Resolving Ambiguity


Brown v. Canada, 2014 FCA 301

statute void for uncertainty only if no guidance as to what to legally debate

In rejecting a taxpayer submission that "the Act is null and void ‘due to vague and convoluted interpretations in the [Act]'" and, in particular, that definitions of various terms including "taxpayer" and "business" were vague, Webb JA quoted with approval (at para. 10) the statement of Lord Denning in Fawcett Properties Ltd. v. Buckingham County Council, [1961] A.C. 636 at 676 that "when a statute has some meaning, even though it is obscure, or several meanings, even though there is little to choose between them, the courts have to say what meaning the statute is to bear, rather than reject it as a nullity," and (at para. 11) of Gonthier J. in R. v. Nova Scotia Pharmaceutical Society, [1992] 2 S.C.R. 606 that "a law will be found unconstitutionally vague if it so lacks in precision as not to give sufficient guidance for legal debate."

Goar, Allison & Associates Inc. v. The Queen, 2009 DTC 653, 2009 TCC 174 (Informal Procedure)

After finding that the taxpayer was not liable to a penalty under s. 162(2.1) of the Act, C. Miller, J. stated (at para 12):

where the Government penalizes a taxpayer and in this case a non-resident, I am of the view that such penalty provision should be absolutely crystal clear. If there is ambiguity, it should be resolved in favour of the taxpayer. However, in this particular provision, I find no ambiguity.

Gendis Inc. v. Attorney General of Canada, 2007 DTC 5634, 2006 MBCA 58

After describing at para. 76, a statement in the taxpayer's factum, that "where the words of the statute are clear and plain, other techniques of interpretation cannot alter the result" as "rigid or simplistic" the Court went on to state (at para. 85):

The Supreme Court has recognized that except in the rarest of cases where the language admits of absolutely no doubt or ambiguity, the object and purpose of legislation plays a fundamental role in any statutory interpretation, and that the oft-cited quote from Drieger referred to in Stubart Investments best encapsulates the preferred approach.

Gunn v. Canada, 2006 DTC 6544, 2006 FCA 281

uncertainty from lack of explicitness resolved in taxpayer's favour

Before going on to reject the interpretation in the Supreme Court of Canada decision in the Moldowan case that had the effect of reading the word "combination" out of s. 31(1), Sharlow J.A. noted (at p. 6556) that the objective that tax rules should be "consistent, predictable and fair" might be further undermined if the provisions of the Act "are applied on the basis of a judge-made rule that has no statutory foundation", and further stated (at para. 78) that "the Courts would do well to approach the combination question in section 31 with an eye on the case of Johns-Manville" where Estey J. stated that reasonable uncertainty resulting from lack of explicitness in the statute should be resolved in favour of the taxpayer.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 31 - Subsection 31(1) 162

Placer Dome Canada Ltd. v. Ontario (Minister of Finance), 2006 DTC 6532, 2006 SCC 20, [2006] 1 S.C.R. 715

residual presumption in favour of the taxpayer

Before going on to find that an ambiguity in the statutory provisions of the Mining Tax Act (Ontario) should be resolved in favour of an interpretation that did not result in treating a definition of "hedging" as redundant, LeBel J. stated (at p. 6536):

The interpretive approach is thus informed by the level of precision and clarity with which a taxing provision is drafted. ... Where, as in this case, the provision admits of more than one reasonable interpretation, greater emphasis must be placed on the context, scheme and purpose of the Act. ... Although there is a residual presumption in favour of the taxpayer, it is residual only and applies in the exceptional case where application of the ordinary principles of interpretation does not resolve the issue ... .

Locations of other summaries Wordcount
Tax Topics - Statutory Interpretation - Interpretation Bulletins, etc. shifting CRA position could not be relied upon except to evidence ambiguity 73
Tax Topics - Statutory Interpretation - Redundancy/reading in words presumption against tautology 114
Tax Topics - Income Tax Regulations - Regulation 1204 - Subsection 1204(1) - Paragraph 1204(1)(b) cash-settled derivatives had the effect of fixing mine production] 399
Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Futures/Forwards/Hedges “hedging “ includes cash settled derivatives including options 415
Tax Topics - Statutory Interpretation - Regulations/Statutory Delegation addition of regulation did not significantly expand scope of tax 223

Canada v. Stapley, 2006 DTC 6075, 2006 FCA 36

Sexton J.A. found that although a purposive interpretation of s. 67.1(1) would have resulted in a conclusion that the taxpayer was not subject to the expense-deduction limitation in that provision, the plain meaning of the provision and the legislative scheme indicated that the limitation applied. Accordingly, the taxpayer's appeal failed.

Rezek v. Canada, 2005 DTC 5373, 2005 FCA 227

In finding that s. 39(4) elections that were made with late-filed returns were valid, Rothstein J.A. stated (at p. 5388):

"Where the Act prescribe sanctions for late filing, those sanctions will apply. Where it does not, the Court will not read into the Act sanctions that do not appear"

Dangerfield v. Canada, 2004 DTC 6025, 2003 FCA 480

In rejecting a submission that in order for a child support order to establish a commencement day, all orders in the judgement were required to have the same date, Linden J.A. stated (at p. 6027) that "needlessly technical interpretation that deprives custodial parents of tax relief granted to them by Parliament is to be avoided".

Markevich v. Canada, 2003 DTC 5185, 2003 SCC 9, [2003] 1 S.C.R. 94

After referring to dictionary definitions of the word "poursuite", the Court stated (at p. 5191):

It would therefore be difficult to conclude definitively that 'poursuite' is more restrictive than 'proceedings' and that this is determinative in the context of s. 32. It is then necessary, in this case, to conclude that the common meaning of the English and French versions of the provision is unclear and that resort to the other rules of statutory interpretation is necessary in order to discern Parliament's intent.

Sherway Centre Ltd. v. Canada, 2003 DTC 5082, 2003 FCA 26

Evans J.A. stated (at p. 5089) that "even though ambiguities in tax legislation are presumptively resolved in a manner that prevents the Crown from obtaining more than it was legally entitled to receive", in this instance the provision was sufficiently clear that it should be found that the Minister did not have the power to allow by reassessment the deduction of interest that was deductible by the taxpayer because the years in question were statute barred.

Water's Edge Village Estates (Phase II) Ltd. v. Canada, 2002 DTC 7172, 2002 FCA 291

In December 1991 the taxpayers (who were Canadian residents) acquired most of the partnership interests in a partnership ("Klink") that had been formed approximately 12 years earlier and whose principal asset, in December 1991, was an IBM mainframe computer which originally had cost U.S.$3.7 million but which had a current fair market value of $5,000. Klink then transferred the computer to a recently-formed British Columbia limited partnership in consideration for a partnership interest therein.

After finding that it was contrary to the scheme of the capital cost allowance provisions of the Act to permit Klink to recognize a terminal loss based on the original historical cost of the computer, Noël J.A. noted (at p. 7180) that the relevant provisions of the Act nonetheless were clear on this point and that:

Faced with such clarity it would be inappropriate, for the reasons expressed by the Supreme Court in a number of recent decisions to attempt to modify the words of the relevant provisions to provide a result which conforms with their object and spirit ... .

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 13 - Subsection 13(21) - Undepreciated Capital Cost - A cost means original cost 174
Tax Topics - Income Tax Act - Section 254 - Subsection 254(4) 167
Tax Topics - Income Tax Act - Section 96 exploiting modest business asset was sufficient partnership activity 221
Tax Topics - Statutory Interpretation - Interpretation Act - Subsection 45(3) prompt amendment evidenced intent to end anomaly 82

Canada v. Schafer, 2000 DTC 6542 (FCA)

After noting that s. 301(1.1) of the ETA clearly provided that the 90-day limitation period therein began to run from the date a notice of assessment was "sent", Isaac J.A. stated (at p. 6546):

"The language of subsection 301(1.1) is clear and unambiguous and must be applied regardless of its object and purpose."

65302 British Columbia Ltd. v. Canada, 99 DTC 5799, [1999] 3 S.C.R. 804

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 para. 51):

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.

Alberta (Treasury Branches) v. M.N.R.; Toronto-Dominion Bank v. M.N.R., 96 DTC 6245, [1996] 1 S.C.R. 963

Before going on to consider the purpose of s. 224(1.2) of the Act and of s. 337 of the Excise Tax Act, Cory J. stated (at p. 6248):

Thus, when there is neither any doubt as to the meaning of the legislation nor any ambiguity in its application to the facts then the statutory provision must be applied regardless of its object or purpose. I recognize that agile legal minds could probably find an ambiguity in as simple a request as 'close the door please'... However, the very history of this case with the clear differences of opinion expressed as between the trial judges and the Court of Appeal of Alberta indicates that for able and experienced legal minds, neither the meaning of the legislation nor its application to the facts is clear. It would therefore seem to be appropriate to consider the object and purpose of the legislation.

Jones v. The Queen, 96 DTC 6016 (FCA)

Before finding that s. 56(2) did not apply to the taxpayer, Décary J.A. stated (at p. 6019):

The fact that the application of subsection 56(2) may lead to harsh consequences is an additional reason for the Court, when it assesses the evidence in a case where the motive is not obvious, not to infer to hastily that a taxpayer had evinced a desire such as to attract the application of the provision.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 56 - Subsection 56(2) 69

The Queen v. Fording Coal. Ltd., 95 DTC 5672 (FCA)

Strayer J.A. stated (at p. 5673), before finding that former s. 245(1) applied to deny the tax benefit that otherwise should have been obtained from a "seeding transaction":

I do not understand the leading authorities on the interpretation of taxing statutes... although they call for a teleological approach to the interpretation of such statutes, to direct that the object and spirit of the Act are to govern even where the words are clear but not in accord with such object and spirit.... Although I find, for reasons to be discussed later, that such a deduction in these circumstances is contrary to the object and spirit of the sections in questions and of the Act, I do not consider this to be a justification for treating the 'seeding transaction' as of no effect for the purposes of subsections 66.1(4) and 66.2(3).

Locations of other summaries Wordcount
Tax Topics - General Concepts - Tax Avoidance 83

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.

The Queen v. United Equities Ltd., 95 DTC 5042 (FCA)

Robertson J.A., in implying the interpretative approach ennunciated in Communauté Urbaine v. Corp. Notre Dame de Bon-Secours, 95 DTC 5017, [1994] 3 S.C.R. 3 found (at p. 5048) that s. 194(7) should be interpreted in favour of the taxpayer because it was "a curative provision intended to provide relief against forfeiture of intended tax benefits".

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 194 - Subsection 194(7) 136

Québec (Communauté urbaine) v. Corp. Notre-Dame de Bon-Secours, 95 DTC 5017, [1994] 3 S.C.R. 3

Before finding that a non-profit corporation providing low rental housing to indigent elderly persons qualified for exemption under the Act Respecting Municipal Taxation (Quebec) as a "reception centre", Gonthier J. summarized (at p. 5023) the relevant principles of interpretation:

The interpretation of tax legislation should follow the ordinary rules of interpretation;

  • a legislative provision should be given a strict or liberal interpretation depending on the purpose underlying it, and that purpose must be identified in light of the context of the statute, its objective and the legislative intent;
  • this is the teleological approach; the teleological approach will favour the taxpayer or the tax department depending solely on the legislative provision in question, and not on the existence of predetermined presumption;
  • substance should be given precedence over form to the extent that this is consistent with the wording and objective of the statute;
  • only a reasonable doubt, not resolved by the ordinary rules of interpretation, will be settled by recourse to the residual presumption in favour of the taxpayer.
Locations of other summaries Wordcount
Tax Topics - General Concepts - Onus 105

The Queen v. Swantje, 94 DTC 6633 (FCA)

In finding that the inclusion of pension income in the formula under s. 180.2(1) should not be regarded as subjecting such pension income to tax, Marceau J.A. stated that (p. 6635):

The proper approach must be a functional one, and the scheme must be considered as a whole, taking into account the intent of the legislation, its object and spirit and what it actually accomplishes.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 180.2 - Subsection 180.2(1) 102

Canada v. Antosko, 94 DTC 6314, [1994] 2 S.C.R. 312

In finding that the taxpayers are entitled to a deduction under s. 20(14)(b) because they complied with the expressed conditions of the provision, Iacobucci J. stated (p. 6321):

Where the words of the section are not ambiguous, it is not for this Court to find that the appellants should be disentitled to a deduction because they do not deserve a 'windfall', as the respondent contends. In the absence of a situation of ambiguity, such that the Court must look to the results of a transaction to assist in ascertaining the intent of Parliament, a normative assessment of the consequences of the application of a given provision is within the ambit of the legislature, not the Courts.

Macklin v. The Queen, 92 DTC 6595 (FCTD)

Rothstein J. articulated various principles of the "modern, interpretative approach to the Income Tax Act" including the following principle:

The Act should be applied as to affect the conduct of a taxpayer which has the designed effect of defeating the expressed intention of Parliament. (p. 6599)

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 44 - Subsection 44(1) "immediately before" 169

The Queen v. United Equities Ltd., 92 DTC 6572 (FCTD), rev'd 95 DTC 5042 (FCA)

rev'd on other grounds 95 (DTC 5042 (FCA)

Unlike the Tax Court judge, MacKay J. was able to find an ambiguity in the wording of s. 194(7) when read in light of the general purposes of the legislation. This ambiguity was resolved in the taxpayer's favour on the basis of the principle enunciated in the Johns-Manville case.

Locations of other summaries Wordcount
Tax Topics - Statutory Interpretation - Indentation 55

Harvey C. Smith Drugs Ltd. v. The Queen, 92 DTC 6349 (FCTD), aff'd 95 DTC 5026 (FCA)

After referring to the principle in the Johns-Manville Canada case, Reed J. stated (p. 6353):

In my view, those cases merely indicate that if after one has read the relevant statutory provisions of an Act and read them in the light of the purpose and object of the statute, there is still doubt as to which alternative interpretation was intended, then, that doubt should be resolved in favour of the taxpayer, regardless of whether the provision in question is a charging section or an exemption or deduction provision.

Pembina on the Red Development Corp. Ltd. v. Triman Industries Ltd., 92 DTC 6174 (Man. C.A.)

Before finding that there was an ambiguity in s. 224(1.2) which should be resolved in favour of the taxpayer, Scott J.A. stated (p. 6179):

"While statutory 'ambiguity' is now resolved by looking to the purpose and rationale of the particular provision, the purpose rule has not displaced the plain meaning rule in tax law. Put another way, the purpose rule is only used where the statutory language of the provision under scrutiny is obscure or ambiguous".

The Queen v. Canadian Marconi Co., 91 DTC 5626 (FCA)

In finding that s. 152(4) unambiguously indicated that the Minister was precluded from issuing a favourable reassessment of the taxpayer to give effect to its success in litigation of other taxation years, Mahoney J.A. stated (p. 5629):

This is a hard case from the Respondent's point of view but, in my respectful opinion, this appeal is concerned with a rather straightforward question of statutory interpretation. One need go no further into the authorities than the Sussex Peerage case,

If the words of the statute are in themselves precise and unambiguous, then no more can be necessary than to expound those words in their natural and ordinary sense.

In my opinion, there is no ambiguity in subsection 152(4) as it bears on the question here.

Westcoast Energy Inc. v. The Queen, 91 DTC 5334 (FCTD), briefly aff'd 92 DTC 6253 (FCA)

In finding that s. 12(1)(x) did not apply to tax damages received by the taxpayer, Denault J. stated (p. 5342):

It is not the function of this Court to expand the meaning of a word to make the tax system fair. Parliament could have been more specific if the intention was to include commercial damage awards in section 12(1)(x). If there is any ambiguity in legislative intent to tax, the taxpayer is entitled to the benefit of the doubt.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(x) damages not reimbursement 63

Mcclurg v. Canada, 91 DTC 5001, [1990] 3 S.C.R. 1020

Before considering whether s. 56(2) applied to the payment of dividends on a class of shares which permitted discretionary dividends, Dickson, C.J. stated:

In proceeding to analyze the tax consequences of the application of the discretionary dividend clause, it is necessary to determine both the purpose of the legislative provision and the economic and commercial reality of the taxpayer's actions.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 56 - Subsection 56(2) 245

Canada v. Fries, 90 DTC 6662, [1990] 2 S.C.R. 1322

The Court was not satisfied that payments by way of strike pay constituted "income ... from a source" within the meaning of s. 3 and "in these circumstances the benefit of the doubt must go to the taxpayers".

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 3 55

The Queen v. McLaren, 90 DTC 6566 (FCTD)

... [I]f a provision is not aptly worded to carry out the intent of its drafter, the court should not be precluded from allowing the taxpayer to take advantage of the benefits of the provision as worded.

Regina Shoppers Mall Ltd. v. The Queen, 90 DTC 6427 (FCTD)

In finding that the Minister had not followed the proper procedural requirements in order to be able to reassess the taxpayer for its 1980 taxation year, Addy J. stated (p. 6431):

The Act must also be strictly interpreted in favour of the taxpayer and against the taxing authority ... There is no rule of equity or of common law which may somehow assist the taxing authority to obtain revenue which it has lost solely and entirely through its own negligence or failure to exercise the powers granted to it by the Act.

The Queen v. Nowsco Well Service Ltd., 90 DTC 6312 (FCA)

Urie, J.A. interpreted s. 125.1(3)(a) in light of the principle that reasonable uncertainty resulting from lack of explicitness in the statute should be resolved in favour of the taxpayer.

Lloyds Bank Canada v. International Warranty Co. Ltd., 89 DTC 5279 (Alta. Q.B.), rev'd (1989), 60 DLR (4th) 272 (Alta CA)

There has been no suggestion that s. 224(1.2) has as its object the achievement of some social or economic policy as compared with fiscal policy. It is a provision designed to maximize fiscal recovery. It therefore becomes unnecessary to explore the uncharted territory which is opened up by Estey's statement that a taxpayer may be held liable if he is within the spirit of the charge.

The Queen v. J.W. Baker Agency (1976) Ltd., 89 DTC 5078 (FCA)

"[I]f and to whatever extent subsection 32(1) might be thought to be ambiguous in this respect, such ambiguity should be resolved in favour of the taxpayer."

Mattabi Mines Ltd. v. Ontario (Minister of Revenue), [1988] 2 CTC 294, [1988] 2 S.C.R. 175

Wilson J. stated respecting the statements of Estey J. in Johns-Manville that "although Estey J. was referring to ambiguity within a single statute, I believe these principles are not inappropriate to a case like the present in which the ambiguity stems from the interplay of a provincial Regulation and federal administrative practice."

Lucas v. The Queen, 87 DTC 5277, [1987] 2CTC 23 (FCTD)

In interpreting the deduction for union dues, Cullen, J. applied the principle that reasonable uncertainty should be resolved in favour of the taxpayer.

Canterra Energy Ltd. v. The Queen, 87 DTC 5019, [1987] 1 CTC 89 (FCA)

In resolving in the taxpayer's favour an ambiguity concerning the meaning of the word "minus" in a regulation providing a "super depletion allowance," Urie, J.A. stated:

If the regulation in issue is insufficiently explicit to carry out what may have been the intention of the Governor in Council, the taxpayer should not be deprived of benefits arising from that lack of explicitness.

Canadian Marconi v. R., 86 DTC 6526, [1986] 2CTC 465, [1986] 2 S.C.R. 522

Wilson, J. stated that if Parliament is to restrict the meaning of the phrase "active business" to a manufacturing or processing business, "it must express itself clearly to that effect." The taxpayer accordingly was able to include interest income in its computation of the manufacturing and processing deduction.

The Queen v. Moore, 86 DTC 6325, [1986] 2 CTC 22 (FCTD), aff'd 87 DTC 5215 (FCA)

aff'd on other grounds 87 DTC 5215 (FCA)

The rule that ambiguity should be resolved in the taxpayer's favour does not apply where "the ambiguity does not originate within the Act itself but rather from seemingly conflicting interpretations found in the interpretation bulletins."

Electrocan Systems Ltd. v. The Queen, 86 DTC 6089, [1986] 1 CTC 269 (FCTD), aff'd 89 DTC 5079 (FCA)

In construing a penal section [here, s. 227(9)] words that are capable of an interpretation that would or would not inflict the penalty must be given the latter interpretation.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 227 - Subsection 227(9) 35

Johns-Manville Canada v. The Queen, 85 DTC 5373, [1985] 2 CTC 111, [1985] 2 S.C.R. 46

presumption of relief for business expenditures

Estey J stated (at para. 33):

[I]f the interpretation of a taxation statute is unclear, and one reasonable interpretation leads to a deduction to the credit of a taxpayer and the other leaves the taxpayer with no relief from clearly bona fide expenditures in the course of his business activities, the general rules of interpretation of taxing statutes would direct the tribunal to the former interpretation ... [A]nother basic concept in tax law [is] that where the taxing statute is not explicit, reasonable uncertainty or factual ambiguity resulting from lack of explicitness in the statute should be resolved in favour of the taxpayer.

Recurring land acquisition expenditures of the taxpayer in relation to the expanding circumference of its open pit mine were found to be deductible.

AMOCO Canada Petroleum Co. Ltd. v. MNR, 85 DTC 5169, [1985] 1CTC 240 (FCA)

Reliance was placed on the statement in Morguard Properties Ltd. v. City of Winnipeg (1983), 3 DLR (4th) 1, 13 that "'The resources at hand in the preparation and enactment of legislation are such that a court must be slow to presume oversight or inarticulate intentions when the rights of the citizen are involved.'"

The Queen v. Manley, 85 DTC 5150, [1985] 1 CTC 186 (FCA)

Mahoney J. characterized the finding in Atkins, 81 DTC 5293, that an amount paid in settlement of a claim for damages for wrongful dismissal is not salary, as "an application of the well-known principle that a taxpayer is entitled to the benefit of any doubt as to legislative intention to tax. It is an application in a case where the fisc evidently elected to plead legislative intention on a single, and as it turned out, erroneous basis." (p. 5154)

Harris Steel Group Inc. v. MNR, 85 DTC 5140, [1985] 1CTC 181 (FCA)

MacGuigan, J.A. stated that "it is now settled law that there is only one principle of statutory interpretation, which might be designated as the words-in-total-context approach...[:] "'... the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament.'"

R. v. Filteau, 85 DTC 5249, [1985] 1 CTC 19 (Que. C.A.)

Since s. 238(2) was ambiguous, it was given an interpretation that favoured the accused.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 238 - Subsection 238(2) 70

Saskatchewan Wheat Pool v. The Queen, 85 DTC 5034, [1985] 1 CTC 30 (FCA)

Since "paragraph 20(1)(gg) provides for an exception from the general rule for computing income for the purposes of taxation [,] a taxpayer seeking to benefit from such exception must bring himself clearly within the language of the legislation."

Bristol-Myers Canada Inc. v. D.MNR for Customs and Excise, 85 DTC 5024, [1985] 1CTC 20 (FCA)

It is now settled law that, in the words of E.A. Driedger, Construction of Statutes, 2nd ed., (1983), at 207, 'there are no special rules or canons of construction for tax exemptions, and whether a subject is taxable or exempt depends in all cases on the intention of the legislature to be ascertained in the normal way'.

Thyssen Canada Ltd. v. The Queen, 84 DTC 6539, [1984] CTC 600 (FCTD), rev'd 87 DTC 5038, [1987] 1CTC 112 (FCA)

In allowing the taxpayer's appeal, the Court interpreted s. 18(4) in light of its underlying objective. An argument, that since the taxpayer was seeking a deduction from its income then s. 18(4) should be strictly constructed, was rejected.

Cominco Ltd. v. The Queen, 84 DTC 6535, [1984] CTC 548 (FCTD)

In applying an exempting provision (s.65) in accordance with the Crown's interpretation of the provision, it was stated: "It is recognized, of course, that with a taxing statute it is the literal wording and not the general purpose of the Act which generally controls its interpretation".

Stubart Investments Ltd. v. The Queen, 84 DTC 6305, [1984] CTC 294, [1984] 1 S.C.R. 536

The strict interpretation rule for the construction of taxing statutes has been modified somewhat in recent years by the plain meaning rule.

Hillis v. The Queen, 83 DTC 5365, [1983] CTC 348 (FCA)

Since the purpose of a rollover provision (s.70(6)) was "to give a measure of tax relief to the surviving spouse of a family unit ... the enlargement of time jurisdiction [in s. 70(6)] should be given a generous operation so that this purpose is not lightly defeated: it should not be construed stringently and unsympathetically to the purpose."

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 70 - Subsection 70(6) 194

Great Atlantic and Pacific Tea Co. Ltd. v. The Queen, 79 DTC 5401, [1979] CTC 509, [1980] 1 S.C.R. 670

It was stated that the strict construction rule (as formulated by Estey, J.), "is rooted in the simple line of reasoning that Parliament, in determining the procedure for recovering the cost of government from the community, must have intended to recover from a particular taxpayer his share of that cost only where the taxing statute clearly defines that share."

Simpsons-Sears Ltd. v. Provincial Secretary (N.B.) et al., 78 DTC 6242, [1978] CTC 396, [1978] 2 S.C.R. 869

Ritchie, J. stated respecting the Excise Tax Act (Canada): "If the charging sections of the present statute are susceptible of alternative meanings, it will be seen that I prefer that which is more favourable to the appellant."

Minister of National Revenue v. Sheldon's Engineering Ltd., 55 DTC 1110, [1955] CTC 174, [1955] S.C.R. 637

The Partington strict construction rule was applied.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 251 - Subsection 251(1) - Paragraph 251(1)(c) no common control 100

See Also

Fortnum v. The Queen, 2018 TCC 126 (Informal Procedure)

residual presumption in taxpayer's favour

A tuition credit was not available under s. 118.5(1)(b) if the tuition fees paid by the taxpayer were “paid in respect of a course of less than three consecutive weeks duration.” In the face of conflicting authority, Smith J found that this requirement was satisfied by a summer session for an MBA program at an Indiana university that consisted of 10 consecutive courses each of which was of one or two weeks’ duration.

He also stated (at para. 24):

If I am wrong in reaching that conclusion, I find that this is a case where the application of the ordinary principles of interpretation may not resolve the issue, in which case the matter should be resolved by recourse to the residual presumption in favour of the Appellant: Placer Dome ... .

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 118.5 - Subsection 118.5(1) - Paragraph 118.5(1)(b) succession of 1 or 2 week courses satisfied the duration test 261

Toronto-Dominion Bank v. Minister of Revenue of Ontario, [1994] OJ No. 897

In rejecting the interpretation of the Minister of the definition of "value of consideration" in the Land Transfer Tax Act (Ontario), Feldman J. applied the statement in Driedger, Construction of Statutes, 2nd Ed. that "in all statutes, whether they could be classified as penal or remedial, where there is doubt or obscurity the Courts are inclined to lean in favour of what is reasonable from the subject's point of view, on the theory or presumption that Parliament is reasonable."

Locations of other summaries Wordcount
Tax Topics - Other Legislation/Constitution - Ontario - Land Transfer Tax Act - Subsection 1(1) - Value of the Consideration (f) not engaged where fee owner transferred beneficial ownership then registered title 199

Spectron Computer Corp. v. MNR, 93 DTC 1473 (TCC)

In rejecting a submission that there was an ambiguity in Regulation 2902 that should be resolved in the taxpayer's favour, Kempo, TCJ. stated (p. 1478):

The ostensible anomaly is resolvable by the contemporary words-in-total-context approach which has as its focus the determination of the object and purpose of these provisions. The law is not restricted to a literal and virtually meaningless interpretation where the words employed will support, on a broader construction, a conclusion which is workable and in harmony with the evident purpose of the Act ... If the ambiguity cannot be resolved on this approach, then any reasonable doubt remaining may be resolved in the taxpayer's favour.

Willingale v. International Commercial Bank Ltd. (1978), 52 TC 242 (HL)

Lord Reid's dictum in Duple Motors "that profit shall not be taxed until realised" was adopted in finding that discounts on bills should not be brought into income until the time of disposition of the bills.

B.P. Australia Ltd. v. Commissioner of Taxation of the Commonwealth of Australia, [1966] A.C. 224 (PC)

Before finding that payments which the taxpayer made to service stations in order to secure their agreement to deal exclusively with the taxpayer and other oil companies were deductible on income account, Lord Pearce stated (p. 270):

It is of commercial importance that profits should not be inflated for tax purposes by the artificial withdrawal from the profit and loss account of expenditure directly incurred in earning them unless it is of a truly capital nature.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(b) - Capital Expenditure v. Expense - Restrictive Covenants purpose of inducement for 5-year agency agreement was increasing sales 167

Ostime v. Duple Motor Bodies Ltd., [1961] 2 All E.R. 167 (HL)

[T]he prevailing consideration must be that the taxpayer should not be put to any risk of being charged with a higher amount of profit than can be determined with reasonable certainty.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 10 - Subsection 10(1) 155

Administrative Policy

85 C.R.. - Q.44

RC will be guided by the new object and spirit test in Stubart and guidelines 1, 2(a), 2(b), 3(a), 3(b) and 3(c).


David A. Ward, "A Comparative Study of the Interpretation of Tax Statutes in the United Kingdom and the Republic of Ireland - Part I", British Tax Review, 1994, No. 1, p. 42.