INCOME TAX |
Income calculation |
Deductions |
Canada v. Canadian Helicopters Ltd.
A-289-01
2002 FCA 30, Malone J.A.
22/1/02
6 pp.
Appeal from Tax Court of Canada decision allowing respondent's appeals from tax assessments under Income Tax Act for 1990, 1991 taxation years--Assessment issues arising from $8.9 million U.S. loan obtained by respondent, Canadian Helicopters Limited, to purchase shares of competitor, Viking Helicopters Ltd., in August 1989--Respondent paid interest on loan as result of share-purchase transaction, although CHC Helicopter Corporation Ltd. acquired title to Viking shares--Minister disallowed Helicopters' claim to deduct loan interest under Act, s. 20(1)(c)--Whether loan interest deductible--Tax Court Judge determining interest deductible under exceptional circumstances category explained by F.C.A. in 74712 Alberta Ltd. v. M.N.R., [1997] 2 F.C. 471--Correctly followed analysis established in 74712 Alberta Ltd. case in holding Helicopters proved exceptional circumstances warranting interest deduction--Events subsequent to loan arrangement, such as management arrangements between Viking and Helicopters, increased business income to Helicopters, reduced competition, providing evidence of Helicopters' purpose, intention in obtaining loan--Events arising after fact can have probative value in exceptional circumstances inquiry--Tax Court Judge correctly based findings on evidence arising after share-purchase--Findings of Tax Court Judge as to reasonable expectation all proper based on record before him--Cannot be varied by Court unless showing palpable, overriding error tainting assessment of facts--Appeal dismissed--Income Tax Act, S.C. 1970-71-72, c. 63, s. 20(1)c).