The Minister made an assessment under s. 152(1.11) on the basis that the GAAR applied to reduce the paid-up capital of shares of a Canadian holding company ("Holdings") from $167 million to $475,000, and about ten days later assessed on the basis that previous purported distributions of about $104 million of paid-up capital ("PUC") by Holdings were subject to Part XIII tax.
Boyle, J. intimated in obiter dicta that he would have been inclined to find that s. 152(1.12) precluded the assessment under s. 152(1.11). Respecting the Minister's argument that the Minister's redetermination of PUC was not relevant only to the preceding taxation years as it had the effect of eliminating $62.5 million of PUC otherwise available for future transactions, Boyle, J. stated (at para. 27) that "the contrary argument is that the determined amount, being $475,000, was relevant only for the prior years since the entire $475,000 determined PUC amount had been fully returned in prior years." Furthermore, "instinctively, it seems that retroactive determinations, like retroactive tax legislation, should be avoided except in cases where the legislator has clearly and unambiguously set out its intent to impose or permit the tax to be imposed retroactively."