Words and Phrases - "logging operations"

The taxpayer, an integrated forest products company, realized net capital gains from the disposition of two BC saw mills and a capital loss from the disposition of Ontario housing assets that had been used for managers of an Ontario pulp and paper mill. After being assessed in British Columbia for BC logging tax on the basis that the net capital gains were "income derived from logging operations," and therefore subject to the logging tax under BC's Logging Tax Act, the taxpayer amended its federal income tax return in order to claim logging tax credits under s. 127(1) of the federal Act.

Paris J. found (at para. 50) that "logging operations" and "processing..and sale of logs, timer and products produced therefrom" in Reg. 700(1)(d)(i) refers to "ongoing activities that are carried on by a taxpayer" . He stated (at para. 51):

I find that, according to their ordinary meaning, the words "logging operations" denote the ongoing activity of physical cutting of trees into logs and transporting those logs and the words "processing and sale" connote an ongoing activity involving manufacturing or production and sale.

Under those definitions, "logging operations" could not encompass a taxpayer's capital dispositions (para 69). The taxpayer's logging tax credits were therefore denied.