Drafting Style

In the course of finding that the single-supply doctrine should not be applied to treat the supply of an orthodontic appliance and a related supply of orthodontic services to a patient as a single supply of exempt healthcare services (the orthodontic services), Woods JA stated (at para. 42):

It is highly unlikely that Parliament would explicitly provide that any supply of an orthodontic appliance is zero-rated if the intention is that the supply is restricted to the wholesale level. Such imprecise drafting is not typical of taxing statutes in general or in the ETA.

At issue was whether a Barbados bank subsidiary (Glenhuron ) of the taxpayer, which used equity funds received from its Canadian parent to invest in short-term debt obligations, conducted its business principally with persons with whom it dealt at arm’s length, as required in s. 95(1) - investment business - (a). In rejecting the Crown’s submission that there was a requirement that there be an element of competition involved in the receipt of funds by Glenhuron, Woods JA stated (at para. 58):

[This] is an example of a court inferring a purposive interpretation from unexpressed legislative intent. ,,, As stated by the Supreme Court of Canada: “This Court has consistently held that courts must therefore be cautious before finding within the clear provisions of the [ITA] an unexpressed legislative intention ...” (Shell …) . The emphasis in the Tax Court’s reasons on an unexpressed intention of competition is not appropriate in this case which involves a FAPI scheme that is drafted with mind-numbing detail.

Before going on to find that there was no inference that because Parliament had specifically accorded favourable tax treatment to some types of Canadian amateur athletic associations, athletic associations could not qualify as being charitable, Rothstein J. stated (at para. 16) that "because of the degree of precision and detailed characteristics of many tax provisions, an emphasis has often been placed on textual interpretation where taxation statutes are concerned".

After quoting commentary that "'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", Iacobucci J. stated (at pp. 5809-5810):

"This is not an endorsement of a literalist approach to statutory interpretation, but a recognition that in applying the principles of interpretation to the Act, attention must be paid to the fact that the Act is one of the most detailed, complex, and comprehensive statutes in our legislative inventory and courts should be reluctant to embrace unexpressed notions of policy or principle in the guise of statutory interpretation."

In finding that revenue-producing assets did not have to be held for any minimum period of time or generate a relatively large amount of revenue in order to satisfy the requirements of Regulation 1102(1)(c), L'Heureux-Dubé J. stated (at pp. 5377-8):

"In as technical a piece of legislation as the ITA, had Parliament or the executive wanted to specify any minimum period of time, materiality requirement, or financial statement content requirement, they would have used clear language to that effect."

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."

"Given the various specific drafting terms (references and cross-references to various sections) in which the provisions of the Act are usually couched, it seems difficult to understand why, if it had been intended to prevent the transfer of ABIL as between members of the controlled group, this was not explicitly articulated in the provisions." (p. 6426)

Before going on to find that a charging provision in the Succession Duty Act (BC) in substance imposed tax on resident beneficiaries rather than property, Dickson J. stated (at p. 350):

"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."

Succession duty imposed by Nova Scotia on Nova Scotia residents of an Alberta corporation whose wholly-owned subsidiary received the residue of the estate of their Nova Scotia-domiciled grandfather, was not a tax on property outside the province but, rather, a tax upon persons within the province measured by the benefits which they derived as a result of the bequest made to the Alberta corporation. Accordingly, the provisions imposing such tax were intra vires the Legislature of Nova Scotia.