Linden J.A.:
We can see no basis upon which to interfere with the decision of the Tax Court. Based on the facts as found and the authorities relied on by the Tax Court Judge, he arrived at the right decision. That outcome is fortified by the Neuman v. Minister of National Revenue decision (1998), 98 D.T.C. 6297 (S.C.C.) of the Supreme Court of Canada, released following the date of that decision in which Mr. Justice Iacobucci warned that Courts should not be “quick to embellish” tax avoidance provisions in the Income Tax Act but should await “precise and specific” measures from legislators to combat any perceived “mischief” (See p. 6305). He reminded as that “taxpayers can arrange their affairs in a particular way for the sole purpose of deliberately availing themselves of the tax reduction levies on the Income Tax Act.”
That, he explained, included the use of “corporate structures which exist for the sole purpose of avoiding tax”.
It follows that other structures, including trusts, may also be used to save tax, as long as proper legal documentation is prepared to accomplish the purpose desired. Despite the able argument of Mr. McNary, we have not been persuaded that the agreements between the trust and the taxpayer and the trust and the company were illegal for purposes of the Income Tax Act (See Section 104 (2)) nor improper under trust law, which now appears to permit structures called “business trusts”, which conduct businesses. (See Flannigan “The Nature and Duration of the Business Trust” 6 Estates and Trusts Quarterly 181).
Nor have we been persuaded that the Alberta Business Corporations Act has been violated by these agreements.
In addition, we are not convinced that section 56 (2) of the Income Tax Act applies to the facts of this case.
The appeal should be dismissed with costs.
Appeal dismissed.