Words and Phrases - "confer"
Del Grande v. The Queen, 93 DTC 133 (TCC)
The taxpayer, who was an officer, director and shareholder of two corporations and provided financial and business advice to the other principal was granted options to acquire the shares of the two companies for an exercise price equal to the nominal fair market value of the shares at that time and, three years later, at a time that the shares had substantially appreciated in value, exercised the options in order to facilitate an extension of the corporate line of credit through his giving of a guarantee. In finding that no benefit was received by the taxpayer, Bowman J. stated (p. 137):
"The word 'confer' implies the bestowal of bounty or largesse, to the economic benefit of the conferee and a corresponding economic detriment of the corporation. Such was not the case here. The corporations did no more than was legally required of them."
In addition, given that his rights under the option agreement did not depend upon his being a shareholder and his options were exercisable only while he was an officer or director, any benefit received by him would not have been received by virtue of being a shareholder.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 251 - Subsection 251(1) - Paragraph 251(1)(c) | majority shareholder not subject to the direction of the minority shareholder | 65 |
| Tax Topics - Income Tax Act - Section 7 - Subsection 7(5) | 114 | |
| Tax Topics - Statutory Interpretation - Specific v. General Provisions | 81 |
MNR v. Pillsbury Holdings Ltd., 64 DTC 5184, [1964] CTC 294 (Ex Ct)
In 1953 two subsidiaries of the taxpayer waived the interest that was coming due on two loans they had made to the taxpayer a year previously, and a year later all the further interest was waived in connection with the repayment by the taxpayer of a portion of the principal in full satisfaction of the loans.
Cattanach allowed the taxpayer's appeal against an assessment under s. 8(1)(c) of the pre-1972 Act given that the Minister had not assumed, in making the assessment, that such waivers were an arrangement or device adopted by the corporation to confer a benefit or advantage on the taxpayer as shareholder, nor had the Minister established such an arrangement on the evidence. Cattanach J. stated (at p. 5187):
"The word 'confer' means 'grant' or 'bestow'. Even where a corporation has resolved formerly to give a special privilege or status to the shareholders, it is a question of fact whether the corporation's purpose was to confer a benefit or advantage on the shareholders or some purpose having to do with the corporation's business such as inducing the shareholders to patronize the corporation."