D
E
Taylor:—This
is
an
appeal
heard
in
Vancouver,
British
Columbia,
on
January
19,
1983,
against
an
income
tax
assessment
for
the
year
1976
in
which
the
Minister
of
National
Revenue
increased
the
taxable
income
of
the
appellant
by
$48,000.
That
amount
was
founded
on
the
following
assumptions
of
fact:
—
That
the
Appellant
was
at
all
times
material
director
and
sole
shareholder
of
Cawsey
Enterprises
Ltd
(Cawsey);
—
That
the
Appellant
was
at
all
times
material
the
spouse
of
one
Ronald
Waddell;
—
That
Cawsey
paid
in
1976
pursuant
to
the
direction
of,
or
with
the
concurrence
of,
the
Appellant,
to
Ronald
Waddell
the
amount
of
$48,000,000.00;
—
That
the
payment
of
the
said
$48,000.00
constituted
a
benefit
that
the
Appellant
desired
to
have
conferred
on
Ronald
Waddell;
—
That
the
said
payment
if
made
to
the
Appellant
would
have
been
included
in
computing
the
Appellant’s
income
for
the
1976
taxation
year.
In
assessing,
the
respondent
relied,
inter
alia,
upon
subsections
15(2)
and
56(2)
of
the
Income
Tax
Act,
SC
1970-71-72,
c
63
as
amended.
The
evidence
showed
that
Ronald
Waddell
was
not
a
shareholder
of
“Cawsey”.
Therefore,
the
taxation
sought
by
the
Minister
can
only
be
upheld
if
the
final
phrase
in
subsection
56(2)
of
the
Act
—
“to
the
extent
that
it
would
be
if
the
payment
or
transfer
(of
property)
had
been
made
to
him”
—
can
be
applied
directly
to
Mrs
Waddell.
The
contention
of
counsel
for
the
respondent
is
that
if
the
loan
had
been
made
to
Mrs
Waddell,
she
certainly
would
have
been
taxable
thereon
under
subsection
15(2)
of
the
Act,
and
the
above
phrase
from
subsection
56(2)
would
act
as
a
lever
to
produce
that
same
end
result.
I
would
refer
to
a
recent
decision
of
this
Board
in
Peter
Caspari
v
MNR,
[1983]
CTC
2001;
83
DTC
45,
in
which
there
is
the
following
comment
at
2002
[46]:
Subsection
56(2)
of
the
Income
Tax
Act
cannot
be
relied
upon
to
redeem
the
assessment.
Assuming
that
the
Appellant
concurred
in
the
making
of
the
payment
to
the
son
of
the
monies
loaned
to
him,
and
assuming
that
such
payment
to
the
son
was
made
in
some
way
as
a
benefit
that
the
Appellant
desired
to
have
conferred
on
the
son,
subsection
56(2)
could
operate
only
to
require
the
inclusion
of
the
payment
in
the
computation
of
the
Appellant’s
income
to
the
same
extent
as
would
be
the
case
if
the
payment
had
been
made
to
the
Appellant.
If
the
payment
of
monies
loaned
to
the
son
by
Arames
had
been
made
to
the
Appellant,
that
hypothetical
situation
would
not
alone
operate
to
transmute
the
loan
made
to
the
son
into
a
loan
made
to
the
Appellant.
As
I
read
the
last
sentence
above,
the
Board
in
Caspari
made
a
distinction
between
a
simple
“payment
of
monies”
to
the
appellant,
and
a
“loan”
to
the
appellant.
That
distinction
is
not
available
to
me
in
this
matter
since
counsel
for
the
respondent
has
not
challenged
the
“bona
tides”
of
the
loan,
and
simply
asserted
that
if
the
same
funds
as
a
loan
had
been
made
available
to
Mrs
Waddell,
such
a
loan
would
have
been
taxable
under
subsection
15(2)
of
the
Act.
Presuming
all
the
other
conditions
relative
to
subsection
56(2)
outlined
in
the
quotation
from
Caspari
(supra)
had
been
fulfilled
in
the
instant
appeal
(and
I
am
not
suggesting
they
would
be),
I
would
be
inclined
to
agree
with
counsel
for
the
respondent
up
to
that
point.
However,
my
difficulty
arises
from
a
different
quarter.
The
“payment
or
transfer
of
property”
critical
to
subsection
56(2)
of
the
Act
must
be
“for
the
benefit
of
.
.
.
or
as
a
benefit
that.
..”
in
order
to
be
caught
thereby
for
taxation
purpose.
I
am
not
persuaded
that
a
“bona
fide”
loan
for
purposes
of
subsection
15(2)
is
analogous
with
such
a
“payment
or
transfer
of
property”
under
subsection
56(2).
In
that
connection,
I
would
make
reference
to
a
comment
by
Mr
Justice
Thurlow
in
A
Miller
v
MNR,
[1962]
CTC
199;
62
DTC
1139,
as
quoted
in
Warren
Champ
v
The
Queen,
[1983]
CTC
1;
83
DTC
5029
at
4
[5031]:
The
scope
of
the
subsection
is
not
obscure
for
one
does
not
speak
of
benefitting
a
person
in
the
sense
of
the
subsection
by
making
a
business
contract
with
him
for
adequate
consideration.
Decision
The
appeal
is
allowed
and
the
matter
referred
back
to
the
respondent
for
reconsideration
and
reassessment
accordingly.
Appeal
allowed.
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