Provincial Law


Groulx v. Canada, 2010 DTC 5027 [at 6621], 2010 FCA 321

In challenging a set-off under s. 224.1 of a tax debt of the taxpayer against 30% of Canada Pension Plan and Old Age Security payments receivable by the taxpayer, the taxpayer could not rely on a rule in the Civil Code of Quebec that provided that "compensation" cannot take place if the object of the debt is property that is exempt from seizure. The court found no evidence of a Parliamentary intention to import the Quebec civil law concept of "compensation" into statutory set-off.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 224.1 CPP/OAS pensions 84

Hewlett Packard (Canada) Ltd. v. Canada, 2004 DTC 6498, 2004 FCA 240

After finding that the taxpayer had not transferred the ownership of old fleets of cars before the end of its current taxation year for purposes of the Civil Code of Quebec as well as under the common law provinces, Noël J.A. went on to note (at p. 6506) that even if the application of the Civil Code gave rise to a different result, "this Court has held that, for the sake of uniformity, the common law approach should prevail even in Quebec."

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 13 - Subsection 13(21) - Disposition of Property no disposition until change in beneficial ownership 185

Fraser v. Canada (Attorney General), 2004 DTC 6279, 2004 FCA 128

Ss.1(2) and 12(1) of the Maintenance Enforcement Act (Alberta), which provided that a child maintenance agreement filed with the Alberta Director of Maintenance Enforcement which, in turn, was filed by the Director with the Court of Queen's Bench was deemed to be a judgement of the Court, had the effect of qualifying such an agreement as "an order made by a competent tribunal in accordance with the laws of a province" under para. (b) of the definition on "support amount" in s. 56.1(4). Sharlow J.A. noted (at p. 6281) that in the quoted wording Parliament had "indicated that the question of whether there is an order meeting that description is a matter of provincial law".

Caisse populaire Desjardins de Val-Brillant v. Blouin, 2003 DTC 5420, 2003 SCC 31, [2003] 1 S.C.R. 666

Deschamps J. stated (in dissenting reasons with which the majority did not disagree) (at p. 5430) that:

"It is settled law that the legislature may assign tax consequences to a juridical act that are different from the consequences that follow under the rules of the civil law."

She went on to find that the arrangement in question, which was not a trust under civil law, nonetheless could be characterized for purposes of the Act as a trust.

W.E. Roth Construction Ltd. v. Minister of Finance (2001), docket C33216 (Ont. CA)

In rejecting the relevance of provincial interpretation bulletins to the issue before it, the Court stated:

"On the issue of consistency, once there is a court-mandated interpretation for one province, it is desirable and likely that the same provision in other provinces' complementary legislation will be interpreted the same way. In other words, the policy objective of a uniform interpretation is achieved by court interpretation of the 'plain meaning' of identical language in the same way, not by any mandate imposed by interpretation bulletins."

Backman v. Canada, 2001 DTC 5149, 2001 SCC 10, [2001] 1 S.C.R. 367

foreign "partnership" must have the attributes of a Cdn partnership

After affirming a finding that the taxpayers had not become members of a Texan partnership notwithstanding expert evidence that under the laws of Texas the partnership existed, the Court stated (at p. 5156):

"... Where a Canadian taxpayer seeks to deduct a partnership losses through s. 96 of the Act, the taxpayer must satisfy the essential ingredients of a partnership under Canadian law. Even in respect of foreign partnerships, for the purposes of s. 96 of the Act, the essential elements of a partnership that exists under Canadian law must be present. A partnership must be that entity familiar to Canadian law, it must be more than a partnership in name only."

The majority found that the determination of who was a director of a Nova Scotia corporation for purposes of s. 227.1 of the Act should be governed by the provisions of the Companies Act (Nova Scotia).

Locations of other summaries Wordcount
Tax Topics - General Concepts - Purpose/Intention motivation v. purpose 65
Tax Topics - General Concepts - Tax Avoidance 87
Tax Topics - Income Tax Act - Section 96 essential Canadian elements of partnership not present as only momentarily "partners" in common 298

The Queen v. Corsano, 99 DTC 5658, [1999] 2 CTC 395 (FCA)

The majority found that the determination of who was a director of a Nova Scotia corporation for purposes of s. 227.1 of the Act should be governed by the provisions of the Companies Act (Nova Scotia).

Canada v. Construction Bérou Inc., 99 D.T.C 5869 (FCA)

Létourneau J.A. found (at p. 5870) that s. 248(3) of the Act reflected an:

"attempt by Parliament to harmonize the two [common law and civil] systems with a view to providing fair and equal treatment to all Canadian taxpayers ... . Hence, the necessity for a judicial interpretation which allows for the implementation of this legislative intent."

Major v. Brodie & Anor, [1998] BTC 141 (Ch. D)

Before rejecting a submission by the Inspector of Taxes that the position of the taxpayers, as members of a Scottish partnership, should be the same as if they were members of an English partnership, Park J. stated (at p. 154) that:

"... If the tax liability of an English taxpayer depends on the nature of some entity or structure which is not constituted under English law, the matter is determined by reference to what the commissioner finds to be the actual legal characteristics of that entity or structure under its own governing law."

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - 101-110 - Section 102 - Subsection 102(2) top tier partners are lower tier partnership members 242
Tax Topics - Income Tax Act - Section 253.1 top tier partners are lower tier partnership members 242
Tax Topics - Income Tax Act - Section 96 - Subsection 96(1) - Paragraph 96(1)(f) 242

Neuman v. M.N.R., 98 DTC 6297, [1998] 1 S.C.R. 770, [1998] 3 CTC 177

In finding that the corporate character of a dividend governed the analysis of whether s. 56(2) applied to a dividend received by the taxpayer's wife, Iacobucci C.J. stated (at. p. 6304) that "it is well accepted that tax law embraces corporate law principles unless such principles are specifically set aside by the taxing statute".

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 56 - Subsection 56(2) inapplicable to dividends on discretionary shares paid to inactive spouse 298

Dale v. Canada, 97 DTC 5252, [1997] 2 CTC 286 (FCA)

Before going on to find that an order received from the Nova Scotia Supreme Court retroactively amending the share capital of the taxpayer should also have effect for purposes of the Act, Robertson J.A. stated (at p. 5255):

"In determining whether a legal transaction will be recognized for tax purposes one must turn to the law as found in the jurisdiction in which the transaction is consummated. Often that determination will be made without the aid of guiding precedents which are on point and, hence, the effectiveness of a transaction may depend solely on the proper application of general common law and equitable principles ... . As for the Minister, he must accept the legal results which flow from the proper application of common law and equitable principles, as well as the interpretation of legislative provisions."

Locations of other summaries Wordcount
Tax Topics - General Concepts - Effective Date retroactive superior court order has retroactive effect for tax purposes 174
Tax Topics - General Concepts - Rectification & Rescission retroactive effect of nunc pro tunc rectification order 177
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Dividend 78
Tax Topics - Income Tax Act - Section 83 - Subsection 83(2) 78
Tax Topics - Income Tax Act - Section 85 - Subsection 85(1) retroactive validation by Superior Court of preference share issuance was effective for s. 85 purposes 171

Boger Estate v. MNR, 91 DTC 5506, [1991] 2 CTC 168 (FCTD)

It was noted that the income tax law is, essentially, an accessory to the general law, importing the concepts of general public and private law.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 159 - Subsection 159(3) 43

Drescher v. The Queen, 85 DTC 5064, [1985] 1CTC 229 (FCTD)

Liability for income tax is determined by the income which property yields to the beneficial owner of the property, and the determination of a person's beneficial interest "is established according to the law of property (including equity where applicable) of the province in which the goods or property are located".

Gervais v. The Queen, 85 DTC 5004, [1984] CTC 661 (FCTD)

It was found that since income tax law "must be interpreted consistently throughout Canada", the conferral of a benefit by deed of sale should not be regarded as a gift for the purpose of s. 69(1)(c) of the Act even though it would probably be considered as a gift in Quebec law.

Crown Tire Sevice Ltd. v. The Queen, 83 DTC 5426, [1983] CTC 412 (FCTD)

After referring to the common law authorities on the distinction between a contract of sale of goods and a contract for work and materials, it was stated:

"While the distinctions employed here may seem somewhat technical and remote from revenue law, one must assume that Parliament in speaking [in s. 125.1(3)(a)] of goods for sale or lease had reference to the general law of sale or lease to give greater precision to this phrase in particular cases."

Rank Xerox Ltd. v. Lane, [1981] A.C. 629 (HL)

Since the Finance Act 1965 is "applicable to Scotland as well as to England and Wales ... it should be given an interpretation which would produce a similar effect in both parts of the Kingdom."

Seven Mile Dam Contractors v. The Queen in Right of British Columbia (1980), 116 DLR (3d) 398, 1980 CanLII 451 (BCCA)

In applying the "rule of construction of statutes that new principles are not to be introduced into any branch of the law except by clear language," Hutcheon J.A. found that a definition in the Interpretation Act (B.C.) of a person as including a partnership did not displace or abrogate the general law of partnerships.

Ablan Leon (1964) Ltd. v. MNR, 76 DTC 6280, [1976] CTC 506 (FCA)

"In determining whether money or other benefits received by a person are income of that person, the courts must, of course, look to common law and civil law - whichever may be relevant - concepts and institutions, including such concepts and institutions as ownership, trust, partnership and corporation. It is important, however, to bear in mind that what is involved is the interpretation of a statute, the Income Tax Act. In that Act, concepts which have their origin in and derive their meaning from the common law may be expressedly or impliedly changed or modified."

The Queen v. Esskay Farms Ltd., 76 DTC 6010, [1976] CTC 24 (FCTD)

Although a contract for the sale of land arguably was ultra vires the purchaser, who in turn sold the land to the City of Calgary, the title to the land depended upon the executed transfer rather than upon the ultra vires contract. The purchase accordingly was effective for purposes of the Act.

The Queen v. Lagueux & Freres Inc., 74 DTC 6569, [1974] CTC 687 (FCTD)

In finding that lease agreements were in reality purchase agreements, Decary, J. stated: "fiscal law is an accessory system, which applies only to the effects produced by contracts. Once the nature of the contracts is determined by the civil law, the Income Tax Act comes into effect, but only then, to place fiscal consequences on those contracts."

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

Martland J. stated, in his dissenting reasons for judgment, (p. 1165):

"... while it is obvious that a provincial Legislature cannot legislate in such a manner as to alter the provisions of the Dominion Succession Duty Act, nevertheless, in applying the provisions of that Act, it is necessary to look to relevant provincial legislation to determine what property may be included in a succession."

Income Tax Commissioners v. Gibbs, [1942] 1 All E.R. 415 (HL)

Before adopting an interpretation of Schedule D, Cases I and II, Rule 9 pursuant to the Income Tax Act, 1918 that differed somewhat from the English conception of a partnership, Viscount Simon, L.C. stated (p. 422):

"So far as English law is concerned, it is indisputable that a partnership firm is not a single persona, though a different view is obtained in Scotland, and in construing a taxing statute which applies to England and Scotland alike, it is desirable to adopt the construction of statutory words which avoids differences of interpretation of a technical character such as are calculated to produce inequalities in taxation as between citizens of the two countries."

See Also

Buckingham v. The Queen, 2010 TCC 247, rev'd 2011 FCA 142

rev'd on other grounds 2011 FCA 142

Webb J. found that, to the extent that the taxpayer's appeal pertained to the New Brunswick Income Tax Act, that portion of the taxpayer's case should be heard by the New Brunswick Queen's Bench and not the Tax Court of Canada. He stated (at para. 6):

No jurisdiction is granted to this Court under the Tax Court of Canada Act to hear appeals on matters arising under any provincial income tax statute.

Good Equipment Limited v. The Queen, 2008 DTC 2527, 2008 TCC 28

Before going on to find that the taxpayer was the beneficial owner of equipment title to which was held by a finance company that received lease payments from the taxpayer, Bowie J. stated (at para. 7):

"It is trite that the effect of the contract between the appellant and Case Credit, and specifically the question whether beneficial title to the goods passes under it, must be determined on the basis of the provisions of the contract itself, including the understanding of the parties as to its effect."

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 13 - Subsection 13(21) - Depreciable Property inventory converted to depreciable property when leased and converted back on lease maturity 316

Ellis Vision Incorporated v. The Queen, 2004 DTC 2024, 2003 TCC 912

Rip J. found that the reference to "chattels" in s. 20(1)(m) included intellectual property (in this case, rights to a TV documentary program) given that the French version used the words "de biens meubles", i.e., moveable property.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(m) goods are any personal property/potential reserve where s. 9 inclusion 217

Laplante v. The Queen, 96 DTC 1196, [1995] 1 CTC 2647 (TCC)

Before finding that the taxpayer was not a limited partner of an Ontario partnership because the partnership had not been registered as required by the Limited Partnerships Act (Ontario), Brulé TCJ. stated (at p. 1198):

"While it is certainly true that a provincial statute cannot impinge upon federal legislation such as income taxation, it does not logically follow that one cannot look to provincial law to determine the nature of a business relationship, a matter within the realm of the property and civil rights of a province."

Démolition A.M. de l'est du Québec Inc. v. MNR, 93 DTC 889, [1993] 2 CTC 2447 (TCC)

In rejecting the relevance of provisions of the Civil Code which allegedly established that the Code treated demolition work as a construction activity, and that the demolition work accordingly constituted construction for purposes of s. 125.1(3)(b)(iii) of the Income Tax Act, Garon J. stated (p.897):

"The interpretation cannot be determined by provincial statutes which may vary from one province to another in respect of the same subject and thus demolition businesses and related activities differently."

Administrative Policy

24 March 2004 External T.I. 2003-0034311E5 - "liquidation and a dissolution": What does it mean

In discussing whether the procedure under Czech law known as "winding-up without liquidation" will qualify as "a liquidation and a dissolution" for purposes of s. 95(2)(e.1) of the Act, the Agency indicated that "the question to be answered is what does 'a liquidation and a dissolution' mean under our law" and that the particular terms used in the foreign jurisdiction are irrelevant to the determination of this question.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 95 - Subsection 95(2) - Paragraph 95(2)(e) process of distributing the assets and satisfying the liabilities is "liquidation" 275
Tax Topics - General Concepts - Foreign Law Czech liquidation procedure compared to Canadian winding-up procedures 110


Marie-Pierre Allard, "Effet Rétroactif des Obligations Conditionnelles en Droit Fiscal", 2001 Canadian Tax Journal, Vol. 49, No. 5, p. 1338.