Table of Contents


Stonehouse Group Inc. v. Ontario (Finance), 2021 ONCA 10

“the principle that governments have the right to legislate illogically” was “not … persuasive”

As a result of being reassessed to deny the carryback of a loss, the taxpayer was required to pay the reassessed taxes – but, following success in its objection, later was refunded the tax. The logical application of an interpretation of a Corporations Tax Act (Ontario) provision advanced by the Ontario Ministry of Finance would have been to deny any interest to the taxpayer on this refund.

After noting that the provision could also potentially be interpreted more narrowly so as to avoid this result, and before finding for the taxpayer, Nordheimer JA stated (at paras. 26, 30):

[T]he respondent’s reliance on the principle that governments have the right to legislate illogically is not a persuasive one. It is also not a principle of statutory interpretation to be readily invoked. …

The language in s. 79(7) is not unambiguous when read in its entire context. While it is not necessary to resort to it in this case … there remains “a residual presumption in favour of the taxpayer” … . Given the history of the legislative provisions regarding the payment of interest, an interpretation which favours the underlying policy choice of fairness to the taxpayer is to be preferred.

Locations of other summaries Wordcount
Tax Topics - Other Legislation/Constitution - Ontario - Corporations Tax Act - Section 79 - Subsection 79(7) s. 79(7) merely dealt with the timing of when interest began to accrue 376

Markevich v. Canada, 2001 DTC 5305, 2001 FCA 144

Before concluding that s. 32 of the Crown Liability and Proceedings Act (Canada) applied to statutory collection procedures under the Act as well as to Court procedures, Rothstein J.A. noted that to interpret s. 32 as applying only to court procedures would lead "to the perplexing conclusion that while court proceedings are subject to provincial limitation laws, the statutory collection procedures are not" and stated (at p. 5313):

"The Income Tax Act may contain incongruous provisions or provisions that appear to be inconsistent. However, where it is possible to construe legislation according to its words, so as to avoid incongruity or inconsistency, such construction is to be preferred."

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 222 120

The Queen v. Consumers' Co-Operative Refineries Ltd., 87 DTC 5409, [1987] 2 CTC 204 (FCA)

Pratte, J.A. stated (at p. 5411) that he was willing to adopt, with respect to s. 132(2) an interpretation that "stretches the meaning of the words used in the section" but which is "in harmony with the obvious purpose of the provision" and which avoids an absurd result.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 135 - Subsection 135(2) 98
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Amount allocation in proportion to patronage could be made at a zero rate 16

Delesalle v. The Queen, 85 DTC 5613, [1986] 1 CTC 58 (FCTD)

"Where the language of a statute is reasonably capable of two constructions the court, as interpreter and not legislator, may adopt that which is just and reasonable rather than one which is patently unreasonable." (p. 5621)

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Partnership Interests partnership interest buyback not distribution 60
Tax Topics - Income Tax Act - Section 96 - Subsection 96(1.1) departing partner required to agree to the s. 96(1.1) allocation 263

Laurentide Rendering Inc. v. The Queen, 84 DTC 6153 (FCTD), aff'd 88 DTC 6331, [1988] 2 CTC 200 (FCA)

"In interpreting a statute the Court must opt for an interpretation that does not lead to an illogical result which Parliament is not deemed to have wished." (p. 6156) The taxpayer's argument that there was an "'immense loophole' in the Act and that owing to this 'loophole' the Act cannot apply to its situation" was rejected.

Attorney General of British Columbia v. Canada Trust Co. et al., [1980] 2 S.C.R. 466, [1980] CTC 338

The phrase "in respect of" in a section was given the meaning "with reference to", "in order to give sense and purpose to the section and avoid incongruous results ... . The fact that the Legislation chose to proceed by piecemeal amendments, resulting in an inelegant jumble of tax bases and internal inconsistencies, is no reason to frustrate the obvious intention of the Legislature"

Words and Phrases
in respect of

See Also

Hancock & Anor v Revenue and Customs, [2019] UKSC 24

Luke principle that a stained interpretation can be adopted to implement clear Parliamentary intention

Lady Arden referred with apparent approval to the principle in Luke v Inland Revenue Comrs [1963] AC 557, stating (at para. 24):

This enables the court, when interpreting a statute, to adopt (my words) a strained interpretation in place of one which would be contrary to the clear intention of Parliament.

Although she confirmed an interpretation of a provision that effectively read the phrase “or include” out of it, she did not consider it necessary to apply the Luke principle to do so as she considered that the wording of the provisions themselves evinced an intention that effectively ignored those two words.

Locations of other summaries Wordcount
Tax Topics - Statutory Interpretation - Redundancy/reading in words phrase read out of provision to give effect to intent 323