The link #24 ... June 2006

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

Publication on Bijuralism (I)

Me Chikwa Zahinda (M. Fisc.) is the author of an article published in the Revue de planification fiscale et successorale titled: “La doctrine de rectification de contrats et son application en droit fiscal : étude comparée des principes de common law, droit civil et droit corporatif” (2006) vol. 27, no. 1, p. 17. It is generally recognized that in order to apply the Income Tax Act it is necessary to characterize the legal relationships established by the taxpayer. But what happens when parties to a contract make a mistake in recording their agreement? The author examined the means available to a taxpayer to correct such errors, with particular attention given to differences between the remedies available in the common law provinces (doctrine of rectification) and those available in Quebec under the Civil Code of Québec (correction of errors). The author also examined a number of corporate laws which expressly provide for the possibility of correcting such errors. Finally, the author analysed tax case law which dealt with the doctrine of rectification or the correction of errors.

Publication on Bijuralism (II)

A two-part column reviewing recent tax case law dealing with bijuralism was published in the last issue of the Revue de planification fiscale et successorale. The first part of the column was written by Me Michelle Desrosiers (M. Fisc.): “Partie I – Jurisprudence récente : Les principes d’interprétation en bijuridisme canadien en contexte fiscal : où en sommes-nous?” (2006) vol. 27, no. 1, p. 213. The author reviews the most recent decisions that applied section 8.1 of the Interpretation Act in order to determine the suppletive law for tax law purposes where federal legislation refers to private provincial law concepts without defining their scope. Most of the decisions deal with the determination of employment or independent contractor status for the purpose of determining whether the employment was insurable employment under the Employment Insurance Act.

The second part of the column deals with a recent decision of the Supreme Court of Canada: Philippe Denault, “Partie II – D.I.M.S. Construction inc. (Syndic de) c. Québec (Procureur général) : La fin d’une controverse – Mise en œuvre du principe de complémentarité par la Cour suprême du Canada” (2006) vol. 27, no. 1, p. 235. This judgment brings an important clarification regarding the interaction or federal legislation with provincial private law. It confirms that civil law applies as suppletive law to the Bankruptcy and Insolvency Act where its provisions are incomplete with respect to private law. It also ends the controversy surrounding the application of equitable set-off in bankruptcy cases in Quebec. According to the author, D.I.M.S. Construction could provide an indication as to the process to follow for other federal statutes where it is necessary to identify complementary sources of federal private law.

Presentation on Recent Tax Case Law

Me Michelle Desrosiers (M. Fisc.) made a presentation on May 12 at a workshop during the Congrès 2006 of the Barreau du Québec. In a workshop titled ‘Recent Tax Case Law’, Me Desrosiers discussed a number of recent tax cases that dealt with the question of complementarity between provincial private law and federal legislative. Among the cases discussed were the decision of the Federal Court of Appeal in 9041-6868 Québec inc. c. MNR and the decision of the Tax Court of Canada in Vaillancourt c. Canada. In these two cases, the issue was to determine whether the individual’s work constituted ensurable employment for the purposes of section 5 of the Employment Insurance Act. In both cases, the courts held that this question must be analysed according to the rules found in the Civil Code of Québec where the contract was concluded in Quebec.