Mahoney,
J:—The
facts
are
agreed.
Robin
Ellis
Agnew
died
in
1973.
The
plaintiff
filed
an
income
tax
return
for
that
portion
of
the
year
he
had
lived
and
reported
therein
gains
on
deemed
disposition
of
capital
property
as
required
by
paragraph
70(5)(a)
of
the
Income
Tax
Act.*
The
plaintiff
elected,
under
subsection
159(5)
of
the
Act,+
to
defer
payment
of
the
tax
attributable
to
the
increase
in
taxable
income
by
reason
of
the
application
of
paragraph
70(5)(a).
The
issue
is
the
rate
of
interest
payable
in
respect
of
the
deferred
tax.
The
election
to
defer
payment
was
made
June
25,
1974.
An
Order
in
Council^
was
published
in
the
Canada
Gazette
of
July
24,
1974
whereby,
inter
alia,
the
Income
Tax
Regulations
were
amended
as
follows:
5.
(1)
Subsection
4300(1)
of
the
said
Regulations
is
revoked
and
the
following
substituted
therefor:
"4300.
(1)
A
rate
of
interest
of
6%
per
annum
is
hereby
prescribed
(a)
for
the
purposes
of
subsection
159(7)
.
.
.
of
the
Act:
.
.
.”
(2)
Subsection
4300(1)
of
the
said
Regulations,
as
enacted
by
subsection
(1)
of
this
section,
is
effective
on
and
after
(a)
December
23,
1971,
in
respect
of
the
provisions
referred
to
in
paragraph
(a)
thereof;
.
..
The
plaintiff
argues
that
the
regulation
is
void
for
uncertainty
and
ambiguity.
With
respect,
I
see
no
merit
in
that
argument.
It
is
clear
that
the
Governor
in
Council
intended
to
prescribe
an
interest
rate
of
6%
per
annum
for
purposes
of
subsection
159(7)
to
be
effective
on
and
after
December
23,
1971.
That
intention
is
not
uncertain
nor
is
its
expression
ambiguous.
The
plaintiff
also
argues
that
the
regulation
is
ultra
vires
the
authority
given
the
Governor
in
Council
by
subsection
159(7)
of
the
Act:*
98.
(1)
Section
159
of
the
said
Act
is
amended
by
adding
thereto
the
following
subsections:
(7)
Every
election
made
by
a
taxpayer
under
subsection
(4)
or
by
the
legal
representative
of
a
taxpayer
under
subsection
(5),
as
the
case
may
be,
shall
be
made
by
him
in
prescribed
form
and
in
prescribed
manner,
and
on
condition
of
payment,
at
the
time
of
payment
of
any
amount
the
payment
of
which
is
deferred
by
the
election,
of
interest
on
that
amount,
at
the
rate
per
annum
prescribed
for
the
purposes
of
this
subsection
at
the
time
of
the
making
of
the
election,
from
the
day
on
or
before
which
payment
of
that
amount
would,
but
for
the
election,
have
been
required
to
be
made
to
the
day
of
payment
thereof.”
(2)
This
section
is
applicable
to
the
1972
and
subsequent
taxation
years.
The
italics
are
mine.
The
plaintiff’s
position
is
that
subsection
159(7)
does
not
authorize
the
Governor
in
Council
to
prescribe
a
rate
of
Interest
having
retroactive
effect
upon
a
previously
made
election.
Other
pertinent
provisions
of
the
Act
are:
221.
(2)
No
regulation
made
under
this
Act
has
effect
until
it
has
been
published
in
the
Canada
Gazette
but,
when
so
published,
a
regulation
shall,
if
it
so
provides,
be
effective
with
reference
to
a
period
before
it
was
published.
248.
(1)
In
this
Act,
“prescribed”,
in
the
case
of
a
form
or
the
information
to
be
given
on
a
form,
means
prescribed
by
order
of
the
Minister,
and,
in
any
other
case,
means
prescribed
by
regulation;
“regulation”
means
a
regulation
made
by
the
Governor
in
Council
under
this
Act;
These
provisions
have
been
met.
The
question
turns
entirely
on
the
wording
of
subsection
159(7).
No
prescription
of
a
rate
of
interest
for
purposes
of
that
section
had
been
made
before
PC
1974-1531;
that
Order
in
Council
established
that
rate
for
the
first
time.
section
58
of
the
1973-74
amendment
to
the
Income
Tax
Act
added
subsection
(7),
as
well
as
subsections
(4),
(5)
and
(6),
to
section
159
of
the
Income
Tax
Act.
By
its
very
terms,
it
made
all
of
those
subsections
“applicable
to
the
1972
and
subsequent
taxation
years”.
Parliament’s
intention,
under
subsection
159(7),
is
clearly
that
the
prescribed
rate
of
interest
in
effect
at
the
time
of
the
election
under
subsection
159(5)
shall
apply
to
each
and
every
deferred
payment
flowing
from
that
election
regardless
of
intervening
changes
in
the
prescribed
rate.
It
also
clearly
contemplates
that
a
rate
be
prescribed
in
the
first
place.
The
Governor
in
Council
might,
to
be
sure,
have
prescribed
a
nil
rate
but
his
failure,
for
a
period,
to
prescribe
any
rate
was
not
tantamount
to
the
prescription
of
a
nil
rate
for
that
period.
The
rate
prescribed
in
the
first
place
must,
of
necessity,
have
had
retrocactive
effect
in
the
sense
that
it
applied
to
elections
made
during
the
period
when
no
rate
was
prescribed
but
that
was
not
a
retroactive
change
in
the
prescribed
rate;
there
was
no
prescribed
rate
to
change.
In
my
opinion
PC
1974-1531
is
intra
vires
the
authority
given
the
Governor
in
Council,
by
subsection
159(7),
to
prescribe
a
rate
of
interest
for
purposes
of
that
section
and,
by
virtue
of
subsection
221(2)
of
the
Act
and
subsection
58(2)
of
the
1973-74
amendment,
is
properly
retrocactive
to
the
date
of
the
election
made
in
this
case.
The
action
is
dismissed
with
costs.
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