The appellant corporation appealed the dismissal of its challenge to provincial corporation tax reassessments based on the thin capitalization rules.
The central issue was whether a mortgage debt to a non-resident shareholder had been incurred by a partnership or separately by the corporate partners, such that s. 18(4) of the Income Tax Act would apply.
The Court of Appeal accepted the respondent's position that the secured debt was the debt of the partners, with several liability limited to one-half each, and not a debt of the partnership.
Because that factual finding was supported by the evidence, appellate intervention was unwarranted and the thin capitalization rules applied.