The link #28 ... July 2008

The Bijural Revision Services Unit (Taxation and Comparative Law) of the Legislative Revision Services Group of the Department of Justice of Canada is pleased to keep you posted on the most recent harmonization news.

June 4, 2008: Extended Tax Group Meeting

Provides Opportunity for Exchange

On June 4, 2008, the Bijural Revision Services Unit (Taxation and Comparative Law) played host to a meeting of the Extended Tax Group, with the aim of fostering dialogue  between the Unit’s bijuralists and colleagues, in the federal service and beyond, who are routinely faced with bijural issues in their day-to-day activities. Marc Cuerrier, Senior General Counsel at the Legislative Services Branch, started the meeting by emphasizing to participants, the importance of this collaborative exercise as, whether we are working at the federal or provincial level, we are dealing with the same issues, the same taxpayers. This was followed by presentations and discussions on a number of topics including those which follow.

University of Toronto Professor submits report on the notion of “acquisition”

Noting the importance of the concept of “acquisition” in the Income Tax Act (investment tax credits, capital cost allowance, interest deductibility, options), Eric Allard-Pouliot reviewed the leading tax cases on the notion (Wardean Drilling, Bérou) and the question raised thereby: Does the reasoning in Bérou apply in Quebec even in light of section 8.1 of the Interpretation Act? Me Allard-Pouliot then reviewed the recent analysis of Professor David Duff of the Faculty of Law of the University of Toronto. Professor Duff concludes that section 8.1 should apply to set aside the common law definition of “acquisition” adopted in Bérou when civil law applies. However, Professor Duff also suggests that this a case where the Income Tax Act should set out a definition that has uniform application across the country.

Bijural analysis of the concepts of “estate” and “heir”

Joseph Sirois discussed his comparative law review of the concepts of “estate” and “heir” in the Income Tax Act. The common law term “estate” is not defined in the Income Tax Act and thus must be examined under provincial private law rules. The term is not used in civil law which, in a similar context, uses “succession.” While the concept of “estate” is narrower than that of “succession” in civil law, these differences do not cause any substantive difficulty in the application of the Income Tax Act. It will, however, be recommended that the English version of the Act be amended to include a reference to “succession” where it includes a reference to “estate” to reflect civil law. Finally, as the concept of “heir” does not per se include the concept of “legatee” in common law, and that of legatee by particular title in civil law, the addition of “legatee” in the Income Tax Act will be recommended where needed.

Impact of the Thibault decision on other deferred income plans

Michelle Desrosiers briefly discussed research undertaken by her in connection with various deferred income plans created and governed by the Income Tax Act. The aim was to determine whether it is necessary to recommend draft legislation to Department of Finance to the extent that such plans could no longer qualify as trust under the civil law of Quebec, and this as a consequence of the Supreme Court of Canada’s decision in Bank of Nova Scotia v. Thibault, [2004] 1 SCR 758. Among the plans examined were RESPs, DPSPs, RDSPs and eligible funeral arrangements. Conclusion: The Thibault decision should not pose a problem for the latter regimes. Me Desrosiers also discussed research carried out on the matter of gifts to persons other than “qualified donees.” While proposed subsections 248(30) et seq. (Bill C-10), will ensure that uniform rules apply for purposes of establishing the eligible amount of a gift to qualified donees, the same is not the case for the application of the term “gift” in other contexts as the scope of the term “gift” differs as between the common law and the Quebec civil law.

Congrès du Barreau du Québec 2008

Workshop on Bijuralism

The 53rd Congrès du Barreau du Québec was held this past May 29th through 31st. Wishing to take advantage of this event to promote bijuralism and the harmonization of federal laws with the Québec civil law, the Legislative Bijuralism Team (Revision Initiatives) and the Bijural Revision Services Unit (Taxation and Comparative Law) of Justice Canada presented a workshop on the civil law’s place within federal law. The workshop included many speakers drawn from those two teams, namely: Me Marc Cuerrier, Me Marc Gauthier, Me Emmanuelle Guay, Me France Allard, Me Lyne Tassé, Me Joseph Sirois and Me Brigitte Ramaseder. In addition, special guests the Honourable Robert Décary, supernumerary judge at the Federal Court of Appeal and Me Aline Grenon, full professor at the common law faculty of Ottawa University, also addressed the workshop participants and contributed to the discussion.

The workshop endeavoured to place Canadian bijuralism in context and to illustrate its occurrences and impact in different federal laws. A general discussion focussed on certain problematic interactions with federal law (especially in security, bankruptcy and taxation matters) and the Québec civil law, and highlighted proposed solutions.

Legislation on Bijuralism

Bill C-10 in the Senate

Bill C-10 (former Bill C-33), An Act to amend the Income Tax Act, including amendments in relation to foreign investment entities and non-resident trusts, and to provide for the bijural expression of the provisions of that Act, passed by the House of Commons on October 29, 2007, is currently before the Senate’s Standing Committee on Banking, Trade and Commerce. Bill C-10 contains harmonization proposals first released as draft legislation on July 18, 2005.

Please consult the table of contents for prior issues of this publication.

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