Foreign Law

Table of Contents


Canada v. Loblaw Financial Holdings Inc., 2021 SCC 51

meaning of banking business under Barbados law was not persuasive

In finding that the business of a Barbados subsidiary of the taxpayer was not a “business conducted principally with persons with whom [it did] not deal at arm’s length” notwithstanding that it raised its capital mostly from the taxpayer, Côté J. stated (at paras. 44):

The Crown argues that the meaning of conducting business can be understood by reference to Barbadian law. Section 4(2) of the Barbados IFSA and s. 4 of the Barbados OSBA define the business of an international bank as including both the receipt of foreign funds and the use of such foreign funds to provide financial services. However, we are not concerned with Barbadian law in this case. Our task is to discern what the Parliament of Canada intended by the words “other than any business conducted principally with persons with whom the affiliate does not deal at arm’s length”. The Crown has failed to provide any persuasive reason why the Barbados Parliament’s understanding of international banking business is in any way reflective of the Parliament of Canada’s understanding of conducting business. As I said above, we must discern the Parliament of Canada’s intent by examining the text of the ITA in its entire context and in its grammatical and ordinary sense, alongside the statute’s scheme and objects.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Business “business conducted,” as contrasted to “business,” did not include the raising of capital 229
Tax Topics - Income Tax Act - Section 95 - Subsection 95(1) - Investment Business - Paragraph (a) bank business was conducted with arm's length persons notwithstanding that capital raised from shareholder 579
Tax Topics - Statutory Interpretation - Certainty full effect should be given to Parliament’s precise and unequivocal words to produce certainty 88
Tax Topics - Statutory Interpretation - Speaking in vain Parliament does not speak in vain 72
Tax Topics - Income Tax Act - Section 91 - Subsection 91(1) two policies balanced in FAPI regime 79
Tax Topics - Statutory Interpretation - Expressio Unius est Exclusio Alterius specific addition of a competition requirement in another provision implied that there was no such requirement here 152

Administrative Policy

21 June 2016 Internal T.I. 2015-0581151I7 - Dutch Co-Op Entity Classification

two-step approach applied to finding Dutch co-op a corporation

Before going on to find that a Netherlands cooperative was a corporation for ITA purposes, the Directorate stated:

[T]he appropriate approach to classifying an entity for Canadian income tax purposes is to first determine the characteristics of the foreign business association based on the relevant foreign commercial law and entity’s organizational documents, and then compare these characteristics with those of recognized categories of business association under Canadian commercial law in order to classify the foreign business association under one of those categories. This two-step approach is consistent with the approach adopted by the Canadian courts.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Corporation Dutch co-op a corporation 74
Tax Topics - Income Tax Act - Section 96 Dutch co-op a corp., not partnership 45

23 April 2013 Internal T.I. 2012-0466081I7 F - Usufruct created under French legislation

2-step approach to characterizing a French civil law transaction

Before finding that a gift of real property subject to the reservation of a usufruct under French law was to be treated under ITA s. 43.1 in the same manner as a gift with a reservation of a life estate respecting a real property, CRA stated:

A two-step approach should generally be used in determining the status of a foreign arrangement for Canadian tax purposes. These two steps can be summarized as follows:

1. Determine of the characteristics of the foreign arrangement according to the foreign commercial law; and

2. Compare these characteristics with the categories of arrangements recognized under Canadian commercial law, considering the relevant law of the provincial jurisdiction, and in accordance with the facts and circumstances of the particular situation, in order to classify the foreign arrangement into one of these categories.

According to the applicable provisions of the C.c.f., we understand that the deed of transfer which took place on XXXXXXXXXX constitutes an inter vivos gift of real estate with the reservation of usufruct to the donor, for life. Two principles recognized in Canadian commercial law can be compared to this concept, namely a gift with reservation of usufruct in Quebec civil law, to which the rules set out in subsection 248(3) apply, and a gift with a reservation of a life estate respecting a real property recognized in common law, which is covered by subsection 43.1(1).

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 43.1 gift of immovable subject to reservation of a usufruct gave rise to a disposition under s. 43.1 282
Tax Topics - Income Tax Act - Section 69 - Subsection 69(1) - Paragraph 69(1)(b) disposition of all building under shared gift 277

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

Czech liquidation procedure compared to Canadian winding-up procedures

The Agency was advised that under the corporate law of the Czech Republic, there was a distinction between a wind-up with liquidation of a subsidiary (under which an appointed liquidator sold all property of the company and settled all obligations) and a wind-up of a subsidiary into its sole member/shareholder without liquidation where the business assets were transferred to the sole member. In discussing whether either procedure would qualify as "a liquidation and a dissolution" for purposes of s. 95(2)(e.1), the Agency indicated that the question to be answered was whether these procedures corresponded to the nature of a liquidation and a dissolution under Canadian corporate law.

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 - Statutory Interpretation - Provincial Law 70