AuthorVern Krishna
ProfessionProfessor of Common Law, University of Ottawa Barrister at Law
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].

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