Irving Oil Ltd. v. Minister of National Revenue, (2001) 284 N.R. 255 (FCA)

• Judge: Linden, Rothstein and Sharlow, JJ.A.
• Court: Federal Court of Appeal (Canada)
• Case Date: October 22, 2001
• Jurisdiction: Canada (Federal)
• Citations: (2001), 284 N.R. 255 (FCA);2001 FCA 364

Irving Oil Ltd. v. MNR (2001), 284 N.R. 255 (FCA)

MLB headnote and full text

Temp. Cite: [2001] N.R. TBEd. DE.038

Her Majesty the Queen (appellant) v. Irving Oil Limited (respondent)

(A-513-00; 2001 FCA 364)

Indexed As: Irving Oil Ltd. v. Minister of National Revenue

Federal Court of Appeal

Linden, Rothstein and Sharlow, JJ.A.

November 27, 2001.

Summary:

The Crown reassessed Irving Oil Ltd. to increase its tax liability respecting several years. Irving paid the assessed amounts while its objections and appeals were out­standing. Irving was ultimately successful and received a refund plus interest. Irving reported the refund interest on its 1992 return as active business income. The Crown reassessed Irving, arguing that interest on an income tax refund could never be business income. Irving appealed.

The Tax Court of Canada, in a decision reported [2000] 3 C.T.C. 2823; 2000 D.T.C. 2164; [2000] T.C.J. No. 349, allowed Irving's appeal. The Crown appealed.

The Federal Court of Appeal dismissed the appeal.

Income Tax - Topic 1051.1

Income from a business or property - Income from business - What constitutes - A corporation (Irving) chose to pay income tax reassessments rather than post security while its objections and appeals were outstanding - It used funds generated from its active business - It knew that if it was successful, it would be entitled to a tax refund with interest - It was ultimately successful and reported the refund interest on its 1992 return as active business income - The Crown reassessed Irving - The tax court judge allowed Irving's ap­peal - The Federal Court of Appeal dis­missed the Crown's appeal, agreeing with the tax court judge that there was no au­thority for the Crown's proposition that interest on an income tax refund could never be business income - The court also rejected the Crown's proposition that a decision to pay tax in dispute was not a business activity at all.

Cases Noticed:

Munich Reinsurance Co. v. Minister of National Revenue, [2000] 2 C.T.C. 2785; 2000 D.T.C. 2009 (T.C.C.), affd. 281 N.R. 377 (F.C.A.), refd to. [para. 2].

Irving Oil Ltd. v. Minister of National Revenue, [1988] 1 C.T.C. 263; 16 F.T.R. 253; 88 D.T.C. 6138 (T.D.), affd. [1991] 1 C.T.C. 350; 126 N.R. 47; 91 D.T.C. 5106 (F.C.A.), leave to appeal dismissed (1991), 136 N.R. 320 (S.C.C.), refd to. [para. 7].

Roenisch v. Minister of National Revenue, [1931] Ex. C.R. 1; [1931] 2 D.L.R. 90; 1 D.T.C. 199, dist. [para. 13].

First Pioneer Petroleums Ltd. v. Minister of National Revenue, [1974] C.T.C. 108; 74 D.T.C. 6109; 43 D.L.R.(3d) 722 (F.C.T.D.), dist. [para. 13].

No. 195 v. Minister of National Revenue (1954), 54 D.T.C. 465 (I.T.A.B.), dist. [para. 14].

Smith's Potato Estates Ltd. v. Bolland, [1948] 2 All E.R. 367 (H.L.), dist. [para. 14].

Moloney et al. v. Minister of National Revenue, [1992] 2 C.T.C. 227; 145 N.R. 258; 92 D.T.C. 6570 (F.C.A.), dist. [para. 16].

Loewen v. Minister of National Revenue, [1994] 2 C.T.C. 75; 166 N.R. 226; 94 D.T.C. 6265 (F.C.A.), dist. [para. 16].

Minister of National Revenue v. Ensite Ltd., [1986] 2 S.C.R. 509; 70 N.R. 189; [1986] 2 C.T.C. 459; 86 D.T.C. 6521, dist. [para. 17].

Counsel:

Ernest Wheeler, for the appellant;

Joseph M. Steiner, for the respondent.

Solicitors of Record:

Morris Rosenberg, Deputy Attorney Gen­eral of Canada, Ottawa, Ontario, for the appellant;

Osler, Hoskin & Harcourt, Toronto, Ontario, for the respondent.

This appeal was heard on October 22, 2001, at Toronto, Ontario, before Linden, Rothstein and Sharlow, JJ.A., of the Federal Court of Appeal. Sharlow, J.A., delivered the following judgment for the Court of Appeal on November 27, 2001.