Words and Phrases - "solicits orders for sale in Canada"

The taxpayer, who ceased to be a resident of Canada when he resigned as CFO of a NASDAQ-listed corporation (Canadian Solar Inc., or “CSI”), thereafter exercised his employee stock options to acquire CSI shares and, after such shares had declined in value, sold them on the NASDAQ through a stock broker based in the U.S. Such sale gave rise to a capital loss.

In rejecting a submission (at para. 10) that the taxpayer’s loss was deemed by s. 253(b) to be from a business carried on in Canada as “when an individual lists shares of a publicly listed corporation for sale on a particular stock exchange, the individual makes the share available to anyone who is willing to purchase the share, without any territorial restriction,” Dawson JA stated (at paras. 12-13):

Assuming that listing publicly traded shares for sale on a stock exchange constitutes a solicitation or offer within the meaning of subsection 253(b), the solicitation or offer must take place in Canada. Offering shares listed on an American exchange through an American broker does not constitute the solicitation of orders or the offering of anything for sale in Canada by the offeror.

The contrary conclusion would be inconsistent with the purpose of section 253, which has been held to be “to subject non-resident persons to Canadian tax provided they carry out a minimum amount of commercial activity within Canada’s borders” (Maya Forestales S.A. v. Canada, 2005 TCC 66, 2005 D.T.C. 514, at paragraph 34; aff’d 2006 FCA 35, 354 N.R. 272).