Words and Phrases - "or"
Somerset Limited v. The King, 2026 TCC 123
The taxpayer, which had been a B.C. corporation since its incorporation in 1943 and was resident in Canada at all times, sought to cease being a “Canadian corporation” as defined in s. 89(1) and, thus, to cease qualifying as a Canadian-controlled private corporation (“CCPC”) at the time of closing the sale of two Vancouver real estate properties. To this end, it continued to the British Virgin Islands (“BVI”) shortly before such closing, so that it treated the taxable capital gain of $16 million realized on such disposition as not being subject to refundable tax under s. 123.3 and as being eligible for the general rate reduction under s. 123.4.
The definition of "Canadian corporation" at any time referred to a corporation resident in Canada that was:
(a) incorporated in Canada, or
(b) resident in Canada throughout the period that began on June 18, 1971, and that end[ed] at that time.
It was agreed that, by virtue of the continuance, the taxpayer was deemed by s. 250(5.1)(a) to have been incorporated in BVI, so that para. (a) was not satisfied. Regarding para. (b), although the taxpayer satisfied it on a literal basis since it had been continuously resident in Canada since before June 18, 1971, MacPhee J indicated that the "or" in the above definition was disjunctive and adopted the interpretation in inter alia Saipem that para. (b) would apply only to a corporation not incorporated in Canada. However, s. 250(5.1)(a) deemed the taxpayer to have been incorporated in the BVI “for the purposes of applying this Act” (other than s. 250(4)), so that it did not matter that it had not been factually incorporated in the BVI.
Accordingly, as it continued to be a Canadian corporation, it continued to be a CCPC.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) | alternative transaction in GAAR abuse analysis must be contemporaneous/ DAC followed | 376 |
Hoch v. The Queen, 2019 TCC 99
The taxpayer and his wife lived in a Toronto home which was beneficially owned as to 3/8ths and 5/8ths by them, and the shul employing him as its principal rabbi, respectively. The shul issued him a T4 slip indicating a s.6(1)(a) benefit for each of 2014 and 2015 for their free occupancy of the 5/8ths of the home as $45,000, with the taxpayer claiming a matching deduction under s. 8(1)(c)(iii). Respecting the 3/8ths of the home, he claimed $39,460 under s. 8(1)(c)(iv) for each year.
The Minister’s disallowed the s. 8(1)(c)(iv) deduction on the basis that a deduction could not be claimed under both ss. 8(1)(c)(iii) and (iv). Before dismissing the taxpayer’s appeal, MacPhee J indicated (at para. 13) that “or” (used between ss. 8(1)(c)(iii) and (iv)) “in the ordinary sense is prima facie disjunctive” but “can also be conjunctive in limited circumstances”; that the comma placed before the “or” was indicative of the disjunctive sense of the word; that the French version used “soit,” "which roughly translates to ‘either, or’ in English” (para. 15), and thus (para. 16):
The ordinary definition, comma placement, and the French version of the provision show that the word “or” in subparagraph 8(1)(c)(iii) is disjunctive.
For completeness, MacPhee also reviewed the statutory context and purpose, finding inter alia (at paras. 25):
It is unlikely that Parliament intended for a person to avoid the limitations imposed by subparagraph 8(1)(c)(iv) by simply claiming amounts under both subparagraphs (iii) and (iv).