Alberta Gas Ethylene Co. v. Minister of National Revenue

• Jurisdiction: Federal Jurisdiction (Canada)
• Court: Court of Appeal (Canada)
• Judge: Heald, Urie and Hugessen, JJ.A.
• Citation: (1990), 112 N.R. 399 (FCA)
• Date: 18 June 1990

Alta. Gas Ethylene Co. v. MNR (1990), 112 N.R. 399 (FCA)

MLB headnote and full text

Alberta Gas Ethylene Company Ltd. (appellant/plaintiff) v. Her Majesty The Queen (respondent/defendant)

(A-1208-88)

Indexed As: Alberta Gas Ethylene Co. v. Minister of National Revenue

Federal Court of Appeal

Heald, Urie and Hugessen, JJ.A.

June 18, 1990.

Summary:

ASCO was a wholly owned nonresident subsidiary of Alberta Gas. ASCO was formed to borrow money in the United States at a favourable interest rate and in turn loan the money to Alberta Gas. Alberta Gas made interest payments on the loans. The Minister of National Revenue ruled that withholding taxes were owed by Alberta Gas on the interest payments to ASCO. Alberta Gas appealed.

The Federal Court of Canada, Trial Division, in a judgment reported 24 F.T.R. 309, dismissed the appeal. Alberta Gas appealed.

The Federal Court of Appeal dismissed the appeal.

Income Tax - Topic 8703

Special taxes - Nonresident withholding taxes - Payments of interest - To subsidiaries - ASCO was a wholly owned nonresident subsidiary of Alberta Gas - ASCO was formed to borrow money in the United States at a favourable interest rate and in turn loan the money to Alberta Gas - Alberta Gas made interest payments on the loans - The Minister of National Revenue ruled that withholding taxes were owed by Alberta Gas on the interest payments to ASCO - The Federal Court of Canada, Trial Division, affirmed the ruling - The court held that the separate corporate identity of the subsidiary ASCO could not be ignored, nor could ASCO be said to be merely the agent of Alberta Gas in the loan transactions - The Federal Court of Appeal affirmed the decision.

Statutes Noticed:

Income Tax Act, S.C. 1970-71-72, c. 63, sect. 212, sect. 215 [para. ].

Income Tax Act Regulations, sect. 805 [para. 3].

Counsel:

W.J.A. Mitchell, Q.C., and J.A. Hermes, for the appellant;

I.E. Lloyd and L.L. Evans, for the respondent.

Solicitors of Record:

Thorsteinssons, Vancouver, B.C., for the appellant;

John C. Tait, Q.C., Deputy Attorney General, Ottawa, Ontario, for the respondent.

This appeal was heard on June 18, 1990, at Vancouver, B.C., before Heald, Urie and Hugessen, JJ.A., of the Federal Court of Appeal.

On June 18, 1990, Hugessen, J.A., orally delivered the following judgment  for the Court of Appeal: