Josée Tremblay

The appellants brought an action in the Superior Court claiming they were exempt from paying GST on certain financial services under the Excise Tax Act.

The respondent successfully moved for summary judgment on the basis that the Tax Court of Canada had exclusive jurisdiction.

On appeal, the appellants argued the Superior Court had constitutional or concurrent jurisdiction.

The Court of Appeal dismissed the appeal, finding the claim was not constitutional in nature and that the Tax Court of Canada Act, read with the Excise Tax Act, clearly gave the Tax Court exclusive jurisdiction over GST rebate claims.

The appellants acquired the debt of a failing company from a non-taxable provincial board.

The debt included significant accrued interest, payment of which had been suspended for two years.

Upon transfer, the appellants received partial payment of this interest, included it in their income, and claimed a deduction under s. 20(14)(b) of the Income Tax Act.

The Minister disallowed the deduction because the tax-exempt board had not included the interest in its income under s. 20(14)(a).

The Supreme Court of Canada held that the transaction met the plain meaning of s. 20(14) and was not a sham.

The Court ruled that a transferee's right to a deduction under s. 20(14)(b) is not conditional on the transferor including the amount in income under s. 20(14)(a).