Words and Phrases - "purpose"
632738 Alberta Ltd. v. The King, 2023 TCC 117
The appellant was assessed under s. 103(1). A representative of the appellant (Mr. Thompson, who wholly-owned it) refused to answer questions posed on his examination for discovery that were designed to elicit the reason or purpose for which various transactions were engaged in by the appellant and other companies in the group.
After referring to the “principal reason” test in s. 103(1), Sommerfeldt J stated (at para. 42):
At least one thesaurus indicates that purpose and reason are synonyms. Therefore, questions asking about the purpose of an agreement or transaction, as well as questions asking about the reason for an agreement or transaction, could come within the purview of subsection 103(1) … .
Sommerfeldt J quoted various authorities on determining the intention of a corporation including Roseland Farms and (at paras. 47 and 52):
... Canadian Dredge & Dock ... discussed the identity doctrine, which “merges the board of directors, the managing director, the superintendent, the manager or anyone else delegated by the board of directors to whom is delegated the governing executive authority of the corporation,” such that “the conduct of any of the merged entities is thereby attributed to the corporation.”
I do not think that the … Questions are improper merely because they seek to explore Mr. Thompson’s state of mind or (in his capacity as a director and officer of the Appellant) his reasons, purpose, intention or understanding in respect of the Transactions … .
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - General Concepts - Solicitor-Client Privilege | company could refuse to not disclose its reasons for engaging in transactions on grounds of privilege | 318 |
| Tax Topics - Other Legislation/Constitution - Federal - Tax Court of Canada Rules (General Procedure) - Section 96 - Subsection 96(1) | claim of privilege on discovery could have Rule 96(1) consequences | 250 |
Commissioner of Taxation v Sharpcan Pty Ltd, [2019] HCA 36
Before finding that the taxpayer’s expenditures for 10-year assignable gaming licences (“GMEs”), which it required in order to be permitted to continue using gaming machines on its hotel premises, were capital expenditures, the Court stated (at para. 49):
[T]he evidence … demonstrated that the Trustee was motivated to purchase the GMEs by the realisation that it could not continue to carry on its gaming business unless it did so. Motive, however, is different from purpose. [T]he motive for a person's conduct is the person's reason for engaging in it. By contrast, the purpose of a person's conduct is the end that is sought to be accomplished by it. Here, although it may be accepted that the Trustee's motive for purchasing the GMEs was that the Trustee wished to continue to carry on its gaming business as it had done up to that point, the end that the Trustee subjectively sought to accomplish in outlaying the purchase price of the 18 GMEs, and thus the subjective purpose of the expenditure, was to acquire the 18 GMEs necessary to continue to trade. That was also the objective purpose of the outlay. Looked at objectively from a practical and business point of view, the purpose of paying the purchase price of the GMEs was to acquire the GMEs as an asset of the Trustee to be used in the course of the Trustee's hotel business.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(b) - Capital Expenditure v. Expense - Contract Purchases or Prepayments | 10-year gaming licences required to maintain existing gaming revenues were purchased on capital account | 350 |
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(b) - Capital Expenditure v. Expense - Concessions and Licences | periodic payments under 30-year government concession were currently deductible | 206 |
| Tax Topics - Income Tax Act - Section 13 - Subsection 13(34) - Paragraph 13(34)(b) | 10-year gaming licences required to maintain existing gaming revenues were not for goodwill | 245 |
Camp Kahquah Corp. v. The Queen, docket 96-2348-GST-G
The appellant, a registered charity, operated a summer lakeside camp which provided camp experiences for younger and older children, as well as seniors’ and family retreats. The attendants were mostly evangelical Christians. Bell JTCC found (at para. 31) that “the Appellant's sole purpose was the conduct of a Christian camp including evangelising for the conversion of persons to the religious beliefs it espoused.” In finding that the camp was not a place of amusement, he stated (at para. 34):
It is noted that the words "the purpose" are employed. This indicates that the sole purpose of the "place of amusement" was to provide amusement or recreation. Words such as those used in subsection 55(2) of the Income Tax Act, namely, "one of the purposes of which" are not used in this definition.
Black v. The Queen, 2014 DTC 1046 [at at 2882], 2014 TCC 12, briefly aff'd 2014 FCA 275
In 2002, the taxpayer was resident both in Canada and the U.K. for domestic tax purposes, but by virtue of Art. 4, para. 2(a) of the Canada-U.K Income Tax Convention (the "Convention") he was a resident of the U.K. for purposes of the Convention. S. 250(5) of the Act, which otherwise might have explicitly deemed his non-residence under the Convention to apply for purposes of the Act, did not apply to him in 2002.
The taxpayer argued that, even in the absence of s. 250(5), his treaty non-residence caused him to not be resident under the Act, so that he was not subject to tax under the Act on non-Canadian sourced income such as $2.9 million of U.S. employment income, imputed benefits of $1.4 million from free use of a corporate jet, and interest and dividends.
In rejecting this submission, Rip CJ indicated that the stipulation in Art. 4 that the taxpayer was resident in the U.K. for "purposes" of the Convention engaged only a "particular object" being "the Convention itself, nothing else" (para. 26), that "it is clear that if an income or capital item is not provided for in the Convention, Canada's authority to tax that item is not restricted" (para. 29), that in the OECD discussions of the residence tie-breaker rules "no mention is made of an override of domestic law" (para. 33), and that the Convention merely "allocates to each country the authority to tax" (para. 51).
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Statutory Interpretation - Interpretation Act - Subsection 45(2) | amendments usually change the Act | 185 |
| Tax Topics - Statutory Interpretation - Other/Conflicting Statutes | presumption against inconsistency | 99 |
| Tax Topics - Treaties - Income Tax Conventions - Article 29 | Treaty residence not domestically applicable | 281 |
The Queen v. Placer Dome Inc., [1997] 1 CTC 72, 96 DTC 6562 (FCA)
After the taxpayer solicited competing bids for the sale of a significant block of shares it held in another public company ("Falconbridge") both directly and through a holding company ("McIntyre"), it accepted an offer of Falconbridge that required Falconbridge to declare and pay a significant dividend on all the outstanding shares of Falconbridge, and (following the payment of a corresponding dividend by McIntyre) to purchase the shares of Falconbridge and McIntyre held by the taxpayer. The only purpose of the dividends was to permit Falconbridge to make an offer that effectively approximated 118% of the previous market price of the Falconbridge shares (and that exceeded the 115% of the market price which the other bidder could have paid without triggering the statutory requirement for a follow-up offer to the other Falconbridge shareholders). Accordingly, given that the purpose of the transactions was to be determined having regard to the actual state of mind of the taxpayer and Falconbridge, rather than its purpose in some objective sense, s. 55(2) did not apply. Robertson JA stated (at p. 6567):
While there may be instances where the term “purposes” is modified by words or phrases suggesting something other than a subjective understanding, that is not the case with respect to subsection 55(2) ... . [I]t is clear that the use of the term “purpose” in one context and “result” in another requires that a different meaning be attributed to each that is consistent with their use and context within subsection 55(2).
In the Tax Court, Bell TCJ. stated (96 DTC 1787 at 1794) that the taxpayer "had not participated in the creation and structure of the Falconbridge bid" and that "that finding alone renders it impossible to conclude that one of the purposes of the Appellant was to effect a significant reduction of the capital gain to be realized", as to which Robertson JA stated (at p. 6567) that "it remains for future determination whether this reasoning should itself be determinative of the issue."
Newton v. Commissioner of Taxation of the Commonwealth of Australia, [1958] A.C. 450 (PC)
In interpreting the provisions of s. 260 of the Commonwealth Income Tax and Social Services Contribution Assessment Act, 1936-1951 (Australia), Lord Denning stated (p. 465):
"The word 'purpose' means, not motive but the effect which it is sought to achieve - the end in view."
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 260 - Subsection 260(1) - Securities Lending Arrangement | "arrangement" | 130 |
1207192 Ontario Limited v. Canada, 2012 DTC 5157 [at at 7396], 2012 FCA 259, aff'g 2011 DTC 1301 [at 1686], 2011 TCC 383
In the course of applying s. 245 to deny the recognition by the taxpayer of a capital loss, the Court considered and rejected the argument of the taxpayer's principal (Mr. Cross) that his primary intention in entering the series of transactions in issue (which effected a surplus strip) was creditor protection, and that "each and every step in the plan was essential" to achieving such protection. Sharlow J.A. stated (at para. 20):
Justice Paris followed the correct approach when he determined the purpose of the series of transactions on an objective basis – that is, by ascertaining objectively the purpose of each step by reference to its consequences – rather than on the basis of the subjective motivation of Mr. Cross, or his subjective understanding of what may or may not have been required to achieve creditor protection.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) | capital loss from value shift did not reflect economic loss; purpose objectively determined | 451 |