Canada v. Lachance
A-1296-92
Hugessen J.A.
2/3/94
11 pp.
Appeal from Trial Division judgment reversing Tax Court of Canada decision dismissing respondent's appeal-Respondent professional engineer and member of partnership doing business in several provinces in Canada; respondent retired from company in 1983 and received $110,000 as his share of partnership income for fiscal year ending January 31, 1984-For 1984 taxation year respondent reported total income received from partnership as if all earned in Quebec, where he had residence-Partnership had earned income in nine provinces, only 12.8% in Quebec-Minister assessed respondent as if 87.2% of income earned in provinces other than Quebec and reduced Quebec income tax abatement and assessed provincial tax-Respondent contended he should be assessed as Quebec resident who had no source of income outside Quebec-Under Income Tax Act, s. 96(1) taxpayer's income calculated as if partnership had distinct legal personality: income of partnership is allocated to its members in proportion to share of each member in partnership; each member deemed to have received his or her share from each source and from each place in same proportion as partnership; partnership's income "flows through" to income of each of its members-Under s. 96(1.1), person who has ceased to be member of partnership deemed to be member: amounts representing person's share in partnership's income must be included in computing his or her income "notwithstanding any other provision" of the Act-Act, s. 96(1) creating set of fictions for computing income of taxpayer who is (or deemed to be) member of partnership; s. 96(1)(f) allocates to taxpayer share of partnership's income as if received by taxpayer from same sources and from sources located in same places as partnership itself-S. 96(1) determines how taxpayer to whom it applies must compute income and computation necessarily reflected in computation of taxpayer's taxable income and tax-As partnership earned 87.2% of its income in provinces other than Quebec, respondent deemed to have done same in so far as share of income concerned-Appeal allowed-Income Tax Act, S.C. 1970-71-72, c. 63, s. 96(1) (as am. by S.C. 1980-81-82-83, c. 47, s. 53 (item 12); 1983-84, c. 1, s. 43(1)), (1.1) (as enacted by S.C. 1974-75-76, c. 26, s. 60(2)).