Paris J rejected the taxpayer's submission (to the effect that the phrase "can reasonably be regarded" in s. 20(12) did not permit the Minister to look to the economic substance of arrangements given that it did not also contain the language, contained in ss. 16(1) and 68, authorizing the Minister to go beyond the "form or legal effect" of the arrangements), stating (at para. 63):
The words "irrespective of . . . the form or legal effect thereof" found in subsection 16(1) and "irrespective of the form or legal effect of the contract or agreement" found in section 68 do not modify the phrase "can reasonably be regarded" but instead relate to the deeming provision which follows in each case which deems certain types of income to have been received by the taxpayer. There is no such deeming provision in subsection 20(12).