Redclay Holdings Ltd. v. The Queen, 96 DTC 1207, [1996] 2 CTC 2347 (TCC) -- summary under Subsection 78(1)

In rejecting a submission that s. 78(1) should be interpreted as applying to deny an expense (in this case, alleged interest expense) to a taxpayer only where the taxpayer computes its income on an accrual basis and the creditor to whom the expense is owed is subject to tax on a cash basis rather than an accrual basis, Rip TCJ. found that the wording of s. 78(1) was unambiguous and, therefore, there was no basis for limiting its application in the suggested manner.