In its 1989 taxation year, the taxpayer deducted non-capital losses of $29.4 million which it treated as comprising a non-capital loss carried back from 1991 of $5.8 million and a $23.5 million non-capital loss carried back from 1992. The Minister, following a request by the taxpayer for a loss determination for the 1991 and 1992 taxation years provided a loss re-determination indicating that the losses for 1991 were now $25.8 million and for 1992 were $8.1 million (based on treating the taxpayer's foreign exchange gains and losses as being on capital account rather than income account). These re-determined figures were correct.
The Court reversed the Tax Court, where Miller J. found that in determining the amount of the 1991 loss that was available to be deducted by the taxpayer in 1993, the Minister was entitled and required to apply the ordering provisions of s. 11(3), so that the amount of the 1991 loss that should be considered to have been utilized by the taxpayer in its 1989 taxation year was higher than the $5.8 million originally considered by the taxpayer to have been so applied. The Minister could not point to any legal authority for requiring the deduction of the 1991 loss in 1989 (which was statute-barred) to be increased (so that the amount of such loss that could be carried forward was decreased). Furthermore, under subsection 111(1), "only the taxpayer has the right to choose how to allocate the non-capital loss of a particular year between the 3 prior years and the 7 subsequent years, subject only to the restrictions in subparagraphs 111(3)(a)(i) and 113(3)(b)(i)."