ITT Industries of Canada Ltd. v. Canada
T-1048-89
Simpson J.
1/2/99
15 pp.
Motion brought by defendant for determination of question of law as to whether Tree Farm Licence 6 (TFL 6) "timber resource property" within meaning of Income Tax Act, s. 13(21)(d.1)-Tree farm licence agreement entered into under Forest Act (1948 Forest Act) between Province of British Columbia and holder-Holder provided with exclusive rights to cut timber owned by B.C. in specified areas-On May 1, 1961, plaintiff acquiring TFL 6 from original holder, owner for approximately 20 years-1948 Forest Act replaced by 1978 Forest Act-New Act providing inter alia all perpetual tree farm licences to be replaced by 25-year term licences-TFL 6 expiring on December 31, 1979-Replacement licence issued on January 1, 1980-Plaintiff selling TFL 6 on October 30, 1980 for $72,180,000 (Sale Proceeds)-In computing income for 1980 taxation year, plaintiff decided TFL 6 timber limit rather than timber resource property-MNR reassessing plaintiff on basis Sale Proceeds proceeds of sale of timber resource property rather than timber limit-Including all Sale Proceeds in plaintiff's income for 1980 taxation year-Whether definition of original right includes clause (i)(B) of s. 13(21)(d.1)-Words following parentheses either describe operation of defined term or state how defined term relates to subject which whole section devoted to defining-Clause (i)(B) describing situations in which original rights can be regarded as timber resource properties-Not further defining original rights-Definition of original right ending with parentheses in opening phrase of subparagraph (i)-S. 13(21)(d.1) not model of clarity-Opening passage of subparagraph (ii) oddly worded as defined term original right not used-Plaintiff suggesting higher taxation costs attached to timber resource property make good policy sense because, if there was right or expectation of renewal extension or substitution at time of acquisition, such licence would have higher value-Plaintiff's submission about policy too speculative-When s. 13(21)(d.1) came into force in 1974, subparagraph (ii) had purpose distinct from subparagraph (i) in that it could apply to extensions, renewals, substitutions of and for rights not caught by subparagraph (i)-Subsections intended to apply independently because disjunctive word "or" used between subsections, subparagraph (i) has in-force date in text-TFL 6 timber resource property under provisions of s. 13(21)(d.1)(ii)-Income Tax Act, S.C. 1970-71-72, c. 63, s. 13(21)(d.1) (as enacted by S.C. 1974-75-76, c. 26, s. 6(7))-Forest Act, R.S.B.C. 1948, c. 128-Forest Act, S.B.C. 1978, c. 23.