Will-Kare Paving & Contracting Ltd. v. Minister of National Revenue

• Jurisdiction: Federal Jurisdiction (Canada)
• Judge: L'Heureux-Dubé, Gonthier, McLachlin, Iacobucci, Major, Bastarache and Binnie, JJ.
• Court: Supreme Court (Canada)
• Citation: (2000), 255 N.R. 208 (SCC),2000 SCC 36,[2000] 1 SCR 915,[2000] SCJ No 35 (QL),54 DTC 6479,188 DLR (4th) 242,[2000] 3 CTC 463,255 NR 208
• Date: 10 November 1999

Will-Kare Paving v. MNR (2000), 255 N.R. 208 (SCC)

MLB Headnote and full text

[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

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Temp. Cite: [2000] N.R. TBEd. JL.023

Will-Kare Paving & Contracting Limited (appellant) v. Her Majesty The Queen (respondent)

(26601; 2000 SCC 36)

Indexed As: Will-Kare Paving & Contracting Ltd. v. Minister of National Revenue

Supreme Court of Canada

L'Heureux-Dubé, Gonthier, McLachlin, Iacobucci, Major, Bastarache and Binnie, JJ.

July 20, 2000.

Summary:

A taxpayer was involved in the asphalt concrete paving business. The taxpayer acquired an asphalt plant. About 25% of the plant's production was sold to third parties and the balance was used by the taxpayer. The taxpayer claimed capital cost allowance under s. 20(1)(a) of the Income Tax Act on the basis of the plant being covered by Class 39 of Schedule II of the Income Tax Regu­lations. The taxpayer also claimed deductions under s. 127(5) of the Act respecting the acquisition costs of the asphalt plant on the basis that it was "qualified property" as defined in s. 127(9) of the Act. The Minister of National Revenue reclassified the property for purposes of capital cost allowance and denied any investment tax credit pursuant to s. 127(5), both on the basis that the asphalt plant was not being used primarily for manu­facturing or processing of goods for sale within the meaning of Class 39 or s. 127(9). The taxpayer appealed.

The Tax Court of Canada dismissed the appeal. The taxpayer appealed.

The Federal Court of Appeal, in a decision reported (1998), 232 N.R. 381, dismissed the appeal. The taxpayer appealed.

The Supreme Court of Canada, Binnie, Gonthier and McLachlin, JJ., dissenting, dismissed the appeal.

Income Tax - Topic 1194

Income from a business or property - Deductions - Capital cost allowance - Manufacturing and processing equipment -An asphalt concrete paving business (the taxpayer) acquired an asphalt plant - About 25% of the plant's production was sold to third parties and the balance was used by the taxpayer - The taxpayer claimed capital cost allowance arguing that the plant was covered by Class 39 of Schedule II of the Income Tax Regulations - The taxpayer also deducted acquisition costs under s. 127(5) of the Income Tax Act claiming that the plant was "qualified property" as defined in s. 127(9) of the Act - The Minister of National Revenue reclassified the property for capital cost allowance purposes and denied any investment tax credit under s. 127(5), ruling that the asphalt plant was not being used primarily for manufacturing or processing of goods for sale within the meaning of Class 39 or s. 127(9) - The Supreme Court of Canada affirmed the assessments.

Income Tax - Topic 1194

Income from a business or property - Deductions - Capital cost allowance - Manufacturing and processing equipment -[See second Income Tax - Topic 6763 ].

Income Tax - Topic 6763

Computation of tax - Rules for cor­porations - Definitions - Manufacturing or processing of goods for sale - [See first Income Tax - Topic 1194 ].

Income Tax - Topic 6763

Computation of tax - Rules for cor­porations - Definitions - Manufacturing or processing of goods for sale - Section 127(9) defined qualified property for pur­poses of accelerated capital allowance and investment tax credits as property used primarily for the purpose of "manufactur­ing or processing goods for sale or lease" -The Supreme Court of Canada interpreted this phrase - The court held that private law distinctions were to be used in de­fining the scope of the manufacturing and processing incentives in the Act - The concepts of sale or lease had settled legal definitions of which Parliament was cogni­zant when it used such language - There­fore, the availability of the manufacturing and processing incentives at issue had to be restricted to property utilized in the supply of goods for sale and not extended to property primarily utilized in the supply of goods through contracts from work and materials - The court declined to adopt an ordinary or plain meaning interpretation.

Income Tax - Topic 6874

Computation of tax - Rules for cor­porations - Investment tax credits - Quali­fied property - [See first Income Tax - Topic 1194 and second Income Tax - Topic 6763 ].

Income Tax - Topic 7027

Computation of tax - Rules for all taxpayers - Tax credits - Investment tax credits - [See first Income Tax - Topic 1194 and second Income Tax - Topic 6763 ].

Statutes - Topic 522

Interpretation - Taxing statutes - [See second Income Tax - Topic 6763 ].

Words and Phrases

Manufacturing or processing goods for sale or lease - The Supreme Court of Canada discussed the meaning of this phrase as used in the definition of "quali­fied property" in s. 127(9) of the Income Tax Act, R.S.C. 1985 (5th Supp.), c. 1 - See paragraphs 1 to 38.

Cases Noticed:

Hawboldt Hydraulics (Canada) Inc. (Bank­rupt) v. Minister of National Revenue, [1995] 1 F.C. 830; 174 N.R. 6 (F.C.A.), refd to. [para. 9].

Canada v. Hawboldt Hydraulics (Canada) Inc. (Trustee of) - see Hawboldt Hy­draulics (Canada) Inc. (Bankrupt) v. Minister of National Revenue.

Crown Tire Service Ltd. v. Canada, [1984] 2 F.C. 219 (T.D.), refd to. [paras. 20, 43].

Minister of National Revenue v. Halliburton Services Ltd. (1985), 85 D.T.C. 5336 (F.C.T.D.), affd. (1990), 90 D.T.C. 6320 (F.C.A.), refd to. [paras. 22, 44].

Nowsco Well Service Ltd. v. Minister of National Revenue (1990), 108 N.R. 269; 90 D.T.C. 6312 (F.C.A.), refd to. [para. 22].

Rolls Royce (Canada) Ltd. v. Minister of National Revenue (1992), 151 N.R. 52; 93 D.T.C. 5031 (F.C.A.), leave to appeal refused [1993] 2 S.C.R. x; 158 N.R. 400, refd to. [paras. 24, 47].

Continental Bank Leasing Corp. v. Minis­ter of National Revenue, [1998] 2 S.C.R. 298; 229 N.R. 58, refd to. [paras. 31, 49].

Rizzo & Rizzo Shoes Ltd. (Bankrupt), Re, [1998] 1 S.C.R. 27; 221 N.R. 241; 106 O.A.C. 1, refd to. [para. 32].

65302 British Columbia Ltd. v. Minister of National Revenue, [1999] 3 S.C.R. 804; 248 N.R. 216, refd to. [para. 32].

Stubart Investments Ltd. v. Minister of National Revenue, [1984] 1 S.C.R. 536; 53 N.R. 241; 10 D.L.R.(4th) 1; [1984] C.T.C. 294; 84 D.T.C. 6305, refd to. [paras. 32, 50].

Minister of National Revenue v. Shell Canada Ltd., [1999] 3 S.C.R. 622; 247 N.R. 19, refd to. [paras. 34, 49].

Leading Investments Ltd. v. Liebig (H.W.) & Co., [1986] 1 S.C.R. 70; 65 N.R. 209; 14 O.A.C. 159; 38 R.P.R. 201; 25 D.L.R.(4th) 161, refd to. [para. 48].

Tennant v. Minister of National Revenue, [1996] 1 S.C.R. 305; 192 N.R. 365, refd to. [para. 49].

Friesen v. Minister of National Revenue, [1995] 3 S.C.R. 103; 186 N.R. 243; 95 D.T.C. 5551, refd to. [para. 49].

Minister of National Revenue v. Alberta (Treasury Branches) et al., [1996] 1 S.C.R. 963; 196 N.R. 105; 184 A.R. 1; 122 W.A.C. 1; 133 D.L.R.(4th) 609, refd to. [para. 49].

Quebec (Communauté urbaine) et autres v. Corporation Notre-Dame de Bon-Secours, [1994] 3 S.C.R. 3; 171 N.R. 161; 63 Q.A.C. 161, refd to. [para. 52].

Antosko v. Minister of National Revenue, [1994] 2 S.C.R. 312; 168 N.R. 16; [1994] 2 C.T.C. 25; 94 D.T.C. 6314, refd to. [para. 53].

R. v. McIntosh (B.B.), [1995] 1 S.C.R. 686; 178 N.R. 161; 79 O.A.C. 81; 95 C.C.C.(3d) 481; 36 C.R.(4th) 171, refd to. [para. 54].

Symes v. Minister of National Revenue, [1993] 4 S.C.R. 695; 161 N.R. 243; [1994] 1 C.T.C. 40; 110 D.L.R.(4th) 470; 19 C.R.R.(2d) 1; 94 D.T.C. 6001, refd to. [para. 60].

Thibaudeau v. Minister of National Reve­nue, [1995] 2 S.C.R. 627; 182 N.R. 1; 124 D.L.R.(4th) 449, refd to. [para. 60].

Harel v. Quebec, [1978] 1 S.C.R. 851; 18 N.R. 91, refd to. [para. 66].

Nowegijick v. Minister of National Revenue et al., [1983] 1 S.C.R. 29; 46 N.R. 41; 83 D.T.C. 5041; 144 D.L.R.(3d) 193, refd to. [para. 66].

Statutes Noticed:

Income Tax Act, R.S.C. 1985 (5th Supp.), c. 1, sect. 20(1)(a), sect. 127(5), sect. 127(9) [para. 8].

Income Tax Act, Interpretation Bulletins, Bulletin No. IT-145 (Feb. 5, 1974), generally [para. 66].

Income Tax Act Regulations (Can.), Schedule II, class 8, class 29, class 39 [para. 8].

Interpretation Bulletins - see Income Tax Act, Interpretation Bulletins.

Authors and Works Noticed:

Arnold, Brian J., Statutory Interpretation: Some Thoughts on Plain Meaning, in Report of Proceedings of the Fiftieth Tax Conference (1999), p. 6:20 [paras. 52, 57].

Benjamin, Sale of Goods (1974), generally [para. 39].

Bowman, Stephen W., Interpretation of Tax Legislation: The Evolution of Pur­posive Analysis (1995), 43 Can. Tax J. 1167, generally [para. 57].

Canada, Hansard, House of Commons Debates, vol. 2, 1st Sess., 29th Parlia­ment (February 19, 1973), p. 1428 [para. 62].

Canada, Hansard, House of Commons Debates, vol. 3, 4th Sess., 28th Parlia­ment (May 8, 1972), p. 2002 [para. 61].

Canada, Hansard, House of Commons Debates, vol. 5, 1st Sess., 29th Parlia­ment (June 13, 1973), p. 4723 [para. 62].

Canada, Hansard, House of Commons Debates, vol. 7, 1st Sess., 30th Parlia­ment (June 23, 1975), p. 7028 [para. 63].

Driedger, Elmer A., Construction of Stat­utes (2nd Ed. 1983), p. 87 [paras. 32, 50].

Driedger, Elmer A., Construction of Stat­utes (3rd Ed. 1994), p. 60 [para. 60].

Duff, David G., Interpreting the Income Tax Act - Part 1: Interpretive Doctrines (1999), 47 Can. Tax J. 464, p. 471 [para. 57].

Duff, David G., Interpreting the Income Tax Act - Part 2: Toward a Pragmatic Approach (1999), 47 Can. Tax J. 741, p. 770 [para. 57].

Fulcher, J.E. (Ted), The Income Tax Act: The Rules of Interpretation and Tax Avoidance. Purpose vs. Plain Meaning: Which, When and Why? (1995), 74 Can. Bar Rev. 563, p. 578 [paras. 53, 57].

Hansard - see Canada, Hansard, House of Commons Debates.

Hogg, Peter W., Magee, Joanne E., and Cook, Ted, Principles of Canadian Income Tax Law (3rd Ed. 1999), p. 2 [para. 31].

Hogg, Peter W., and Magee, Joanne E., Principles of Canadian Income Tax Law (1995), p. 454 [para. 54].

Kernochan, John M., Statutory Interpreta­tion: An Outline of Method (1976-77), 3 Dalhousie L.J. 333, pp. 348, 349 [para. 51].

Oxford English Dictionary [para. 48].

Sharlow, Karen, The Interpretation of Tax Legislation and the Rule of Law-Re­joinder (1996), 76 Can. Bar Rev. 151, generally [para. 57].

Taylor, Roger, The Interpretation of Fiscal Statutes: The "Plain Meaning" Approach in Recent Supreme Court of Canada Decisions, in Report of Proceedings of the Forty-Eighth Tax Conference (1997), vol. 2, p. 64:1 [para. 57].

Turner, John N., Banquet Address, in Report of Proceedings of the Twenty-Fourth Tax Conference (1973), p. 281 [para. 64].

Weil, Robert D., Manufacturing and Pro­cessing Tax Incentives: Departmental Perspective, in Report of the Proceedings of the Twenty-Fifth Tax Conference (1974), p. 127 [para. 65].

Willis, John, Statute Interpretation in a Nutshell (1938), 16 Can. Bar Rev. 1, p. 6 [para. 51].

Counsel:

Philip Anisman and Robert B. MacLellan, for the appellant;

Bruce S. Russell and Anne-Marie Lévesque, for the respondent.

Solicitors of Record:

Philip Anisman, Toronto, Ontario, and Burchell, MacDougall, Truro, Nova Scotia, for the appellant;

Department of Justice, Halifax, Nova Scotia, for the respondent.

This appeal was heard on November 10, 1999, before L'Heureux-Dubé, Gonthier, McLachlin, Iacobucci, Major, Bastarache and Binnie, JJ., of the Supreme Court of Canada. The decision of the court was delivered on July 20, 2000, in both official languages, including the following opinions:

Major, J. (L'Heureux-Dubé, Iacobucci and Bastarache, JJ., concurring) - see paragraphs 1 to 38;

Binnie, J., dissenting (Gonthier and McLachlin, JJ., concurring) - see para­graphs 39 to 71.