Section 194

Subsection 194(4) - Corporation may designate amount


Groupmark Canada Ltd. v. The Queen, 93 DTC 5179, [1993] 1 CTC 234 (FCTD)

A related corporation issued a non-interest bearing promissory note for $120,000 to the taxpayer on May 18, 1984. Given that advances in excess of $120,000 had actually been made by the taxpayer to the other corporation in varying amounts both before and after the agreement of May 18, 1984, the requirement that "consideration" for $120,000 be issued or granted was met.

Words and Phrases

Subsection 194(4.2) - Where amount may not be designated


Mort v. The Queen, 93 DTC 5058, [1993] 1 CTC 99 (FCTD)

The requirements of s. 194(4.2)(b) were met given that the steps that had been taken by April 10, 1984 "were meaningful, significant and advanced", including an identified research and development project on which money already had been spent, a budget, and discussions with a third-party financier, evidenced in writing, with a request that the project be funded by way of an SRTC issue.

First Fund Genesis Corp. v. The Queen, 91 DTC 5361, [1991] 2 CTC 14 (FCTD)

After finding that s. 194(4.2) had retroactive effect to the date that the restriction was first announced on October 10, 1984 by the Minister of Finance, Joyal J. went on to find that the issuer ("Dell") had entered into arrangements that were "substantially advanced" by that date:

"By that date, Dell had already established the general but concrete framework within which it would proceed with the S.R.TC financing for its research projects. All that remained to work out were the finer details of exactly how much money would go where, who the S.R.TC investor would actually be and which aspects of its reseach program would be emphasized" (p. 5371).

Words and Phrases
substantially advanced

See Also

Gupta v. MNR, 92 DTC 1542 (TCC)

A document filed by the taxpayer with a Quebec securities commission which did not qualify as a prospectus for purposes of the Quebec Securities Act and which contained disclosure similar to that which would be contained in an offering memorandum, was found to come within the ordinary meaning of "prospectus", i.e., a "notice, a circular, advertisement, or other invitation, offering to the public for subscription or purchase of any shares or debentures of a company".

Words and Phrases
proportion prospectus

Subsection 194(7) - Late designation


The Queen v. United Equities Ltd., 95 DTC 5042, [1995] 1 CTC 164 (FCA)

The taxpayer successfully argued that timely filing of information returns is not a condition precedent to late the filing of a designation under s. 194(7), provided that the Minister has mailed the notice referred to in the postamble to s. 194(7) and payment of the estimated penalty is made within ninety days thereafter. However, the taxpayer was not able to establish that a letter, sent by an SRTC audit group to the company from which the taxpayer had purchased an SRTC debenture ("Acadia Saw Mills") noting that Acadia Saw Mills had not filed its designation and information return on a timely basis and stating that the designation should be resubmitted with the prescribed late filing penalty, should be regarded as having been issued pursuant to any express or implied delegation of power by the Minister to that group.

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Tax Topics - Statutory Interpretation - Resolving Ambiguity 53