http://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/223693/index.do
Farm Credit Canada v. The Queen (March 5, 2017 – 2017 TCC 29, D’Arcy J.).
Précis: This is a decision on about as esoteric a point as one can get in GST/HST litigation. For the periods under appeal Farm Credit Canada claimed to be a “general corporation” for the purposes of the Selected Listed Financial Institutions Attribution Method (GST/HST) Regulations (the “Attribution Regulations”) adopted pursuant to Part IX of the Excise Tax Act (the “ETA”). CRA assessed Farm Credit on the basis that it was a “loan corporation” for the purposes of the attribution regulations. The sole question before the Tax Court was whether Farm Credit was a “loan corporation” during the periods in question under the Attribution Rules. Farm Credit argued that the term “loan corporation” implicitly required that the corporation accept deposits from the public which were then used to make loans. The Tax Court rejected that argument and dismissed the appeal with costs.
Two appeals in respect of earlier taxation periods (the reporting periods ending on March 31, 2009 and March 31, 2010) were quashed since a finding that the Farm Credit was a “general corporation” would have resulted in an increase in tax payable under the Attribution Rules which was not a permissible outcome on the appeal.
Decision: While the decision is lengthy and scholarly (and probably not of much interest except to a very narrow group of financial institution GST/HST specialists) the gist of the decision is quite short and pithy:
[116] The Appellant summarizes its argument in its written submissions as follows:
Based on a unified textual, contextual and purposive approach, the Appellant submits that the appropriate interpretation of “loan corporation” is a regulated entity that makes loans funded by deposits from the public. This is consistent with the established legal meaning across various federal and provincial statutes, and is supported by the context and purpose of the SLFI Regulations.
[117] The Appellant places significant weight on the fact that the provincial legislation that regulates trust and loan corporations defines a “loan corporation” as being a corporation that is incorporated for the purpose of borrowing money from the public and then lending or investing such money.
[118] The Respondent argues that the term “loan corporation” as used in the Attribution Regulations bears its ordinary meaning, which is a corporation whose principal business is making loans. The term loan corporation is not limited to entities incorporated and regulated under the federal Trust and Loan Companies Act or a provincial equivalent statute.
…
[129] I do not agree with the Appellant’s argument on this point. The Appellant is suggesting that, under the Attribution Regulations, there are two groups of financial institutions whose principal business is the lending of money.
[130] One group receives deposits from the public and, as a result, is a loan corporation. This group would determine its Attribution Percentage under the special rules in section 11 of the Old Attribution Regulations and section 26 of the New Attribution Regulations. The second group does not receive deposits from the public and, even though their principal business is the lending of money, they are not “loan corporations”. This group would determine its Attribution Percentage under section 23 of the New Attribution Regulations.
[131] A contextual reading of the Attribution Regulations does not support such a conclusion. As I stated in Club Intrawest v. The Queen,
. . . it is a general rule of statutory interpretation that legislation is deemed to be well drafted and to express completely what the legislature wanted to say. As a result, when interpreting a particular section, the Court should not add words to the section. The Supreme Court of Canada explained this principle in R v McIntosh, as follows:
Second, the contextual approach allows the courts to depart from the common grammatical meaning of words where this is required by a particular context, but it does not generally mandate the courts to read words into a statutory provision. It is only when words are "reasonably capable of bearing" a particular meaning that they may be interpreted contextually. I would agree with Pierre-André Côté's observation in his book The Interpretation of Legislation in Canada (2nd ed. 1991), at p. 231, that:
Since the judge's task is to interpret the statute, not to create it, as a general rule, interpretation should not add to the terms of the law. Legislation is deemed to be well drafted, and to express completely what the legislator wanted to say. . .
The Crown is asking this Court to read words into s. 34(2) which are simply not there. In my view, to do so would be tantamount to amending s. 34(2), which is a legislative and not a judicial function. The contextual approach provides no basis for the courts to engage in legislative amendment.
[132] There are no provisions in the GST Act that state that a listed financial institution whose principal business is the lending of money is only a “loan corporation” for the purposes of the Attribution Regulations if it accepts deposits from the public. In my view, if Parliament had intended such a result it would have added that specific condition to the legislation. It is not the Court’s role to create statutory conditions. As the Supreme Court of Canada noted in McIntosh, this is a legislative not a judicial function.
[Footnotes omitted]
As a result the Tax Court rejected that arguments of Farm Credit and dismissed the appeal with costs.
Two appeals in respect of earlier taxation periods (the reporting periods ending on March 31, 2009 and March 31, 2010) were quashed since a finding that the Farm Credit was a “general corporation” would have resulted in an increase in tax payable under the Attribution Rules which was not a permissible outcome on the appeal.