Principal Issues: Whether payments under subsections 92.1(1) and 92.1(2) of the OEA, also referred to as the property tax component and the water rental component under the GRC tax regime, are a tax or levy that are deductible in computing income under subsection 9(1) of the Income Tax Act.
Position: 1. Yes, based on the definition of 'gross revenue' applicable for the period from January 1, 2001 until the electricity market opens to competition.
2. For the period after that time, it depends on the definition of 'gross revenue' which has not yet been defined.
Reasons: 1. For the period prior to the opening of the electricity market, the taxes are not taxes on income and are payments made to earn income from a business.
2. For the subsequent period, a determination regarding the deductibility of the payments cannot be made until the term 'gross revenue' is defined for that period.