Interpretation/Definition Provisions


Canada v. Canada North Group Inc., 2021 SCC 30

detailed listing of items covered in the 2nd part of a means and includes definition had a limiting effect

In commenting on the means and includes definition of a security interest in s. 224(1.3), Côté J stated (at para. 63):

I agree with [Justice Rothstein in Caisse populaire Desjardins de l’Est de Drummond] … that the list of examples provided is not exhaustive. However, the examples remain illustrative of the types of interests that Parliament had in mind and are clearly united by a common theme or class because Parliament employed a compound “means . . . and includes” structure to establish its definition: “security interest means any interest in, or for civil law any right in, property that secures payment or performance of an obligation and includes . . . ”. In my view, this structure evidences Parliament’s intent that the list have limiting effect, such that only the instruments enumerated and instruments that are similar in nature fall within the definition. The critical difference between the listed security interests and super-priority charges ordered under s. 11 of the CCAA or any of the sections that follow it explains both why the latter are excluded from the list of specific instruments and why there can be no suggestion that they may be included in the broader term “encumbrance” at the end of that list. The ejusdem generis principle supports this position by limiting the generality of the final words on the basis of the narrow enumeration that precedes them (National Bank of Greece (Canada) v. Katsikonouris, [1990] 2 S.C.R. 1029, at p. 1040). All of the other instruments arise by agreement or by operation of law. Therefore, court-ordered super-priority charges under s. 11 or any of the sections that follow it are different in kind from anything on the list.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 227 - Subsection 227(4.1) a CCAA court can order a super-charge that has priority over the s. 227(4.1) deemed trust (which in fact does not create any Crown proprietary interest in the debtor’s assets) 841
Tax Topics - General Concepts - Ownership Crown deemed trust interest did not have the attributes of beneficial property ownership 386
Tax Topics - Statutory Interpretation - Interpretation Act - Section 8.1 Parliament chose to dissociate itself from provincial law in its drafting of a provision 229

Canada v. Bank of Montreal, 2020 FCA 82

deeming provision applied to all provisions of the Act where it was not explicitly limited

On unwinding a tower structure, a Nevada subsidiary LP of BMO realized FX gains on repaying U.S.-dollar borrowings, but completely offset that loss through realizing a capital loss on winding up an NSULC subsidiary. As a technical matter, s. 112(3.1) did not apply to deny any portion of this capital loss because the NSULC paid all its dividends on a separate class of preferred shares that it had issued as a stock dividend – rather than on the common shares on which the LP had realized the loss.

CRA considered this structuring to be abusive and applied GAAR. Webb JA found that s. 112(3.1) would not have applied to grind the loss even if the NSULC had instead paid all the dividends on its common shares. Thus, the structuring was unnecessary, and there was no “tax benefit” which could engage GAAR.

In particular, he found that the pre-2013 version of s. 39(2) applied to FX gains or losses on the dispositions of property generally, rather than being restricted, as contended by the Crown, to dispositions of foreign currency and FX gains or losses arising on settlement of obligations. As s. 39(2) applied to the FX loss sustained on the disposition of the NSULC shares, s. 39(2) thus deemed that loss to be a loss from the disposition of foreign currency rather than of shares, so that s. 112(3.1) could not apply.

In further rejecting a Crown submission that the deeming of the loss by s. 39(2) to be from the disposition of foreign currency rather than shares did not apply for purposes of s. 112(3.1), Webb JA further stated (at paras 63 and 64):

There was nothing in the language of subsection 39(2) of the Act that restricted its application to only section 39 of the Act. Parliament deemed the net gain or loss as determined under this subsection to be a gain or loss from the disposition of a foreign currency. This deeming rule would have been applicable for the purposes of the Act. Since subsection 112(3.1) of the Act only applies to dispositions of shares, this subsection did not apply to reduce the capital loss of BMO that was deemed to be a capital loss from the disposition of a foreign currency.

When Parliament intends to restrict a particular deeming rule to only certain provisions of the Act, it clearly does so. …

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 39 - Subsection 39(2) former s. 39(2) extended to FX gains on s. 39(1) dispositions 495
Tax Topics - Income Tax Act - Section 112 - Subsection 112(3.1) s. 39(2) deeming of loss to be from FX rather than shares applied to s. 112(3.1) 463
Tax Topics - Income Tax Act - Section 245 - Subsection 245(1) - Tax Benefit no tax benefit as structuring was unnecessary 144

Canada (Attorney General) v. Igloo Vikski Inc., 2016 SCC 38, [2016] 2 S.C.R. 80

an “includes” definition could reasonably be viewed as being limited by the listed items

The World Harmonized System Explanatory Note for the tariff heading 39.26 (other articles of plastics) appearing in the Schedule to the the Customs Tariff Act included various listed categories of items, the first of which was was articles of apparel and clothing, whose description did not encompass the imported items in question (goalie gloves.) Côté J essentially stated (citing National Bank of Greece (Canada) v. Katsikonouris, [1990] 2 S.C.R. 1029 (also cited by Brown J at para. 50) that “’include’ or ‘including’ are ‘terms of extension, designed to enlarge the meaning of preceding words, and not to limit them’.”) Brown J essentially indicated that it was reasonable for the CITT to consider that if the gloves were not covered by the specific paragraph dealing with clothing items, they should not be considered to be intended to be included in that heading, stating (at para. 50):

It is reasonable to interpret that list item as stating exhaustively its own criteria — meaning, in this case, that if an article of clothing or accessories is to be classified in heading 39.26, it must be made by sewing or sealing sheets of plastic together [which was not the case for the goalie gloves].

Locations of other summaries Wordcount
Tax Topics - Other Legislation/Constitution - Federal - Customs Tariff Act - Schedules - General Rules for the Interpretation of the Harmonized System - Rule 2 - Rule 2(b) good must be described in headings - even if not ultimately included therein because of their composite nature — before Rule 2 can apply 783
Tax Topics - Treaties narrower range of interpretations where implementing a Convention 85

Alexander College Corp. v. Canada, 2016 FCA 269

"means" definition can depart from ordinary meaning

The ETA stated that a "’university’ means a recognized degree-granting institution or an organization that operates a college affiliated with, or a research body of, such an institution."

A private for-profit B.C. college with a two-year arts program provided "associate degrees," which were recognized as degrees under the Degree Authorization Act (B.C.). Gleason JA found that the college unambiguously qualified as a university under this definition, so that there was no further requirement that it also be recognized as a university under provincial law. She stated (at para 14):

[T]he use of the word “means” in a statutory definition reflects Parliament’s intention that the definition be exhaustive and therefore may well displace the ordinary meaning for a defined term. …

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 123 - Subsection 123(1) - University private college providing "associate degrees" qualified as a “university” for GST purposes 192
Tax Topics - Excise Tax Act - Schedules - Schedule V - Part III - Section 7 private college granting associate degrees qualified 146

Canada v. Marchessault, 2008 DTC 6496, 2007 FCA 345

related interpretation provision not referenced

The deemed year end under s. 128(2)(d) of the Act applied only to a "bankrupt" as specifically described in s. 2 of the Bankruptcy and Insolvency Act (the "BIA"), and did not extend to an individual (such as the taxpayer in this case) who had made a proposal notwithstanding the statement in s. 66(1) of the BIA that the provisions of the BIA would apply "with such modifications as the circumstances require" to proposals. Trudel J.A. noted (at para. 67) that Parliament had "exactly identified" the definition of "bankrupt" in the BIA and that "Parliament did not refer to the law applicable to a bankrupt under the BIA".

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 128 - Subsection 128(2) person who made a proposal was not a bankrupt 112
Tax Topics - Statutory Interpretation - Interpretation Bulletins, etc. CRA positions not conclusive 51

Survivance v. Canada, 2007 DTC 5096, 2006 FCA 129

deemed acquisition of control implied loss of control

Noël J.A found that it followed from the fact that subsection 256(9) deemed there to be an acquisition of control of a corporation on the beginning of the day, there was a concomitant abandonment of control of the corporation by the taxpayer.

OSFC Holdings Ltd. v. Canada, 2001 DTC 5471, 2001 FCA 260

deeming v. definition provisions

Before finding that s. 248(10) expanded the "common law" meaning of "series," Rothstein J.A. stated (at para. 33):

A deeming provision imports into a term a meaning that the term would not otherwise convey. It normally plays a function of enlargement.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 245 - Subsection 245(3) significant disparity between tax benefit and commercial return from transaction 263
Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) policy against corporate loss trading 229
Tax Topics - Income Tax Act - Section 248 - Subsection 248(10) 32
Tax Topics - Statutory Interpretation - Interpretation Bulletins, etc. 70

Placements Serco Lté v. The Queen, 88 DTC 6125, [1988] 1 CTC 42, [1988] 1 CTC 213 (FCA)

Verrette applied

After referring to the description in R. v. Verrette, [1978] 2 S.C.R. 838, at 845 of the function of a deeming provision, the Court found that a corporation which was deemed by s. 212.1 (a provision in Part XIII of the Act) to have paid a dividend, was thereby subject to withholding tax under subsection 212(2) of the same Part, notwithstanding that subsection 212(2) also, by its terms, applied to amounts that were deemed to be dividends by Part I or Part XIV of the Act.

Canada v. Schafer, 2000 DTC 6542 (FCA)

"deems" is irrebuttable

The Court found that s. 334(1) of the ETA created an irrebuttable rather than a rebuttable presumption by deeming anything sent by first class mail to have been received on the day of mailing, given that a requirement for receipt of the notification would be administratively difficult, and s. 335(1) of the ETA would leave a gap in the legislative scheme if the presumption in s. 334(1) were rebuttable.

Terrador Investments Ltd. v. Canada, 99 DTC 5358, [1999] 3 CTC 520 (FCA)

reasonable implication of deemed fiction

In finding that the making of an election s. 93(1) in respect of a distribution to the taxpayer of a promissory note by a liquidating U.S. subsidiary precluded the taxpayer from later claiming a deduction under s. 20(1)(p) when the uncollected balance of the promissory note proved to be uncollectible, Décary J.A. stated (at p. 5362) that:

"What is deemed to have been paid cannot also be said to be due."

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 93 - Subsection 93(1) 200

ITT Industries of Canada Ltd. v. The Queen, 99 DTC 5105, [1999] 2 CTC 277 (FCTD), aff'd 2000 DTC 6445, Docket: A-99-99

labeling definition

Subpara. (i) of the definition of "timber resource property" in s. 13(21)(d.1) started by referring to "a right or licence to cut or remove timber from a limit or area in Canada (in this pargarph referred to an an 'original right')", and went on to specify that to come within subpara. (i) the original right must not be renewable or extendible. The taxapyer argued that this additional condition also modfied the meaning of "original right" as used in subpara. (ii) of the timber resource property definition. In rejecting this submission, Simpson J. accepted a submission of the Minister 9made at para. 22) that where labelling definitions are used (i.e., "X") in this section referred to as ("Y"), only the words which precede the parenthesis describe the defined term.

In his concurring reasons in the Federal Court of Appeal, Létourneau JA stated (at para. 3):

It is obvious to me that [the additional clauses in subpara. (i)] do not serve to define or further define the term "original right" found in subparagraph (i) as contended by the appellant. These subclauses instead show under what conditions an original right will be a "timber resource property". These subclauses are in fact part of the definition of "timber resource property" which, in my view, is the only term defined in paragraph 13(21)(d .1). The use of the words "original right" in subparagraph (i) is for sheer convenience in order to avoid a repetition, in that paragraph, of the long-winded words "a right or licence to cut or remove timber from a limit or area in Canada". This is made clear by the express mention that this right is to be "referred to as an "original right"". The text does not speak in terms of definition of the right, but rather in terms of a shorter designation of that right... .

Liampat Holdings Ltd. v. The Queen, 96 DTC 6020, [1996] 1 CTC 343 (FCTD)

"deems" is irrebuttable

Cullen J. rejected a submission that the deeming of the accrual of interest pursuant to s. 17(1) created a rebuttable rather than an irrebuttable presumption for purposes of the Act.

Qit-Fer et Titane Inc. v. The Queen, 92 DTC 6071, [1992] 1 CTC 39 (FCTD), aff'd on different grounds 96 DTC 6213 (FCA)

presumption against redundancy

Rouleau J. applied the statement in Côté Interprétation des lois that:

"In reading a statute, one must also presume that each word, phrase, clause and subsection has been drafted deliberately in order to produce a particular result. The Legislature is sparing in its language: it does not speak in order to say nothing."

Derlago v. The Queen, 88 DTC 6290, [1988] 2 CTC 21 (FCTD)

disposition implied proceeds receipt

Martin, J. held that a taxpayer should be assumed, in the absence of any provision to the contrary, to have received proceeds of disposition at the same time that he was deemed by s. 45(1)(a) to have disposed of the property. This view was reinforced by the deemed reacquisition referred to in s. 45(1)(a)(iv). "This indicates to me, in this fictional world of taxation, that Parliament must have intended the deemed proceeds to have been received by the plaintiff because it provided for the expenditure of the proceeds by the plaintiff immediately after their creation."

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 45 - Subsection 45(1) - Paragraph 45(1)(a) change of use on start of personal-use occupation 74

Dunstan v. Young, Austen & Young Ltd., [1987] BTC 530 (HCJ), rev'd [1989] BTC 77 (C.A.)

"includes means a whole bunch of things

"[T]he word 'include' may be used in such a definition to enlarge the natural meaning of the word defined, or to clarify it, or to introduce examples of its meaning, or to introduce restrictions on that meaning, or for two or more of those purposes. Exceptionally it may be used to introduce an exhaustive definition of the word in question."

Midyette v. The Queen, 85 DTC 5565, [1985] 2 CTC 362 (FCTD)

Verrette rule

"'The purpose of any deeming clause is to impose a meaning, to cause something to be taken to be different from that which it might have been in the absence of the clause.'"

Merchant v. The Queen, 84 DTC 6215, [1984] CTC 253 (FCTD)

"means" is exhaustive

The definition of "office" in S.248(1) stated that it "means" X (as well as going to specifiy that it includes various listed positions). Reed J found that X overrode the ordinary sense of the word "office", stating (at p. 6217) that the opening words of the definition "impart a mandatory aspect to the definition."

I.R.C. v. Metrolands (Property Finance) Ltd., [1981] 1 W.L.R. 637 (C.A.), aff'd 82 BTC 8032 (HL)

extent of statutory fiction determined purposively

At 646:

"When considering the extent to which a deeming provision should be applied, the court is entitled and bound to ascertain for what purposes and between what persons the statutory fiction is to be resorted to. It will not always be clear what those purposes are. If the application of the provision would lead to an unjust, anomalous or absurd result then, unless its application would clearly be within the purposes of the fiction, it should not be applied. If, on the other hand, its application would not lead to any such result then, unless that would clearly be outside the purposes of the fiction, it should be applied."

The Queen v. Farmparts Distributing Ltd., 80 DTC 6157, [1980] CTC 205 (FCA)

"including" enlarges

After being referred to the statement in Verrette [1978] 2 S.C.R. 838 at 844 that "in definition provisions, the word 'includes' is generally used extensively in contradistinction to the restrictive word 'means'," Heald J.A. accepted (at p. 6160) a submission of the Crown that the word "including" in s. 212(1)(d) was used in its extensory sense for the purpose of enlarging the meaning of the preceding words, so that payments described after the word "including" were subject to the charge of the section whether or not they could be said to be ejusdem generis with "rent, royalty or a similar payment".

Words and Phrases

The Queen v. Cie Imm. BCN Ltée, 79 DTC 5068, [1979] CTC 71, [1979] 1 S.C.R. 865

detailed definition not presumed exhaustive

At 5072:

"In the context of s. 20(5), the definitions of 'disposition of property' and 'proceeds of disposition' cannot be said to be exhaustive; these expressions must bear both their normal meaning and their statutory meaning; it would be wrong to restrict the former because of the latter."

R. v. Verrette, [1978] 2 S.C.R. 838

deeming provision preserves a word’s ordinary meaning

The accused, who had danced in a public performance completely bare, was charged under the Criminal Code for the offence of being “nude in a public place.” The Quebec Court of Appeal had referenced a provision which deemed a partially clad person to be nude where public decency was offended, and quashed the conviction because the prosecution had not established that the dancing offended public decency. Before allowing the appeal (on the basis that no reference to the deeming provision was needed where the accused, in fact, was nude), Beez J stated (at pp. 845-846):

A deeming provision is a statutory fiction; as a rule it implicitly admits that a thing is not what it is deemed to be but decrees that for some particular purpose it shall be taken as if it were that thing although it is not or there is doubt as to whether it is. A deeming provision artificially imports into a word or an expression an additional meaning which they would not otherwise convey beside the normal meaning which they retain where they are used; it plays a function of enlargement analogous to the word “includes” in certain definitions; however, “includes” would be logically inappropriate and would sound unreal because of the fictional aspect of the provision. Thus, a scantily dressed person is not really nude; but if under certain conditions that person be deemed to be nude in a provision prohibiting nudity, the word “nude” keeps its ordinary meaning which at the same time is extended to something which is not nudity. That is why, under the old s. 205A , in cases of complete nudity, it was clearly unnecessary for the prosecution to prove that the nudity offended against public decency or order: far from restricting the ordinary meaning of “nude”, the deeming provision preserved that meaning and at the same time enlarged it by bringing scantiness of dress within its scope.

Storrow v. The Queen, 78 DTC 6551, [1978] CTC 792 (FCTD)

"includes" does not subtract ordinary meaning

"Where a definition section uses the word 'includes', as it does in ss.62(3), then the expression said to be defined includes not only those things declared to be included, but such other things' ... as the word signifies according to its natural import'".

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 62 101

Toronto General Trusts Corporation v. The Minister of National Revenue, 58 DTC 1162, [1958] CTC 223, [1958] S.C.R. 499

narrow construction of statutory fiction

In considering what scope should be given to what then was s. 36 of The Wills Act (Ontario), Judson J. stated (p. 1167):

"The fiction should not be pushed beyond its purpose. There is the high authority of Lord Mansfield in Morris v. Pugh et al., (1761) 3 Burr. 1241 at 1243, 97 E.R. 811, for caution of this kind."

East End Dwellings Co. Ltd. v. Finsbury Borough Council, [1952] A.C. 109 at 132

accept implications of deeming provision

"If you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real the consequences and incidents which, if the putative state of affairs had in fact existed, must inevitably have flowed from or accompanied it."

See Also

Fowler v Commissioners for Her Majesty’s Revenue and Customs, [2020] UKSC 22

principles in determining the scope of a deeming provision

Before going on to find that a domestic UK provision that deemed an employee to be an independent contractor for purposes of computing his income did not have the effect of ousting his status as an employee for Treaty purposes, Lord Briggs stated (at para. 27):

There are useful but not conclusive dicta in reported authorities about the way in which, in general, statutory deeming provisions ought to be interpreted and applied. They are not conclusive because they may fairly be said to point in different directions, even if not actually contradictory. The relevant dicta are mainly collected in a summary by Lord Walker in DCC Holdings (UK) Ltd v Revenue and Customs Comrs [2011] 1 WLR 44, paras 37-39 …:

(1) The extent of the fiction created by a deeming provision is primarily a matter of construction of the statute in which it appears.

(2) For that purpose the court should ascertain, if it can, the purposes for which and the persons between whom the statutory fiction is to be resorted to, and then apply the deeming provision that far, but not where it would produce effects clearly outside those purposes.

(3) But those purposes may be difficult to ascertain, and Parliament may not find it easy to prescribe with precision the intended limits of the artificial assumption which the deeming provision requires to be made.

(4) A deeming provision should not be applied so far as to produce unjust, absurd or anomalous results, unless the court is compelled to do so by clear language.

(5) But the court should not shrink from applying the fiction created by the deeming provision to the consequences which would inevitably flow from the fiction being real. As Lord Asquith memorably put it in East End Dwellings Co Ltd v Finsbury Borough Council [1952] AC 109, at 133:

“The statute says that you must imagine a certain state of affairs; it does not say that having done so, you must cause or permit your imagination to boggle when it comes to the inevitable corollaries of that state of affairs.”

Locations of other summaries Wordcount
Tax Topics - Treaties - Income Tax Conventions - Article 3 deeming an employee to be an independent contractor did not oust the Treaty Employment Income Article 462
Tax Topics - Treaties - Income Tax Conventions - Article 7 UK domestic provision deeming employee to be independent contractor did not engage Art. 7 232

Fowler v HM Revenue and Customs, [2018] EWCA Civ 2544, rev'd 2020 UKSC 22

domestic deeming provision had Treaty effect

A U.K. domestic income tax provision deemed the diving activities of a South African resident in the North Sea to be the carrying on of a U.K trade, notwithstanding that in fact he was an employee. The majority of the Court of Appeal of England and Wales found that this meant that his earnings were business profits for purposes of Art. 7 of the U.K-South Africa Treaty (rather than employment income under Art. 14) so that they escaped U.K. taxation (as he had no U.K. permanent establishment.) Before so concluding, Henderson LJ stated (at paras. 36-37):

The well known statement of principle by Peter Gibson J, delivering the leading judgment in the Court of Appeal in Marshall v Kerr, has been followed and applied in many later cases. I emphasise in particular the final sentence of that statement ... :

"I further bear in mind that because one must treat as real that which is only deemed to be so, one must treat as real the consequences and incidents inevitably flowing from or accompanying that deemed state of affairs, unless prohibited from doing so."

The wording of that sentence reflects the often-cited observations of Lord Asquith of Bishopstone in East End Dwellings Co Ltd v Finsbury Borough Council [1952] AC 109 at 132-133, which ended with these memorable words:

"The statute says that you must imagine a certain state of affairs; it does not say that having done so, you must cause or permit your imagination to boggle when it comes to the inevitable corollaries of that state of affairs."

Locations of other summaries Wordcount
Tax Topics - Treaties - Income Tax Conventions - Article 3 a domestic provision deeming employment income to be from trade rendered it business profits for Treaty purposes 517
Tax Topics - Treaties - Income Tax Conventions - Article 7 employment income deemed by domestic provision to be business profits 138

Travel Document Service & Ladbroke Group International v Revenue & Customs (Rev 1), [2018] EWCA Civ 549

where an anti-avoidance provision’s application depended on the purpose of being a creditor, that purpose was the one for holding shares which were a deemed loan

A British taxpayer (TDS) used a total return swap to cause its share investment in a subsidiary (LGI) to be deemed to be a loan. However, its hoped-for tax benefit was denied by an anti-avoidance provision that applied if “one of the main purposes” for being a party to a loan relationship was to secure relief from tax. In rejecting TDS’s submission that the anti-avoidance provision should only be applied to actual loans and not deemed loans, Lord Justice Newey referred to the dictum in Marshall v. Kerr (repeated in many subsequent cases) that “because one must treat as real that which is only deemed to be so, one must treat as real the consequences and incidents inevitably flowing from or accompanying that deemed state of affairs, unless prohibited from doing so.” This then meant that what was to be evaluated under the anti-avoidance rules was the purposes for which TDS held its shares of LGI.

In this regard, TDS emphasized that it had held its TDS shares long before entering into the swap and a related novation contract. In rejecting this contention, Lord Justice Newey stated (at para. 46):

While, therefore, there is no question of TDS having had the tax advantage in mind when it acquired the shares, it was evidently intending to use them in the tax avoidance scheme during the currency of the Swap. Had the tax advantage in view been small, there might have been scope for argument as to whether an intention to use the shares to achieve it implied that obtaining the advantage was now a main purpose of holding the shares. In fact, however, the hoped-for gain was large both in absolute terms (more than £70 million) and relative to the apparent value of TDS (some £280 million). That being so, I agree with Mr Ghosh [for HMRC] that the inescapable inference was that securing the advantage had become a main purpose of holding the shares. …

He also rejected HMRC’s submission that "’main’ … means ‘more than trivial’," stating (at para. 48):

A purpose can be "more than trivial" without being a "main" purpose. "Main" has a connotation of importance.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 83 - Subsection 83(2.1) “main” has a connotation of importance 239

Barclays Wealth Trustees (Jersey) Limited v. Commissioners for Her Majesty's Revenue and Customs, [2017] EWCA Civ 1512

trreat as real the inevitable incidents of the deemed fiction

In the course of describing submissions of the taxpayer’s counsel with which he ultimately agreed, Henderson LJ stated (at para. 47):

In support of his submissions on the correct approach to the interpretation of statutory deeming provisions, Mr Ewart referred us to the well known statement by Peter Gibson J, sitting in this court with Balcombe and Simon Brown LJJ, in Marshall (Inspector of Taxes) v Kerr [1993] STC 360 at 366:

"For my part I take the correct approach in construing a deeming provision to be to give the words used their ordinary and natural meaning, consistent so far as possible with the policy of the Act and the purposes of the provisions so far as such policy and purposes can be ascertained; but if such construction would lead to injustice or absurdity, the application of the statutory fiction should be limited to the extent needed to avoid such injustice or absurdity, unless such application would clearly be within the purposes of the fiction. I further bear in mind that because one must treat as real that which is only deemed to be so, one must treat as real the consequences and incidents inevitably flowing from or accompanying that deemed state of affairs, unless prohibited from doing so."

This statement of principle has been cited with approval in many subsequent cases… .

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(1) the determination of whether there is a single trust should accord with how a trust lawyer would view the matter 626

Cartier House Care Centre Ltd. v. The Queen, 2015 TCC 278

general phases in definition not limited by following specific enumeration

Paris J rejected CRA arguments that independent contractors who provided personal care services to a B.C. for-profit residential care home, including assistance with bathing, dressing, grooming, feeding, and incontinence management, were not thereby providing a (GST-exempt) "homemaker service," which was defined to mean "a household or personal service, such as cleaning, laundering, meal preparation and child care, that is rendered to an individual who, due to age, infirmity or disability, requires assistance." He stated (at paras. 46-47):

The use of specific examples after a general term in legislation does not restrict the meaning of the general term to cases similar to the specific examples. Rather, the presumption is that, in using the specific examples, Parliament intended to extend the meaning of the general term to things that would ordinarily have been seen as not falling within the general term. This principle of interpretation was discussed by the Supreme Court of Canada in National Bank of Greece v. Katsikonouris, [1990] 2 S.C.R. 1029… .

See summary under Sched. V, Pt. II, s. 1 – home care service.

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Schedules - Schedule V - Part II - Section 1 - Home Care Service "personal care" included ADL assistance 409
Tax Topics - Excise Tax Act - Schedules - Schedule V - Part II - Section 1 - Institutional Health Care Service accommodation an institutional health care service 232
Tax Topics - Excise Tax Act - Schedules - Schedule V - Part II - Section 13 personal care services provided by independent contractors were exempted 483
Tax Topics - Excise Tax Act - Section 138 s. 138 did not apply where the allocation of consideration among the components was apparent 254
Tax Topics - Statutory Interpretation - Noscitur a Sociis noscitur a sociis did not apply to general phases preceding list 206
Tax Topics - Excise Tax Act - Regulations - Public Service Body Rebate (GST/HST) Regulations - Section 2 - Government Funding funding for personal care services provided by independent contractors would be included 265

Presidential MSH Corporation v. The Queen, 2015 DTC 1101 [pp. 596-610], 2015 TCC 61

definitional term not inserted immediately after referent term

The refundable dividend tax account of the taxpayer was not reduced by amounts which it could have claimed, but failed to timely claim, as "dividend refunds." S. 129(1) provided that the Minister " amount (...[the] "dividend refund"...) equal to [a formula amount]." Notwithstanding that "refund" was used here as a verb, Graham J found that the defined term refers to a refund of the formula amount, rather than to the formula amount whether or not refunded. See summary under s. 129(1).

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 129 - Subsection 129(1) RDTOH not reduced by unclaimed dividend refunds 149

Vocalspruce Ltd. v. Revenue and Customs Commissioners, [2014] BTC 50, [2014] EWCA Civ 1302 (English CA)

must recognize concomitant consequences of deemed facts

The parent company (Brixton plc) of the taxpayer (Vocalspruce) subscribed for zero coupon notes of group companies, and transferred the notes to Vocalspruce in consideration for the issuance by Vocalspruce of shares whose nominal value was equal to the notes' discounted value, but with the shares being issued at a premium which would be paid up by capitalizing the profit to be realized by Vocalspruce on the notes, with such sums to be appropriated to Vocalspruce's share premium account.

After finding that such profits (i.e., realized discounts on the notes) were otherwise exempted from income tax under a provision which excluded "any amounts required to be transferred to the company's share premium account," Lewison LJ went on to find that this exemption did not apply by virtue of a further provision (para. 12 of Sched. 12 of the Finance Act 1996) which (in s. 12(1)) referenced transactions in which one group company "directly or indirectly replaces the other…as a party to a loan relationship," and provided (in s. 12(2)) that "the transaction , or series of transactions, by virtue of which the replacement takes place shall be disregarded." He stated:

Mr Peacock [for Vocalspruce] said that because paragraph 12 (1) refers to a "related transaction" and a related transaction is narrowly defined as the acquisition of rights under the loan relationship, all that is required to be disregarded is the fact of Vocalspruce's replacement of Brixton plc. …

I cannot accept this argument. The term defined is a related transaction; and the defined term may itself colour the meaning of the definition. A transaction is (at least) a bilateral arrangement. It makes no sense to disregard part of the transaction, when the statute clearly requires the whole transaction to be disregarded, except for very limited purposes. … In addition it is a well-known method of interpreting deeming provisions that one must treat as real the inevitable consequences flowing from the deemed state of affairs: DCC Holdings Ltd v HMRC [2010] UKSC 58, [2011] 1 WLR 44 at [38]. If the acquisition by Vocalspruce had not taken place, the inevitable consequence would have been that the shares would not have been issued for a premium, and there would have been no requirement to transfer anything to the share premium account. The rights under the loan relationship would have remained with Brixton plc, which was under no obligation to transfer any amount to a share premium account, and that company would have been liable to pay tax on the gain.

Words and Phrases

Roger Dubois Inc. v. The Queen, 2014 DTC 1094 [3167], 2013 TCC 409, briefly aff'd 2015 CAF 235

"deems" has several meanings

Jorré J found that 18th or 19th century violins purchased by the taxpayer were caught by the description "antique furniture, or any other antique object" in Reg. 1102(1)(e)(iv). The taxpayer submitted that the words "shall be deemed" at the outset of Reg. 1102(1) indicated that the subsection created a set of legal fictions, and therefore each deemed exception to depreciable property should be construed narrowly. However, the word "deemed" had several meanings in statutory drafting, and not all of them create legal fictions - in this case, the word was used to establish a rule excluding certain things from the term "depreciable property" (para. 36).

Locations of other summaries Wordcount
Tax Topics - Income Tax Regulations - Regulation 1102 - Subsection 1102(1) - Paragraph 1102(1)(e) "antique" means "non-recent" 209
Tax Topics - Statutory Interpretation - Noscitur a Sociis no implied similarity requirement 158

Gill v. The Queen, 2012 DTC 1261 [at 3764], 2012 TCC 302

"including without limitation" is expansive

Subparagraph 56(1)(a)(i) provides that superannuation or pension benefits must generally be included in a taxpayer's income, "including, without limiting the generality of the foregoing," a number of items listed in ss. 56(1)(a)(i)(A)-(C.1). Hogan J. found that the general inclusion of "superannuation or pension benefits" at the beginning of s. 56(1)(a)(i) did not mean that clauses (A)-(C.1) were confined to only amounts that were superannuation or pension benefits - in the present case, clause (C.1) meant that the taxpayer was required to include in income an amount paid in redeeming a foreign retirement arrangement, regardless of whether that amount would normally be considered a superannuation or pension benefit (para. 35). The use of the word "includes" in a definition "enlarges the ordinary (or technical) meaning of the defined terms to include things that might normally be thought to fall outside their denotation" (Ruth Sullivan, Statutory Interpretation, 2d ed. (Toronto, Irwin Law, 2007), at p. 70).

Wunderlich v. The Queen, 2012 DTC 1040 [at 2676], 2011 TCC 539 (Informal Procedure)

word used in defined term did not inform its meaning

The taxpayer was promoted to a management position, and the expanded responsibilities prompted him to move closer to work. The Minister disallowed his moving expenses on the basis that he had not moved to a "new" work location and, instead, had stayed put. Webb J allowed the taxpayer's appeal. The definition of "eligible relocation" in s. 248(1) requires that:

the relocation occurs to enable the taxpayer

(i) to carry on a business or to be employed at a location (in section 62 and this definition referred to as "the new work location") ... .

Webb J stated (at para. 8):

"[N]ew work location" is simply the name or the label that was placed on the particular location. The words used as part of this label (in particular new and work) should not be used to define the expression "new work location".

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Eligible Relocation "new work location" does not require a change in work location 228

Klotz v. The Queen, 2004 DTC 2236, 2004 TCC 147, aff'd 2005 DTC 5279, 2005 FCA 158

"includes" is expansive

Bowman A.C.J. applied a statement in Maxwell on The Interpretation of Status, 12th Edition, that "the word in respect of which 'includes' is used bears both its extended statutory meaning and 'its ordinary, popular and natural sense whenever that would be applicable" in interpreting the 'includes' definition of "personal-use property" in s. 54 of the Act.

Administrative Policy

13 January 2005 External T.I. 2004-0101701E5 F - Bien substitué

deeming provision only engaged when the referenced term is used

Before finding that the substituted property definition in s. 248(5)(b) does not apply for the purposes of s. 7(1.1), CRA referred to Verrette, and stated:

When a definition is a deeming provision, as is the case with the definition in subsection 248(5), it must relate to the word that Parliament is trying to define.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 248 - Subsection 248(5) - Paragraph 248(5)(b) substituted property definition in s. 248(5)(b) does not apply for the purposes of s. 7(1.1) 122
Tax Topics - Income Tax Act - Section 7 - Subsection 7(1.1) s. 248(5)(b) inapplicable to s. 7(1.1) 35