the
City
of
Calgary,
in
the
Province
of
Alberta,
and
the
net
annual
income
therefrom
to
pay
and
distribute
annually
in
equal
shares
thereof
amongst
the
following:
(€
(1).
The
Father
Lacombe
Home
at
Midnapore
in
the
Province
of
Alberta.
“(2).
The
Branch
of
the
Salvation
Army,
having
its
Headquarters
at
the
City
of
Calgary,
in
the
Province
of
Alberta.
44
(3).
The
Children’s
Shelter
carried
on
under
the
auspices
of
the
said
City
of
Calgary,
towards
which
I
have
bequeathed
Fifty
(50)
4%
non-voting,
non-cumulative,
redeemable
Preference
Shares
in
the
Capital
Stock
of
Burns
Foundation
(Limited)
by
this
my
Will.
cc
(4).
To
the
Fund
established
for
the
benefit
of
WIDOWS
AND
ORPHANS
OF
MEMBERS
OF
THE
POLICE
FORCE
OF
THE
CITY
OF
CALGARY,
towards
which
I
have
bequeathed
Fifty
(50)
4%
non-voting,
non-
cumulative,
redeemable
Preference
Shares
in
the
Capital
Stock
of
Burns
Foundation
(Limited)
by
this
my
Will.
44
(5).
To
the
Fund
established
for
the
benefit
of
WIDOWS
AND
ORPHANS
OF
MEMBERS
OF
THE
FIRE
BRIGADE
OF
THE
CITY
OF
CALGARY,
towards
which
I
have
bequeathed
Fifty
(5)
4%
non-voting,
non-
cumulative,
redeemable
Preference
Shares
in
the
Capital
Stock
of
Burns
Foundation
(Limited)
by
this
my
Will,”
In
each
year
after
all
payments
were
made
there
was
a
surplus
of
income
which
has
been
invested
in
compliance
with
the
terms
of
the
will
‘‘in
the
names
of
my
Trustees
as
part
of
the
capital
of
‘my
Trust
Estate’
at
compound
interest’’.
The
surplus
invested
as
capital
has
in
each
year
increased
the
corpus
of
‘‘my
Trust
Estate’’
to
be
divided
67%
and
33%
as
above
indicated.
At
the
hearing
before
the
Exchequer
Court
the
parties
filed
an
agreed
statement
of
facts,
para.
9
of
which
reads
as
follows:
4
9.
That
the
taxable
income
submitted
by
the
Appellant,
the
taxable
income
as
assessed
by
the
Department,
and
the
amount
disallowed
by
the
Department
during
the
years
1938
to
1941
inclusive,
are
as
follows
:
|
Taxable
Income
|
|
Amount
Disallowed
|
|
Per
|
|
by
Income
|
|
Department
|
Estate
|
Tax
Department:
|
|
1938
$10,597.94
|
$
9,199.01
|
$
1,398.93
|
|
1939
|
11,656.57
|
7,809.90
|
3,846.67
|
|
1940
|
20,096.97
|
14,382.57
|
5,714.40
|
|
1941
|
26,775.24
|
18,118.03
|
8,657.21
|
|
$69,126.72
|
$49
509.51
|
$19,617.21
|
The
amounts
disallowed
by
the
Income
Tax
Department
represent
33%
of
40%
of
the
net
income
of
the
estate,
These
amounts
are
claimed
as
proper
deductions
by
the
estate
on
the
ground
that
they
have
accrued
to
the
credit
of
an
ascertained
beneficiary
or
ascertained.
beneficiaries
which
are
charitable
institutions.
This
view
is
not
accepted
by
the
Income
Tax
Department.”
The
issue
here
to
be
determined
:
is
33%
of
the
income
realized
from
the
investment
of
40%
of
the
income—being
the
surplus
after
paying
in
each
year
60%
thereof
to
the
nephews
and
nieces—subject
to
income
tax?
It
is
agreed
that
in
each
of
the
years
1938
to
1941
inclusive,
60%
of
the
net
income
was
paid
out
to
the
specified
nieces
and
nephews
and
the
executors,
by
book
entry,
transferred
the
remaining
40%
from
the
estate
income
account
into
the
estate
capital
account.
The
executors
made
no
segregation
or
allocation
of
the
net
income
from
the
said
40%
as
between
the
individuals
entitled
to
67%
thereof
and
the
parties
entitled
to
the
remaining
33%
thereof.
The
appellants’
contention
is
that
income
derived
from
the
33%
is
not
taxable
because
(a)
the
"‘Burns
Memorial
Trust”
is
a
charitable
institution
and
as
such
not
taxable
within
the
meaning
of
section
4(e),
or
alternatively,
the
income
accrued
to
the
credit
of
The
Royal
Trust
Co.,
or
in
the
alternative
to
the
five
named
ascertained
beneficiaries,
or
in
the
further
alternative,
to
the
Salvation
Army
and
Lacombe
Home,
which
are
ascertained
beneficiaries,
and
therefore,
under
section
11(1)
the
individual
beneficiaries
and
not
the
exeeutors
are
taxable
with
respect
thereto.
The
Crown
on
the
other
hand
contends
that.
neither
section
4(e)
nor
11(1)
apply
because
the
income
in
question
was
received
by
the
executors
and
used
by
them
to
make-certain
payments
and
invest
the
surplus
as
part
of
the
capital
of
"‘my
Trust
Estate”.
At
the
time
of
distribution
33%
of
the
residue
of
"‘my
Trust
Estate’’
will
be
paid
over
to
The
Royal
Trust
Co.
not
as
income
but
as
capital.
The
Royal
Trust
Co.
will
receive
it
as
capital
and
hold
it
in
trust
and
pay
the
income
therefrom
to
the
specified
charities.
In
other
words,
that
neither
The
Royal
Trust
Co.
as
trustee
nor
any
of
the
beneficiaries
will
ever
receive
any
portion
of
the
amounts
in
question
as
income
and
‘therefore
they
cannot
be
taxed
nor
be
granted
an
exemption
with
respect
to
income
which
they
never
received.
Further,
that
the
trustees
are
liable
under
section
11(2)
in
that
the
beneficiaries
are
unascertained
and
if
not,
then
they
are
liable
under
section
9.
Section
4(e)
of
the
Income
War
Tax
Act
reads:
"‘4.
The
following
incomes
shall
not
be
liable
to
taxation
hereunder
:
(e)
The
income
of
any
religious,
charitable,
agricultural
and
educational
institution,
board
of
trade
and
chamber
of
commerce,
no
part
of
the
income
of
which
inures
to
the
personal
profit
of,
or
is
paid
or
payable
to
any
proprietor
thereof
or
shareholder
therein
;
‘
’
The
money
is
paid
to
The
Royal
Trust
Co.
‘
"
for
the
creattion
and
establishment
of
a
Trust
to
be
known
as
the
‘Burns
Memorial
Trust’
to
be
administered
by
it
as
Trustee
at
its
office
in
the
City
of
Calgary,
in
the
Province
of
Alberta,
and
the
net
annual
income
therefrom
to
pay
and
distribute
annually
in
equal
shares
thereof
’
’
amongst
the
five
specified
beneficiaries.
It
is
not
nor
could
it
be
successfully
contended
that
The
Royal
Trust
Co.
is
a
charitable
institution
within
the
meaning
of
section
4(e)
but
it
is
contended
that
the
‘‘Burns
Memorial
Trust”
is
a
charitable
institution.
An
order
made
and
issued
out
of.
the
Supreme
Court
of
Alberta
under
date
of
December
11th,
1939,
declared
all
of
these
gifts
"good
and
valid
charitable
bequests’’.
Such
a
declaration,
however,
does
not
conclude
the
issue.
In
order
to
be
exempt
under
section
4(e)
it
must
be
‘‘the
income
of
any
.
.
.
charitable
.
.
.
institution.’’
A
somewhat
similar
question
was
dealt
with
in
Minister
of
National
Revenue
v.
Trusts
and
Guarantee.
Co.
[1940]
A.C.
138,
where,
speaking
on
behalf
of
the
Privy
Council,
Lord
Romer
at
p.
149
stated
:
"That-
it
is
a
charitable
trust
no
one
can
doubt.
But
their
Lordships
are
unable
to
agree
that
it
is
a
charitable
institution
such
as
is
contemplated
by
s.
4(e)
of
the
Act.
It
is
by
no
means
easy
to
give
a
definition
of
the
word
‘institution’
that
will
cover
every
use
of
it.
Its
meaning
must
always
depend
upon
the-context
in
which
it
is
found.
It
seems
plain,
for
instance,
from
the
context
in
which
it
is
found
in
the
sub-
section
in
question
that
the
word
is
intended
to
connote
something
more
than
a
mere
trust.
Had
the
Dominion
Legislature
intended
to
exempt
from
taxation
the
income
of
every
charitable
trust,
nothing
would
have
been
easier
than
to
say
so.
In
view
of
the
language
that
has
in
fact
been
used,
it
seems
to
their
Lordships
that
the
charitable
institutions
exempted
are
those
which
are
institutions
in
the
sense
in
which
boards
of
trade
and
chambers
of
commerce
are
institutions,
such,
for
example,
as
a
charity
organization
society,
or
a
society
for
the
prevention
of
cruelty
to
children.
The
trust
with
which
the
present
appeal
is
concerned
is
an
ordinary
trust
for
charity.
It
can
only
be
regarded
as
a
charitable
institution
within
the
meaning
of
the
subsection
if
every
such
trust
is
to
be
so
regarded,
and
this,
in
their
Lordships’
opinion,
is
impossible.
An
ordinary
trust
for
charity
is,
indeed,
only
a
charitable
institution
in
the
sense
that
a
farm
is
an
agricultural
institution.
It
is
not
in
that
sense
that
the
word
institution
is
used
in
the
sub-section.
‘
’
The
appellants
submit
the
discussion
of
the
word
"‘institution''
in
Mayor
of
Manchester
v.
McAdam
[1896]
A.C.
500,
where
at
p.
511
Lord
Macnaghten
after
pointing
out
that
"‘institution''
is
"‘a
little
difficult
to
define’’,
continues
:
"It
is
the
body
(so
to
speak)
called
into
existence
to
translate
the
purpose
as
conceived
in
the
mind
of
the
founders
into
a
living
and
active
principle.”
They
contended
that
the
testator
had
two
purposes
in
mind,
(1)
to
benefit
the
five
named
beneficiaries
and
(2)
to
perpetuate
the
name
of
the
benefactor.
They
contend
that
the
phrase
"‘Burns
Memorial
Trust’’
gives
to
the
trust
‘‘the
perpetual
memorial
idea’’,
and
this
provides
what
Lord
Romer
requires
by
his
words
"‘something
more
than
a
mere
trust’’
and
therefore
the
"‘Burns
Memorial
Trust’’
is
a
charitable
institution.
This
phrase
perpetuates
the
name
of
the
benefactor
in
association
with
this
trust
but
does
not
make
it
a
perpetual
charitable
trust.
If
the
words
"‘to
be
known
as
the
‘Burns
Memorial
Trust’
’.’
are
deleted
from
para.
36
of
the
will,
which
provides
for
this
trust,
neither
the
permanency
of
the
trust,
the
management
and
disposition
thereof,
nor
the
position
of
the
beneficiaries
would
be
in
any
way
affected.
It
is
a
perpetual
charitable
trust
upon
the
construction
of
the
will
quite
apart
from
these
words
under
the
authority
of
the
Halifax
School
For
The
Blind
v.
Lewis
Chipman
[1937]
S.C.R.,
196.
Further,
all
the
work
in
connection
with
this
fund
is
to
be
performed
by
The
Royal
Trust
Co.
as
trustee.
That
company
receives.
from
the.
trustees
the.
fund
‘‘for
the
creation
and
establishment
of
a
Trust
to
be
known
as
the
‘
Burns
Memorial
Trust’
to
be
administered
by
it
as
Trustee’’
and
"‘to
pay
and
distribute
annually”
the
income
amongst
the
five
beneficiaries.
It
is
a
perpetual
charitable
trust
fund
the
income
from
which
is
used
for
charitable
purposes
through
the
medium
of
the
five
beneficiaries.
There
is
nothing
to
be
performed
in
connection
with
this
trust
by
the
‘‘Burns
Memorial
Trust’’,
nor
in
there
a
body
or
entity
which
could
be
described
as
an
institution
styled
the
‘‘Burns
Memorial
Trust’’.
Under
both
of
the
foregoing
discussions
of
the
word
“institution”
there
is
contemplated
a
body
or
entity
functioning
to
attain
some
charitable
purpose.
Morevore,
the
will
creating
this
perpetual
charitable
trust
not
only
does
not
contemplate
that
the
‘‘Burns
Memorial
Trust’’
will
be
such
an
institution,
but
specifically
states
that
the
trust.
is
to
be
“known
as
the
‘Burns
Memorial
Trust’
’’.
Indeed,
from
all
its
relevant
provisions,
the
will
indicates
that
the
testator,
in
using
this
phrase
intended
to
give
to
the
trust
a
name
that
would
embody
a
memoir
of
its
founder.
In
its
legal
significance
it
is
but
the
name
of
the
trust,
and
I
am
therefore
in
agreement
with
the
conclusion
of
the
learned
Judge
of.
the
Exchequer
Court
that
these
words
are
“a
name
attached
to
a
fund’’
and
that
under
this
will
the
‘‘Burns
Memorial
Trust’’
is
not
an
institution
as
contended
by
the
appellants.
The
appellants
further
submit
that
the
situation
here
created
is
identical
with
that
which
would
have
existed
had
the
testator
provided
for
the
creation
of
a
‘‘
Burns
Memorial
Corporation’’,
or
a
“Burns
Memorial
Trust
Corporation’’
with
general
charitable
objects
and
then
have
directed
that
this
money
should
be
paid
to
that
Corporation
for
charitable
purposes.
If
a
corporation
so
constituted
could
upon
an
examination
of
its
nature
and
purpose
be
held
a
charitable
institution,
the
conclusion
suggested
by
the
appellant
might
follow.
That
would
be
a
situation
entirely
different
from
that
which
here
obtains
where
a
capital
sum
of
money
is
given
to
a
corporation
that
is
not
a
charitable
institution
to
create
and
administer
a
trust
fund
to
be
known
as
the
“Burns
Memorial
Trust’’.
Moreover,
and
quite
apart
from
the
foregoing,
because
this
income
is
received
and
applied
by
the
executors
as
above
indicated,
even
if
the
‘Burns
Memorial
Trust’’
could
be
construed
as
an
institution,
there
still
remains
the
fact
that
the
income
as
income
is
never
paid
to
or
received
by
the
“Burns
Memorial
Trust’’.
That
trust
will
not
be
created
until
the
residue
of
“my
Trust
Estate’’
is
distributed
some
time
in
the
future.
At
that
time
the
fund
will
be
paid
as
eapital,
not
as
income,
to
The
Royal
Trust
Co.
to
create
the
trust
known
as
the
"‘Burns
Memorial
Trust’’.
It
therefore
cannot
be
construed
as
"‘the
meome.
of
any
.
.
.
charitable
.
.
.
institution’’
within
the
meaning
of
section
4(e)
and
is
not
entitled
to
the
benefit
of
the
exemption
therein
provided
for.
On
the
same
basis,
that
as
income
it
is
never
received
by
any
of
the
beneficiaries,
the
appellants’
submission
that
the
income
is
that
of
the
five
named
beneficiaries
cannot
be
supported.
Then
with
respect
to
the
appellants’
contention
that
the
executors
are
not
taxable
because
the
income
here
is
"
"
income
accruing
to
the
credit
of
the
taxpayer
whether
received
by
him
or
not
during
such
taxation
period
’.
"
"
11.(1)
The
income,
for
any
taxation
period,
of
a
beneficiary
of
any
estate
or
trust
of
whatsoever
nature
shall
be
deemed
to
include
all
income
accruing
to
the
credit
of
the
taxpayer
whether
received
by
him
or
not
during
such
taxation
period.”
It
is
not
contended
that
the
income
is
year
by
year
received
by
The
Royal
Trust
Co.
or
the
"‘Burns
Memorial
Trust’’
or
the
five
beneficiaries,
but
that
it
is
‘income
accruing
to
the
credit
of’’
either
The
Royal
Trust
Co.
or
the
’’Burns
Memorial
Trust”
or
the
five
beneficiaries
within
the
meaning
of
section
11(1).
In
order
to
come
within
the
terms
of
this
section
it
must
be
‘‘income
accruing
to
the
credit
of
the
taxpayer”;
As
income
it
is
never
paid,
nor
is
it
intended
that
it
should
ever
be
paid,
to
the
Royal
Trust
Co.,
the
‘‘Burns
Memorial
Trust’’
or
the
five
beneficiaries.
It
is
year
by
year
added
to
and
made
part
of
“my
Trust
Estate’’
and
at
the
time
of
distribution
thereof
it
is
paid
to
The
Royal
Trust
Co.
as
capital
to
be
retained
and
used
by
it
to
create
a
perpetual
trust
fund
(‘‘Burns
Memorial
Trust’’).
It
is
only
after
the
creation
of
this
trust
fund
that
the
beneficiaries
will
receive
income
which
this
capital
fund
will
earn
and
that
is
the
only
income
that
under
the
terms
of
the
will
these
beneficiaries
will
receive.
A
somewhat
similar
provision
came
before
the
Privy
Council
in
St.
Lucia
Usines
and
Estates
Co.
v.
St.
Lucia
(Colonial
Treasurer),
[1924]
A.C.,
508,
where
Lord
Wrenbury
at
p.
512,
speaking
on
behalf
of
the
Privy
Council,
stated
:
“The
words
‘income
arising
or
accruing
are
not
equivalent
to
the
words
‘Debts
arising
or
accruing’.
To
give
them
that
meaning
is
to
ignore
the
word
‘income’.
The
words
mean
‘money
arising
or
accruing
by
way
of
income’.
There
must
be
a
coming
in
to
satisfy
the
word
‘income’.
This
is
a
sense
which
is
assisted
or
confirmed
by
the
word
‘received’
in
the
proviso
at
the
end
of
s.
4,
sub-s.
1.‘‘
Their
Lordships
pointed
out
that
‘‘it
does
not
follow
that
income
is
confined
to
that
which
the
taxpayer
actually
receives’’,
and
illustrated
this
statement
by
reference
to
deduction
of
income
at
the
source
and
as
it
is
arrived
at
by
business
men
and
others
in
the
preparation
of
their
balance
sheets
and
profit
and
loss
accounts.
Moreover,
the
view
expressed
by
Lord
Wrenbury
in
the
St.
Lucia
case
appears
particularly
applicable
because
of
the
definition
of
“income”
in
section
3(1)
of
the
Income
War
Tax
Act:
“3.(1)
For
the
purposes
of
this
Act,
‘income’
means
the
annual
net
profit
or
gain
or
gratuity,
whether
ascertained
or
capable
of
computation
as
being
wages,
salary,
or
other
fixed
amount,
or
unascertained
as
being
fees
or
emoluments,
or
as
being
profits
from
a
trade
or
commercial
or
financial
or
other
business
or
calling,
directly
or
indirectly
received
by
a
person
from
.
.
.
.”
This
definition
makes
it
clear
that
the
income
must
be
“directly
or
indirectly
received’’,
and
with
respect
to
cases
coming
under
section
11(1)
it
is
there
provided
‘‘whether
received
by
him
or
not
during
such
taxation
period’’.
This
is
further
emphasized
by
Mr.
Justice
Newcombe
:
“If
the
income
be
accruing
to
the
credit
of
an
ascertained
person
who
is
the
beneficiary
of
an
estate
or
trust,
the
taxation
of
it
is
provided
for
by
the
first
sentence
of
the
section
;
but,
whatever
may
be
the
meaning
of
‘taxpayer’
in
the
context,
income
which
by
the
terms
of
the
trust
he
may
never
receive
cannot
be
said
to
be
accruing
to
his
credit
and
therefore
such
income
is
not
that
of
the
testator’s
children
or
grandchildren
within
the
intent
of
that
clause.”
In
re
McLeod
v.
The
Minister
of
Customs
and
Excise
[1926]
S.C.R.
457
at
p.
470.
This
income
is
never
received
by
any
of
the
foregoing
beneficiaries
within
the
meaning
of
section
11(1)
and
cannot
therefore
be
‘‘income
accruing
to
the
credit”
of
any
of
them
under
that
seetion.
The
first
of
the
respondent’s
contentions
is
that
this
income
is
received
by
the
trustee
and
is
‘‘accumulating
in
trust
for
the
benefit
of
unascertained
persons’’
and
therefore
the
appellants
are
taxable
under
section
11(2).
""
11.
(2)
Income
accumulating
in
trust
for
the
benefit
of
unascertained
persons,
or
of
persons
with
contingent
interests
shall
be
taxable
in
the
hands
of
the
trustee
or
other
like
person
acting
in
a
fiduciary
capacity,
as
if
such
income
were
the
income
of
a
person
other
than
a
corporation
;
‘
‘
‘The
express
provisions
of
section
3(1)
defining
"
"
income
for
the
purpose
of
this
Act
are
clearly
applicable
to
both
subsections
(1)
and
(2)
of
section
11,
more
particularly
as
there
is
no
effort
to
otherwise
define
that
word
in
section
11.
In
11(2)
it
is
the
income
"‘accumulating
in
trust
for
the
benefit
of
unascertained
persons,
or
of
persons
with
contingent
interests”
that
is
dealt
with.
Therefore,
the
income
which
is
here
accumulating
must
some
time
be
"
directly
or
indirectly
received”?
as
income
in
order
to
come
within
the
definition
of
section
3(1).
Without
repeating
the
considerations
already
mentioned,
it
is
abundantly
clear
that
no
part
of
the
trust
fund,
or
specifically
that
part
of
it
that
the
respondent
seeks
to
tax,
is
income
that
will
ever
be
received
as
such
by
the
beneficiaries
who
it
is
now
contended
are
unascertained
persons.
It
will
never
reach
them
as
either
income
or
capital.
It
will
be
added
to
"‘my
Trust
Estate’’,
a
part
of
which
will
be
the
capital
of
the
perpetual
charitable
trust
provided
for
and
only
a
share
of
the
income
from
that
trust
will
the
beneficiaries
ultimately,
receive.
That
the
funds
we
are
here
concerned
with
will
create
a
perpetual
charitable
trust,
the
principal
of
which
will
remain
always
intact
and
only
the
income
therefrom
will
ever
be
received
by
a
beneficiary,
distinguishes
this
case
from
Minister
of
National
Revenue
v.
Trusts
and
Guarantee
Co.
[1940]
A.C.
138,
where
Lord
Romer,
speaking
on
behalf
of
the
Privy
Council
stated
at
p.
148:
"‘In
the
present
case
the
accumulated
interest
in
the
hands
of
the
respondents
as
trustees
will
in
the
year
1948
have
to
be
handed
over
to
the
municipal
council
of
Colne
as
trustees
in
trust
to
be
applied
for
the
benefit
of
the
aged
and
deserving
poor
of
that
town.
Such
aged
and
deserving
poor
are
without
any
question
persons,
and
equally
without
question
they
are
unaseertained.
’
In
that
case
the
income
was
"
"
accumulating
in
trust
for
the
benefit
of
unascertained
persons”
and
at
a
specified
time
was
"‘to
be
applied
for
the
benefit
of
the
aged
and
deserving
poor”.
Ultimately
these
unascertained
persons
received
the
income
there
in
question
and
that
is
a
requisite
if
income
as
defined
in
3(1)
is
to
be
taxed
under
section
11(2).
Under
the
Burns
will,
as
already
pointed
out,
the
income
sought
to
be
taxed
will
never
be
‘‘
directly
or
indirectly
received’’
by
any
person
or
persons
unascertained
or
otherwise.
It
cannot,
therefore,
be
taxed
under
section
11(2).
In
1940
Parliament
amended
section
11
by
repealing
subsection
4(a)
and
inserting
a
new
4(a)
reading
as
follows:
"
11.
(4)
(a)
Income
received
by
an
estate
or
trust
and
capitalized
shall
be
taxable
in
the
hands
of
the
executors
or
trustees,
or
other
like
persons
acting
in
a
fiduciary
capacity.”
Section
11
is
a
charging
section:
Holden
v.
Minister
of
National
Revenue
[1933]
A.C.
526.
When
in
section
11(2)
Parliament
imposed
a
new
tax
it
specified
the
rate.
The
tax
there
imposed
was
upon
‘‘income
accumulating
in
trust
for
the
benefit
of
.
.
.
”,
while
section
11(4)
(a)
deals
with
"‘income
received
by
an
estate
or
trust
and
capitalized’’,
which
is
different
in
character
and
may
be
quite
different
in
result.
Nor
do
I
find
any
words
which
indicate
an
intention
either
that
the
rate
specified
in
11(2)
be
made
applicable
to
both
subsections,
or
to
adopt
any
other
rate
specified
in
the
statute.
Without
a
rate
or
determinable
amount
there
can
be
no
impost.
A
tax
is
defined
as
‘‘an
impost,
a
tribute
imposed
upon
the
subject”:
Wharton’s
Law
Lexicon^
14th
Ed.,
978.
Therefore
in
the
enactment
of
this
subsection.
4(a)
a
factor
essential
to
the
imposition
of
a
tax
is
omitted
and
the
result
is
that
no
tax
is
imposed.
Parliament
in
the
following
year,
1940-41
Statutes,
c.
18,
s.
19.
added
section
11(4)
(c)
:
"‘(c)
Income
taxable
under
the
provisions
of
this
subsection
shall
be
taxed
as
if
such
income
were
the
income
of
a
person
other
than
a
corporation,
provide
that
no
deduction
shall
be
allowed
in
respect
of
the
exemptions
provided
by
paragraphs
(c),
(d),
(e),
(ee)
and
(i)
of
subsection
one
of
section
five
of
this
Act.”
and
by
section
32
of
the
same
Act
this
provision
was
made
applicable
to
the
income
of
the
1941
taxation
period.
‘32.
Sections
one,
two,
four,
five,
six,
seven,
nine,
ten,
eleven,
twelve,
seventeen,
nineteen,
twenty,
twenty-one,
twenty-
four,
twenty-five
and
twenty-six
of
this
Act
shall
be
applicable
to
income
of
the
1941
taxation
period
and
fiscal
periods
ending
therein
and
of
all
subsequent
periods.
‘
‘
It
therefore
follows
that
with
respect
to
the
1941
period
the
executors
are
under
section
11(4)
(a)
and
(c)
liable
for
the
tax
with
respect
to
the
income
here
in
question.
The
respondent’s
second
contention
is
that
quite
apart
from
the
provisions
of
section
11(2)
the
appellants
are
liable
under
the
provisions
of
section
9
for
all
of
the
years
in
issue.
Section
!)
in
part
reads:
"9.(1)
There
shall
be
assessed,
levied
and
paid
upon
the
income
during
the
preceding
year
of
every
person,
..
.”’
The
word
person”
is
defined
in
section
2(h)
:
"2.(h)
‘person’
includes
any
body
corporate
and
politic
and
any
association
or
other
body,
and
the
heirs,
executors,
administrators
and
curators
or
other
legal
representatives
of
such
person,
according
to
the
law
of
that
part
of
Canada
to
which
the
context
extends
:
’
’
Sections
9
and
11
are
both
charging
sections
and
the
language
used
indicates
that
under
these
sections
Parliament
imposes
a
tax
upon
entirely
different
persons.
Section
9(1)
provides
for
the
assessing.
levying
and
paying
upon
income
during
the
preceding
year
of
every
person
other
than
a
corporation
or
joint
stock
company,
and
9(2)
deals
with
the
corporation
and
the
joint
stock
company.
The
income
tax
is
here
imposed
upon
the
person,
corporation
or
joint
stock
company
per
se
even
though
that
tax
may
be
assessed,
levied
and
collected
from
their
“heirs,
executors,
administrators,
curators
or
other
legal
representatives”.
Section
11
charges
an
income
with
respect
to
that
earned
by
the
estate
or
trust
and
imposes
the
tax
upon
either
the
party
administering
the
estate
or
trust,
or
the
beneficiary.
The
amendment
of
1940-41
was
a
further
step
in
the
attainment
of
that
end
and
provide
for
a
tax
not
previously
imposed.
Under
the
provisions
of
these
sections
it
follows
that
prior
to
the
amendment
of
section
11,
when
in
1940-41
the
above
quoted
section
11
(4)
(c)
was
passed,
no
tax
was
imposed
upon
the
trustees
with
respect
to
the
income
here
in
question.
In
the
result
the
amounts
here
in
question
were
not
taxable
in
the
years
1938,
1939
and
1940
and
therefore
were
improperly
disallowed
by
the
Crown,
while
in
1941,
because
of
the
enactment
of
11
(4)
(c)
the
amount
in
that
year
was
taxable
and
the
deduction
properly
disallowed.
The
judgment
appealed
from
should
be
so
varied
and
the
appellants
should
have
three-fourths
of
their
costs
throughout.
Appeal
allowed
in
part.
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