Table of Contents


McGillivray Restaurant Ltd. v. Canada, 2016 FCA 99

subjective interpretive tests to be avoided

In finding that there should not be an expansive interpretation of what constitutes de facto control in s. 256(5.1), Ryer JA stated (at paras 49-50):

…An interpretation of subsection 256(5.1) that encompasses “operational” control would import a degree of subjectivity into the de facto analysis that, in my view, would lead to unpredictability, rather than predictability, as mandated by the Canada Trustco [2005 SCC 54, [2005] 2 S.C.R. 601] interpretative approach.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 256 - Subsection 256(5.1) de facto control includes only significant influence over the board of directors 402

Canada Trustco Mortgage Co., v. The Queen, 2005 DTC 5523, [2005] 2 S.C.R. 601, 2005 SCC 54

In indicating that judges should not apply taxation policies that are not grounded in the specific provisions of the Act, McLaughlin C.J. and Major J. stated (at p. 5530) that such an approach "would run counter to the overall policy of Parliament that tax law be certain, predictable and fair, so that taxpayers can intelligently order their affairs. Although Parliament's general purpose in enacting the GAAR was to preserve legitimate tax minimization schemes while prohibiting abusive tax avoidance, Parliament must also be taken to seek consistency, predictability and fairness in tax law. These three latter purposes would be frustrated if the Minister and/or the courts overrode the provisions of the Income Tax Act without any basis in a textual, contextual and purposive interpretation of those provisions."

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 245 - Subsection 245(1) - Tax Benefit tax benefit if taxable income reduction or on basis of comparison to alternative 132
Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) policy of CCA provisions relied on cost irrespective of risk mitigation 211
Tax Topics - Income Tax Act - Section 248 - Subsection 248(10) "in contemplation" references "because of" or "in relation to" 127
Tax Topics - Statutory Interpretation - Ordinary Meaning primacy to ordinary meaning if unequivocal 96

Ludco Enterprises Ltd. v. Canada, 2001 DTC 5505, [2001] 2 S.C.R. 1082, 2001 SCC 62

Before finding that for purposes of the requirement in s. 20(1)(c)(i) that money must have been borrowed for an income-producing purpose in order to give rise to deductible interest, "income" referred to income before deductions, Iacobucci J. stated (at p. 5515):

"Nowhere in the language of the provision is a quantitative test suggested. Nor is there any support in the text of the Act for an interpretation of 'income' that involves a judicial assessment of sufficiency of income. Such an approach would be too subjective and certainty is to be preferred in the area of tax law."

Locations of other summaries Wordcount
Tax Topics - General Concepts - Purpose/Intention objective and subjective manifestations of purpose 104
Tax Topics - General Concepts - Tax Avoidance right to structure for tax avoidance 129
Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) ancillary purpose of earning (1%-yield) dividend income/allocation of reinvested proceeds 100% to income-producing source 414

Brill v. The Queen, 96 DTC 6572 (FCA)

In finding that the proceeds of disposition of a property to the taxpayer were established by the actual sale price rather than by the formula in s. 79(c) of the Act, Linden J.A. stated (at p. 6575) that "normally, the Income Tax Act taxes someone on the basis of what has actually been received, not on the basis of some theoretical formula.".

Friesen v. Canada, 95 DTC 5551, [1995] 3 S.C.R. 103

Major J. accepted the following comments in P.W. Hogg's Notes on Income Tax:

"It would introduce intolerable uncertainty into the Income Tax Act if clear language and a detailed provision of the Act were to be qualified by unexpressed exceptions derived from a court's view of the object and purpose of the provision ... . When a provision is couched in specific language that admits of no doubt or ambiguity in its application to the facts, then the provision must be applied regardless of its object and purpose."

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 10 - Subsection 10(1) loss recognized on decline in value of land held as an adventure 142
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Inventory property held in an adventure was inventory 83
Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Real Estate undeveloped land held in speculative venture 142
Tax Topics - Statutory Interpretation - Drafting Style 95
Tax Topics - Statutory Interpretation - Inserting Words 104
Tax Topics - Statutory Interpretation - Ordinary Meaning 80
Tax Topics - Statutory Interpretation - Resolving Ambiguity 97
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Business s. 10(1) applied to an adventure in the nature of trade even if that deemed business was not “carried on” 75
Tax Topics - Income Tax Act - Section 45 - Subsection 45(1) - Paragraph 45(1)(a) property not generating income does not convert to capital property unless s. 13(7) or 45(1) applies 209

The Queen v. Johnson & Johnson Inc., 94 DTC 6125, [1994] 1 CTC 244 (FCA)

In finding that a federal sales tax refund should not be considered to have been receivable by the taxpayer until the Minister had given some public irrevocable indication thereof, Hugessen J.A. stated (p. 6128):

"The decision creates rights and starts time running and it is as much in the public interest as in that of those immediately concerned that there be a basic minimum of certainty as to when it is made and what it is. A decision in Pectore would be an abomination in law."

J.L. Guay Ltée v. MNR, 71 DTC 5423, [1971] CTC 686 (FCTD), aff'd 73 DTC 5374, [1973] CTC 506 (FCA), aff'd 75 DTC 5094, [1975] CTC 97 (SCC)

Nöel A.C.J. stated (at p. 5427) that in order for an accountant's report to give the taxpayer a general picture of his affairs "it is not necessary for the profit shown to be exact but it must be reasonably close, while the Income Tax Act requires it to be exact, and it is thus necessarily arbitrary".

See Also

High-Crest Enterprises Limited v. The Queen, 2015 TCC 230, nullified on procedural grounds 2017 FCA 88

interpretation with reasonably certain application is preferred
see summary 2017 FCA 88

Although assisted–living facilities (or additions thereto) normally are subject to HST on their fair market value when substantially completed, ETA s. 191.1(2) effectively deems the HST to be payable on the greater of most costs and the fair market value where the builder received government funding "for the purpose of making residential units in the complex available to [seniors]."

In finding that test should be interpreted as referring to the dominant purpose of the government funder, Owen J stated (at para. 82):

Given that the definition is pivotal in identifying when to depart from the standard rule, a reasonable degree of certainty in the scope of the definition is to be preferred over an unworkably broad interpretation that accepts any degree of purpose on the part of the grantor or organization. Such an interpretation is also consonant with the general proposition that certainty, predictability and fairness are the preferred outcome in the interpretation of tax law.

See summary under General Concepts - Intention.

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 191.1 - Subsection 191.1(1) - Government Funding government funding only of operating costs did not detract from its objective of increasing beds 257
Tax Topics - General Concepts - Purpose/Intention government funding only of operating costs did not detract from its purpose of increasing beds 231
Tax Topics - Excise Tax Act - Regulations - Public Service Body Rebate (GST/HST) Regulations - Section 2 - Government Funding government funding only of operating costs did not detract from its objective of increasing beds 173

Daishowa-Marubeni International Ltd. v. The Queen, 2010 DTC 1216 [at 3582], 2010 TCC 317, rev'd in part 2013 DTC 5085 [at 5959], 2013 SCC 29

Before finding that the consideration in an asset sale represented by the assumption by a purchaser of a future reforestation liability should be heavily discounted from the estimate of its value by the taxpayer's auditors, C. Miller, J. stated (at para. 38) that in the jurisprudence there:

"is a common thread ... that shows the tendency of the Courts to be reluctant to impose tax, regardless of the taxing regime, in situations where the amount could be taxed is uncertain or unascertainable."