Canada v. McMynn
A-497-94
Linden J.A.
30/5/97
7 pp.
Appeal from Tax Court decision holding respondents, in business of leasing buses in personal capacity, entitled to deductions in years 1985 to 1988 for investment tax credits pursuant to ITA, s. 127(5) and refundable tax credits pursuant to ITA, s. 127.1(2) as result of purchase of new buses between 1985 and 1989, inclusive-MNR had disallowed investment tax credits and refundable investment tax credits on basis buses not "qualified transportation equipment" within meaning of Act, s. 127(9)-Issue whether buses used principally for purpose of transporting passengers in Canada in ordinary course of carrying on business in Canada pursuant to Act, s. 127(9)(a) or whether can be treated as corporation whose principal business is passenger transport pursuant to Act, s. 127(9)(b)-Appeal allowed-Using words-in-total-context approach and given clarity of French version, taxpayers do not fall within language or purpose of provisions of Act, s. 127-Not falling within 127(9)(a) as buses not used by them principally for purpose of transporting passengers in ordinary course of carrying on business in Canada-Rather, engaged in business of providing means whereby others could engage in transporting passengers in ordinary course of business-Respondents must actually transport passengers physically-Lor-Wes Contracting Ltd. v. The Queen, [1986] 1 F.C. 346 (C.A.) distinguished-Act, s. 127(9)(a) requiring equipment be used by taxpayer himself to transport travellers in order to claim benefit of incentive-Taxpayers not coming within s. 127(9)(b)(ii) as not operating as corporation, which provision clearly requires, and as taxpayer's principal business not "passenger . . . transport"-Income Tax Act, S.C. 1970-71-72, c. 63, s. 127(5) (as enacted by S.C. 1974-75-76, c. 71, s. 9; 1983-84, c. 1, s. 72; 1988, c. 55, s.106), (9) (as am. by S.C. 1977-78, c. 1, s. 61; 1979, c. 5, s. 40; 1984, c. 1, s, 72; c. 45, s. 43; 1985, c. 45, s. 72; 1986, c. 6, s. 71; c. 55, s. 48; 1988, c. 55, s. 106), 127.1(2) (as enacted by S.C. 1984, c. 1, s. 73; 1986, c. 6, s. 72; c. 55, s. 49; 1988, c. 55, s. 49, 107).