Words and Phrases - "obiter dictum"
Canadian Imperial Bank of Commerce v. The Queen, 2021 TCC 71, aff'd 2023 FCA 91
CIBC realized an FX loss of C$126.4 million in 2007 when shares of a US subsidiary for which it had subscribed US$1 billion were redeemed for US$1 billion. Owen J rejected the CIBC position - that such loss was deemed by s. 39(2) to be a capital loss from foreign currency and therefore was excluded from the application of the s. 40(3.6) stop-loss rule, which applied only if the loss were viewed as having arisen from the disposition of the subsidiary’s shares – indicating that this position was inconsistent with a statement in the BMO case that: “[t]he gain or loss arising as a result of a disposition of a particular property was (and still is) determined under subsection 40(1)” before any application of s. 39(2).
He further stated (at para. 23) that this statement was not obiter because it was “an essential part of the Court’s conclusion that there is no conflict between subsections 39(2) and 40(1.” He thus was bound to follow that statement, although he was also entitled to state his own opinion, which he did.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 40 - Subsection 40(3.6) | FX loss on share redemption arose under s. 40(1) and, therefore, was subject to s. 40(3.6) denial | 344 |
| Tax Topics - Income Tax Act - Section 39 - Subsection 39(2) | s. 39(2) historically applied only to FX gains or losses on liabilities and foreign currency dispositions | 275 |
| Tax Topics - Statutory Interpretation - Prior Cases | presumption that Parliament enacts with a knowledge of the jurisprudence | 93 |