Decision Date: February 11, 2015
Link: Case Summary Document
Citation: [2015] TCC 35 (CanLll) Tax Court of Canada, C Miller J
Acknowledgement:The Pemsel Case Foundation thanks The Australian Centre for Philanthropy and Nonprofit Studies for its contribution in the drafting of this Case Note.


This Canadian case involved the appeals of 44 appellants (of which French was representative) in relation to a particular pleading which they were advancing in their appeals. The appeals all related to the same issue, being the appellants’ entitlement to tax credits in connection with purported donations to Ideas Canada Foundation, a registered charity. Entitlement to a similar donation made to Ideas Canada Foundation was previously denied by the Tax Court of Canada, and affirmed by the Federal Court of Appeal (Kossow v R, 2013 FCA 283 (CanLII)). However, the appellants in this case added novel arguments in their appeals which were not made in Kossow, and they wished to be given an opportunity to make them. The respondent was particularly concerned with one of these arguments and sought to have the argument struck out on the basis that it was plain and obvious it has no chance of success: rule 53(1)(d) of Tax Court of Canada Rules (General Procedure) (the Rules).

The argument sought to be struck out dealt with references to the Civil Code of Québec (CCQ) and the Interpretation Act (the Act), sections 8.1 and 8.2. The paragraphs of argument (paragraphs 23-26 of the pleadings) in issue were:

• In the alternative, the Appellant should be entitled to a deduction for that portion of each of the Donations that exceeded the value of any benefit or remuneration obtained from each of the Donation (excluding the value of any tax advantage).

• Under the civil law, Article 1810 of the CCQ expressly provides that “a remunerative gift … constitutes a gift … for the value in excess of that of the remuneration”. Consequently, to the extent that the Loans or some aspect thereof may have constituted remuneration to the Appellant, the Donations less the remuneration constituted a “gift” in Québec through operation of sections 8.1 and 8.2 of the Interpretation Act.

• Had the Appellant been resident of Québec during the Taxation Years, he would unquestionably be entitled under section 118.1 of the Act to a deduction of the portion of the Donations in excess of the remuneration.

• Parliament did not intend for section 118.1 of the Act to produce radically different results for taxpayers in Québec that would not apply to taxpayers in the rest of Canada.

None of the taxpayers involved had made his/her donations in Quebec. Therefore, this was what is referred to in Canada as a ‘bijural’ argument – that the civil law applicable in Quebec can be compared to and influence the common law applicable in the rest of Canada. His Honour comprehensively rejected this argument.

Sections 8.1 and 8.2 of the Interpretation Act provide that:

8.1 Both the common law and the civil law are equally authoritative and recognized sources of the law of property and civil rights in Canada and, unless otherwise provided by law, if in interpreting an enactment it is necessary to refer to a province’s rules, principles or concepts forming part of the law of property and civil rights, reference must be made to the rules, principles and concepts in force in the province at the time the enactment is being applied.

8.2 Unless otherwise provided by law, when an enactment contains both civil law and common law terminology, or terminology that has a different meaning in the civil law and the common law, the civil law terminology or meaning is to be adopted in the Province of Quebec and the common law terminology or meaning is to be adopted in the other provinces.

Based on these provisions, the Crown’s position was that for the purposes of section 118.1 of the Income Tax Act, “gift” as defined in Québec was to apply in Québec, and “gift” as defined in common law jurisdictions was to apply in those jurisdictions. Thus, though the definition of gift is codified in Quebec in line with civil law practice, the Québec codified definition of gift could not apply in the rest of Canada and vice versa. His Honour said that this position was “unassailable” (at [10]).

However, he turned his attention to the appellant’s argument for completeness. The appellant first contended that his was a novel argument – that the Tax Court of Canada could look to Québec law to assist in defining “gift” in common law jurisdictions, if it is not clearly defined. The appellant suggested that this was particularly so where the area law is in the state of evolution, such as is the case with the implications of bijurilism generally. On this point His Honour said (at [13]):

The Appellants’ position may be novel, but I find reliance on Québec laws to interpret common law, when the common law is clear, is not arguable.

Complementarity, as envisaged by the Act, did not mean uniformity (at [14]):

I have read nothing that the Appellants have provided to me that suggested, notwithstanding perhaps taxpayers’ expectations, that a principle of bijuralism is uniformity. That is not its objective, and there has been nothing presented to me to suggest the evolution of bijuralism is headed in that direction. The Appellants’ contention that Parliament did not intend section 118.1 of the Act to produce radically different results simply has no foundation in the law, notwithstanding it may be supportable by common sense. It is not an argument.

Common law could not be ignored in favour of civil law in Canada, or vice versa (at [17]-[18], [22]):

The Appellant’s argument is premised on a principle that when there is confusion in the common law one can look to civil law. I have been provided no authority to suggest that. In any event, this is based on the Appellants’ perception that “gift”, while clearly defined in civil law, is ambiguous in common law. Again, with respect, I disagree with that notion. Simply because the common law system has no codified definition of gift, that does not mean the expression has not been clearly defined. There is a plethora of common law jurisprudence which has very clearly established what is required for a common law gift, most succinctly put in The Queen v Friedberg, 92 DTC 6031 (FCA), which was adopted in the more recent case of Maréchaux v R, 2010 FCA 287 (CanLII):

… a gift is a voluntary transfer of property owned by a donor to a donee, in return for which no benefit or consideration flows to the donor.

There is no confusion. There is no ambiguity. There is no need to seek assistance from civil law jurisdictions, Québec or elsewhere, even if such a principle existed. Again, I see no argument to be made…I find no basis upon which the Appellants can mount any argument that would extend the civil law definition of gift to the advantage of taxpayers in common law jurisdictions for purposes of the Charitable Donation Tax Credit. Their position with respect to this argument is hopeless.

Therefore, the motion was granted and the portions of the amended Notices of Appeal containing the bijural argument were struck out.

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Implications of this case

His Honour noted that there were further taxation appeals pending with bijural arguments, which he referred to as “regrettable” (at [28]). His Honour said that there was nothing in the Canadian Interpretation Act or Harmonization Act which supported the bijural argument made in this case. Nor did any argument concerning horizontal or vertical equity in the law of taxation in Canada support the appellants in this case. To add this latter argument to the above case (which was attempted) was to inappropriately conflate two different principles (at [21]). It was appropriate that Canadians in different parts of the country should pay equal taxes, but there were simply two differing legal systems in Canada, and they applied in Quebec and the rest of Canada accordingly.