Conrad M. Black v. Her Majesty the Queen

(Federal) (Civil) (By Leave)


Taxation - Income tax, Legislation, Interpretation.


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Taxation – Income Tax – Residency – Legislation – Interpretation – Tax legislation – To what extent does a residency determination under a tax treaty between Canada and another country prevail for purposes of domestic law, in light of the “override provision” in the enacting legislation, which states that in the event of an inconsistency between the treaty and any other law (including the ITA), the treaty must prevail to the extent of the inconsistency – How, and with reference to which tax treaty, should the taxation of a dual-resident person’s income be determined, where the income is derived from a country in which the person is not resident – How should courts interpret tax treaty provisions that deal with the right to tax income that is not taxed by the person’s country of residence, where those provisions are silent regarding the source of that income – In what circumstances will Canada retain the right to tax such income – How should the courts interpret provisions in the ITA that are enacted as at a particular date, rather than with reference to a taxation year, where interpreting such provisions as a change in the law could result in the radically differential tax treatment of similarly-situated taxpayers within the same taxation year – Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.) (“ITA”) – Canada-United Kingdom Tax Convention (1978) (“Convention”), sub-articles 4(2) and 27(2).

As a resident of Canada for the purposes of the ITA, the applicant is required to pay tax on his worldwide income. In 2002, the applicant was also a resident of the U.K. for the purposes of U.K. tax. Under sub-article 4(2)(a) of the Convention, which provides tie-breaker rules for dual residents, the applicant was deemed to be a resident of the U.K. and not Canada. The applicant challenged assessments by the Minister of National Revenue (“Minister”) for certain items which could not be included in his income if he were not a resident for the purposes of the ITA, and brought a motion for determination of the question of law. The Tax Court of Canada held that although the applicant was deemed to be a resident of the United Kingdom under the Convention, the Minister could assess tax on the basis that he was a resident of Canada for the purposes of the ITA. It also held that the Minister is permitted to tax the applicant’s non-United Kingdom income, not just his income from Canadian sources. The Federal Court of Appeal dismissed the appeal.