The link #25 ... April 2007

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.

Recent decision on bijuralism: Combined Insurance Co. of America v. The Minister of National Revenue

On January 30, 2007, the Federal Court of Appeal released its judgement in Combined Insurance Co. of America v. Minister of National Revenue (2007 FCA 60). This case dealt with the issue of whether the respondent, Mélanie Drapeau, held insurable employment or whether she was a self-employed worker. The Tax Court of Canada (2005 CCI 478) had previously concluded that the respondent held insurable employment with the appellant corporation, Combined Insurance, within the meaning of paragraph 5(1)(a) of the Employment Insurance Act, S.C. 1996, c. 23. The Federal Court of Appeal, in reasons written by Mr. Justice Nadon, allowed the appeal and concluded that the respondent did not hold insurable employment. Contrary to the judgement of the TCC, the FCA remained silent on the issue of the application of section 8.1 IA and on the importance of applying the control test where it is necessary to characterize the status of a worker when the contract is governed by the private law of Québec. The Minister of National Revenue has filed a request for leave to appeal from this judgement before the Supreme Court of Canada.

Appeal before the Supreme Court of Canada: A.Y.S.A. Amateur Youth Soccer Association v. Canada Revenue Agency

The Supreme Court of Canada will hear on May 16 the appeal from the judgement of the Federal Court of Appeal in A.Y.S.A. v. Canada Revenue Agency (2006 FCA 136). The appellant argues that the concept of charity in the Income Tax Act must be interpreted according to the law of Ontario, by virtue of the application of section 8.1 of the Interpretation Act. The Federal Court of appeal, per Noël JA, had ruled that the appellant had not met the requirements of the ITA in order to be registered as a charity. Mr. Justice Noël was of the view that it was not necessary to refer to the law of Ontario since the appellant did not meet the test for registered Canadian amateur athletic associations set out in the ITA and that "Parliament must be taken to have occupied the field respecting the tax treatment" of these associations. According to Mr. Justice Noël, section 8.1 IA is consequently of no assistance to the appellant.

Legislation on bijuralism: Progress of Bill C-33

The Minister of Finance introduced, on November 26, 2006, 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. This Bill contains the harmonization proposals that had been published previously as Legislative Proposals Relating to Income Tax in July 2005. The Bill is now at second reading in the House of Commons.