Double Taxation (Presumption Against)


Fiducie financière Satoma v. Canada, 2018 FCA 74

inclusion of income in more than one taxpayer’s hands is contrary to s. 3

A tax plan turned upon dividends that in fact were paid to a family trust (Satoma Trust) being attributed under s. 75(2) to a corporation (“9134”) that was connected to the dividend payer, so that the dividends deemed to be paid to 9134 were eligible for the intercorporate dividend deduction. Before confirming an assessment under s. 245(2) that the dividend should be included in the income of Satoma Trust, Noël CJ first found that the application of s. 75(2) to 9134 effectively precluded the dividends’ inclusion in the hands of Satoma Trust in the absence of s. 245(2), stating (at para. 36, TaxInterpretations translation):

In my view, express exclusions of this type only confirm an already-present rule. In this regard, the subjecting to tax under the Act of a “taxpayer,” applies in the singular (section 3). Nothing permits the belief that the legislator intended that the same income would be taxable in the hands of more the one taxpayer… . The same dividend cannot be simultaneously received by two persons.:

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 245 - Subsection 245(1) - Tax Benefit tax benefit to trust from tax-free dividend even though not distributed to a beneficiary 277
Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) using ss. 75(2) and 112(1) for tax-free dividends to trust thwarted s. 112(1) object to tax earnings when ultimately distributed 319
Tax Topics - Income Tax Act - Section 3 pervasive rule that the same income is not to be taxed in 2 persons’ hands 148
Tax Topics - Income Tax Act - Section 112 - Subsection 112(1) abusive to use s. 112(1) so as to avoid ultimate taxation of individuals 180
Tax Topics - Income Tax Act - Section 75 - Subsection 75(2) use of s. 75(2) to access s. 112(1) deduction for dividend in fact received by family trust, was abusive 286
Tax Topics - Income Tax Act - Section 82 - Subsection 82(2) s. 82(2) supports the primacy of s. 75(2) over the actual dividend recipient 60

The King v. Henry K. Wampole & Co. Ltd., [1931] S.C.R. 494

no intention to impose sales tax twice on manufacturer

S. 87(d) of the Special War Revenue Act, imposed tax on goods which were “for use by the manufacturer or producer and not for sale,” was found to apply to the distribution by a pharmaceutical manufacturer of drug samples to doctors, but for the fact that the samples had already been subject to tax in the hands of the manufacturer. As to the latter point, Anglin, CJ stated (at p. 497) that “it cannot have been the intention of the Legislature to tax the same property twice in the hands of the manufacturer.”

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 141.01 - Subsection 141.01(2) “use” includes providing free samples 150