A-399-78
Holbrook R. Davis (Appellant)
v.
The Queen (Respondent)
Court of Appeal, Pratte and Le Dain JJ. and Hyde
D.J.—Montreal, January 15, 1980.
Income tax — Income calculation — Capital gain — Cana-
da-U.S. Tax Convention Act, 1943 — Appellant, a former
resident of Canada, realized capital gain after becoming resi
dent of U.S. — Whether or not s. 48 of Income Tax Act
deeming disposition of capital asset on departure in 1972
conflicted with Article VIII of the Convention provision that
capital gains tax would not be assessed on a person realizing a
capital gain after establishing American residency — Appeal
dismissed — Income Tax Act, S.C. 1970-71-72, c. 63, s. 48(1)
as amended by S.C. 1973-74, c. 14, s. 9 — The Canada-Unit
ed States of America Tax Convention Act, 1943, S.C. 1943-44,
c. 21, s. 3.
INCOME tax appeal.
COUNSEL:
S. Minzberg for appellant.
G. Du Pont for respondent.
SOLICITORS:
Phillips & Vineberg, Montreal, for appellant.
Deputy Attorney General of Canada for
respondent.
The following are the reasons for judgment
delivered orally in English by
PRATTE J.: This is an appeal from a judgment
of the Trial Division [[1979] 1 F.C. 318] dismiss
ing the appellant's appeal from an income tax
assessment for the 1972 taxation year, made under
subsection 48(1) of the Income Tax Act, S.C.
1970-71-72, c. 63.
Section 48 of the Income Tax Act was amended
in 1973 by section 9 of chapter 14 of the Statutes
of Canada 1973-74 and the new section was
expressly made applicable to the 1972 taxation
year. It is common ground that the new section 48
supports the assessment. However, the appellant
contends, and all his attacks against the judgment'
of the Trial Division rest on that contention, that
the new section 48 cannot be invoked against him
in this case because there is an inconsistency be
tween the operation of the new section 48 and
Article VIII of the Canada-United States Tax
Convention (see The Canada-United States of
America Tax Convention Act, 1943, S.C. 1943-44,
c. 21,s. 3).
That contention is, in my view, ill founded.
Under the Convention a person, who, like the
appellant, has become a resident of the United
States, is not taxable in Canada by reason of the
capital gains made by him after becoming a
United States resident. This does not conflict, in
my view, with the new section 48 which has merely
the effect of taxing the appellant for 1972 on the
fictitious basis that he is deemed, while he was a
Canadian resident, to have made certain capital
gains.
In effect, the appellant's contention that there
was conflict between the Convention and the new
section 48 was based on the view that the new
section affected vested rights that the appellant
had acquired under the old section 48 and the
Convention. I do not share that view. Under the
Convention and the old section 48 (as the appel
lant interprets it)' the appellant had, as long as the
law remained unchanged, the right not to be taxed
in respect of the capital gains that the old section
48 deemed him to have made. The appellant,
however, did not have the right to be protected
against a retroactive change in the legislation.
For those reasons, I would dismiss the appeal
with costs.
* * *
LE DAIN J. concurred.
* * *
HYDE D.J. concurred.
' And it should not be implied that I agree with that
interpretation.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.