INCOME TAX |
Partnerships |
Canada v. Gillette Canada Inc.
A-715-01
2003 FCA 22, Décary J.A.
16/1/03
9 pp.
Appeal from decision of Tax Court of Canada vacating assessment issued by M.N.R. under Part XIII of Income Tax Act (ITA)--Tax Court held conversion of note receivable issued for repurchase of partnership constituted loan by respondent to partnership, Gillette France SNC (GFSNC) as well as payment or credit within meaning of s. 212(13.1)(b) with result partnership, with respect to payment, deemed to be non-resident person under ITA, Part XIII and hence taxpayer for purpose of s. 214(3)(a)--According to Minister, Tax Court Judge erred in holding partnership not connected with Gillette Co. within meaning of ITA, s. 15(2)--Not open to Tax Court Judge (T.C.J.) having regard to facts, to hold conversion gave rise to payment or credit within meaning of s. 212(13.1)(b) or to loan for purposes of s. 15(2)--T.C.J., after recognizing original note did not give rise to credit, payment or loan within meaning of ITA, failed to recognize second instrument (note converted to indebtedness evidenced by note) had same effect as first and therefore had to be construed same way-- Statement of agreed facts makes clear original note assigned to respondent in exchange for shares in Oral B France--T.C.J. correctly held no payment, credit or loan can be said to arise from present assignment as no debtor-creditor relationship existed and assignment did not involve discharge of any obligation by partnership--Partnership merely happened to be maker of note assigned in payment--Between appellant and partnership nothing changed by substituting second instrument for first except for currency of payment--In particular, creditor remained same, debtor remained same, amount remained same and debt continued to be long-term non-interest bearing--Furthermore, evidence showed second instrument as only consideration received by respondent in exchange for disposition of Oral B shares--Appeal dismissed --Income Tax Act, R.S.C., 1985 (5th Supp.), c. 1, ss. 15(2), 212(13.1)(b), 214(3)(a).