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Taxation - Goods and services tax - Income tax - Legislation - Interpretation - Whether the portion of the “purse” awarded to drivers and trainers of standard bred horses is a prize, so as to be exempt from GST pursuant to s. 188(2) of the Excise Tax Act, R.S.C. 1985, c. E-15 (the “Act”) - Whether the Federal Court of Appeal applied the incorrect standard of review in finding there was no evidence in support of the trial judge’s findings - Whether the Federal Court of Appeal erred in failing to define the term “prize” as contemplated by the Act - Whether the Federal Court of Appeal erred in limiting the extent to which extrinsic evidence should be considered in interpreting and applying statutory provisions.

Standardbred horses race to win a portion of a pool of “purse” money that is offered by the race track. Horses finishing in the top positions win the purse money, which is distributed by the race track in accordance with regulatory rules and negotiated agreements. Agreements in place in the instant case required the race tracks to distribute 90% of the purse money to owners, 5% to the driver, and 5% to the trainer of successful horses.

At issue are the amounts distributed to the Applicant, qua driver and trainer, during the taxation years 1999 to 2001. The Applicant argues that these payments are a “prize” won by a “competitor” in a “competitive event”, entitling them to an exemption to GST under subsection 188(2) of the Act. The Respondent issued an assessment to the effect that the 5% payments were payments of fees by the race track on behalf of owners who had retained drivers and trainers for their services, and that GST was therefore payable. The Applicant appealed the assessment.