Nicolas X. Cloutier

The appellant, a non-resident of Quebec, retired from an accounting partnership and received a retirement allowance.

The province of Quebec assessed tax on a portion of the allowance equivalent to the percentage of the partnership's total income earned in the province.

The appellant challenged the assessment, arguing the taxing provisions exceeded the province's constitutional authority under s. 92(2) of the Constitution Act, 1867.

The Supreme Court of Canada dismissed the appeal, holding that the retirement allowance constituted a share of the partnership's business income earned in Quebec, and the province validly exercised its taxing power.

The taxpayer claimed deductions for interest paid on loans initially contracted to purchase real property and shares in a company.

By the time the deductions were claimed, the property had been sold and the company had gone bankrupt.

The Deputy Minister of Revenue disallowed the deductions.

The Supreme Court of Canada allowed the Deputy Minister's appeal, holding that the deductibility of interest depends on the current use of the borrowed funds and presupposes the existence of a source of income.

Because the properties were sold and the company was bankrupt with no prospect of resuming activities, the sources of income had ceased to exist, and the interest was no longer deductible.