United Equities Ltd. v. M.N.R.
T-1850-89
MacKay J.
8/10/92
23 pp.
Appeal from Tax Court of Canada's decision under Income Tax Act, s. 172 -- MNR disallowing scientific research tax credit (SRTC) claimed for plaintiff's 1984 taxation year and carryback of portion of SRTC for 1983 -- Debenture of $114,000 issued by Company in consideration of payment of $200,000 by plaintiff -- Company's solicitor failing to file documents required to permit designation of SRTC within prescribed times -- Letter dated November 18, 1985 sent to Company by Revenue Canada concerning provisions for late filing of designation-Interpretation of Act, s. 194(7) at issue -- Whether timely filing of information returns condition precedent to late filing of designation and whether letter of November 18 constituting notice by Minister under s. 194(7) -- Corporation filing late entitled to have designation filed and deemed to have been made if conditions of s. 194(7)(a) and (b) met -- Exception clause relating to entire first part of subsection, providing alternative to designating company's right to file late -- Subsection concerned with late filing of designation, not with late filing of information forms, matter dealt with by regulation -- Construction of s. 194(7) consistent with general purposes of legislation relating to SRTCs to encourage investment for research and development by corporations having no, or limited, tax liability and no incentive under taxing statutes -- Incentives created by Act both for investor and corporation designating amount of SRTC -- Late filing of designation and payment of penalty intended to overcome defect of failure to file designation on time -- Revenue Canada's administrative policies inconsistent with Crown's position timely filing of information returns condition precedent to late filing -- No "reading in" necessary in s. 194(7) whose purpose to provide for late filing of designation form -- Factual ambiguity in taxing statute should be resolved in favour of taxpayer even where interpretation decided upon results in extraordinary benefit to taxpayer -- Timely filing of information returns not condition precedent to late filing of designation where notice mailed by Minister under s. 194(7)-Letter of November 18, 1985 notice mailed by Minister under exception clause of s. 194(7) -- Form of notice irrelevant provided taxpayer aware of assessment made by Minister -- Under exception clause of s. 194(7), taxpayer corporation deemed to have made designation on appropriate day -- Action allowed -- Income Tax Act, S.C. 1970-71-72, c. 63, s. 194(4) (as enacted by S.C. 1984, c. 1, s. 95(1)), (7) (as enacted idem).