Epilogue

• Author: Vern Krishna
• Profession: Professor of Common Law, University of Ottawa Barrister at Law
• Pages: 597-609

597

EPILOGUE

The interpretation of tax law is evolutionar y rather than revolution-

ary. It was once viewed as a penal statute th at should be strictly and

literally interpreted wit hout extrinsic aids or policy analysi s. Now it is

increasingly viewed a s a policy statute. Copthorne Holdings Ltd v Can-

ada (Copthor ne),1 the latest decision of the Supreme Court of Canada,

illustrates how far we have evolved from strict and l iteral interpretation

to purposive analysi s of f‌iscal legislation.

The Copthorne deci sion is a shot across the bow of tax profession-

als — lawyers, accountants and CR A off‌icials — who spend long days

with their noses buried in the detail of the Income Tax Act. There is

a danger of not seeing the forest for the trees. Copthorne’s message is

clear: step back from the technica l and convoluted detail of transact ions

to determine whether an arr angement or scheme abusively undermines

the object, spirit and purpose of the tax laws.

Copthor ne involved a series of reorganizations of companie s con-

trolled by Li Ka-Shing and hi s son, Victor Li (the Li Family). The trans-

actions are summar ized at the end of this Epilogue.

The Li Family also controlled a group of non-resident companies

(Li Group), which invested $96.7 million in VHHC Investments Ltd

(Canco I), which then purchased the shares of VHHC Holdings Ltd

(Canco II) for $67.4 million. Thus, Canco I, with stated and paid-up

1 2011 SCC 63 [Copthorne].